Is the "Crisis" Affecting You?

[ATeam]

In another thread, EASYTRADER described how a credit crunch may affect trucking. While I do not disagree with his description of this potential scenario, I have yet to see any changes on the ground because the bailout bill has failed to pass Congress.

Democrats and Republicans are issuing grave warnings of dire consequences to the economy if the bill they are promoting does not pass. While certain commercial banks and Wall Street investment banks are collapsing under the toxic debts they have, and while the LIBOR rate clearly shows a credit freeze of sorts is underway, I am not seeing, on the ground, any changes in our carrier or customers that are attributable to the lack of Congressional action.

The bill did not pass the House on Monday. It may or may not pass the Senate tonight. If it does, the House will still have to take it up, meaning it will be a day or two or more before it is voted up or down.

Leaving politics aside, my question has to do with what y'all are seeing on the ground.

On the ground, at the loading docks you servcie, at the carriers you are assoicated with, and with the drivers you are talking to, do you see any evidence of the dire consequences people in Washington have been talking about since the bailout plan was proposed last week?

We were home while this bailout plan unfolded and are back on the road now. So far, it appears to be business as usual. Freight is moving. Customer businesses remain open. The roads remain crammed with rush hour traffic, our carrier is still answering the telephone, when we drive past the branch offices of failed banks, we see people still transacting their banking business there, truck loans are still available -- as far as we know.

What are you seeing?

 

[TeamCaffee]

We have been looking for a house and a few acres for several months now still have not found the right one. We have noticed over and over that probably 99% of the houses are in some stage of foreclosure with a few in a short sale situation. The common factor in all of the houses we have looked at is lack of upkeep and that when the house was put on the market the price was at a minimum $50,000 higher then what they are asking at this point.
Each house we have considered needs a new roof, and new flooring to start off with and general maintenance done just to get the house livable. A couple of the houses have occupants still and I was amazed at what little pride they had in their homes. Both where filthy and gave the impression of I just do not care let the bank have it.
With the truck it seems as if business as usual still running well still putting money away for the future.

 

[Turtle]

When someone buys a house with little or no down payment, they have little or no equity in the house, no vested interest. They have nothing to lose. Therefore, they have nothing to upkeep, nothing to maintain, and have no emotional attachment to the property to protect the equity that they never had in the first place. There is a huge difference between the mentality of a renter and that of a home owner, and when you can buy a home with the same amount of investment with which you can rent an apartment, the mentality of a renter remains when the mortgage is in place. That's a bad combination.

As for the "crisis", it's not really even a crisis that's going to affect many people in their daily lives. Calm down, take a pill, the sky isn't falling. This affects a very small percentage of the population and an even smaller percentage of financial institutions. The crisis is, at best, on a macro level, not on a micro or individual level. The biggest impact all this will have will be that the US will have less "juice" with which to pound the other countries of the world into submission, as those other countries will be looking for ways to make themselves a little less financially dependent on the US and it's financial markets so that when the US sneezes they won't keep getting a cold.

 

[Moot]

As for the "crisis", it's not really even a crisis that's going to affect many people in their daily lives. Calm down, take a pill, the sky isn't falling.

Easy for you to say. You can crawl into your shell and hide. I had been doing just fine until this morning when the CRISIS finally affected my life. I stopped at a service plaza on I-294 south of Chicago. Went into the men's room and sat down. A few minutes later I noticed the toilet dispenser contained nothing but two empty cardboard cores.

I was forced to pull a "Larry Craig". I knocked on the divider and asked my neighbor if he could pass me some toilet paper. He was kind enough to do so and then let some hang below the divider so I could pull more.

It was fortunate for me that he was next door and not a vice cop. I did refrain from tapping my feet.

 

[dabluzman1]

over the last 27 years we have lived in 15 different homes we have bought from Ohio to California.
We own two now and are going to buy the third after the new year.
In all our looking over the years, we have come across many indivuals who had invested
25,35% or more, as a down payment and lived in a home for 10+ years, yet the house was in dis repair.
Some of the homes were for sale in tough economic times like now others during the boom
years.
a lot of people are lazy and just dont clean. Some others who maybe did care, but after
fighting to "keep" the house in lean times just get down and figure, I'm gonna lose it
anyway, why bother. a persons mental state goes wry when they see all they worked for
being taken away piece by piece.

as for us, sept was a little slow the last two weeks, but over all, we are movin freight.
and making some money.

 

[Turtle]

I try and prioritize things like that, in order of importance:
#1 - something to wipe with after I've gone
#2 - someplace to go

It's kind of like, which is more important, someplace to go, or is the seat down? Many women think the place to go is the most important. Then, suddenly, they're wrong.

 

[blizzard2014]

I steal toilet paper from the service plazas and use it as firewood to burn inside my van to keep warm at night. Please forgive me for that one moot!! I only burn one piece at a time as per Sheryl Crows instructions.

 

[simon says]

The job is never done until the paperwork is done- right?

 

[louixo]

As I talk to friends and family around the country, it seems that some places are barely touched by the "crisis", and other places slammed. The ones that have been hit the hardest and that have taken the biggest price drop in my unofficial survey, have been the states that had the biggest housing price increases over time, like Arizona, California, Nevada, and Florida. Also some of the larger cities in the northeast and southern sunbelt states, like New York City, New England as an area, Atlanta, and Washington D.C. There are plenty of pockets around the country where price changes have been minimal, and remain steady. That`s my two cents, and it comes from personal conversations, and reading newspaper classifieds in the areas I mentioned,and not reading stats put out and broadcast by the sensationalist media.

 

[ATeam]

Sensationalist media being what it is, facts still exist, are reported, and can be identified. There is no question that the media has become more sensationalistic and self-absorbed than it used to be; and with some media outlets, sensationalism is the order of the day. But events still develop on the ground, not in the newsroom.

Today's economic news included two events:

1. The release of the Federal Reserve Bank's Beige Book report

2. A stock market decline of 733 points (Dow Jones Industrials Average)

If you go to Google News and do a search on "Beige Book" and "Stock Market" you can read hundreds of headlines about each event and see how the reporting of them differs from one media outlet to the other. The reporting is different than the spin, and both are different than the facts themselves.

Back to the topic, "Is the 'Crisis' Affecting You?" I can say yes. All news sources of all viewpoints are reporting slowdowns in economic activity and that people are driving fewer miles.

These events (developments) are contributing to a decline in fuel prices. That affects us by reducing both our fuel costs and the fuel surcharge revenue that our load offers include. We see it on the ground, each time we fuel the truck and receive a load offer.

 

[louixo]

Is the crisis affecting me personally? I guess I didn`t answer that the way ATeam presented it, so I`ll answer it here, and digress just a bit. In the ways you mentioned about fuel prices etc., of course everyone is affected, including me. There is no way one who lives and works in the USA won`t be affected in some way, as our national course has been diverted.. As for the Beige Report, stock market drop, and other stats, those are realistic manifestations of course. Every pundit and politician who is interviewed by the media has a theory, and every media hack and host will spin it. What really is the truth?. I for one am afraid nobody really knows. All of the former, want us to believe that every stat, piece of new information, or viewpoint from an authoritative figure were or are contributing factors to our economic slide, but I ask, to what degree in the final analysis? The world is throwing tons of money at the problem, and the politicos are trying to sell the world on the fact that we are on the right track. What else can they do? And what else can we peons do but listen, believe, and watch. Me doing my part to help the cause consists of what it always consisted of, which is, suit up, show up, and keep doing an honest days work, to hopefully earn an honest days pay. If our leaders did the same, and were not in so many cases self serving, back room dealers, scratching each others back at the expense of all of us, I`m sure, and I mean SURE, we`d be alot better off. So, to answer the question of how the crisis is affecting me, I would have to say economically it`s too early to tell. How will it affect me in the future? Same answer. I`m not feeling any pain yet. It`s too early to tell. But my hope is that if you ask me the same question in six months, I can say the "crisis" didn`t affect me all that much. My fear is that I won`t be able to give that answer. I think and feel that our elected officials did not do what they were elected and paid to do, and they incompetently allowed this to happen to our world. They should all be fired! Every single one, without retirement benefits, and we the people should deliver that message to them. If you or I in our little place in the grand scheme of things, didn`t deliver ONE LOAD,that you signed for and said you would get to it`s destination on time, and thru negligence or poor judgement caused a customer to lose a respectable sum, we`d be looking for a new job before the ink dried on the bill of lading. And so would many others like us.

 

[EASYTRADER]

The crisis is affecting us, we have a surface unit, and times are tough for us. For the period from Jun 1 to Oct 1, we had run 23 less trips this year over last. Our refusal rate interestingly enough has been down this period over last. Our revenue is about 10k less which doesn't seem all that bad until you consider the fact that fuel is still 1 dollar higher per gallon than it was last year during this period.

Since Oct 1 we have had 2 runs for a grand total of 1400 bucks gross. It makes me want to puke to know that FECC and other companies are STILL bringing in new trucks.

Since my post on the consequences of Congress dragging there feet. There have been several more dire developments;

1. Iceland has gone BK
2. Hungary currency is now toilet paper - Hungarian banks are now issuing euros for circulation
3. The Treasury has forced 9 banks into buying 250bil. of Treas. money. I say forced because 3 of the 9 didn't need the money, but the Treasury doesn't want the general public to know which of the 9 banks is TRULY insolvent because they are afraid of 1930's like bank runs.
4. 55 billion dollars has been pulled from the SP-500 alone, since my last post. More is to be withdrawn.
5. CNBC analysts believe as many as 3 hedge funds may be insolvent now, hedge funds are private money and aren't subject to reporting rules like banks or public funds. Hedge funds are huge players in these markets, some with assets in the hundreds of billions.
6. Banking analysts think as many as half of Russia's banks may go insolvent, Russia has about 1100 different banks 500 of which are on a watchlist.
7. The PA Turnpike recently issued TAX FREE bonds at 6% and had trouble finding enough takers. PA Turnpike is AAA rated has the best bond rating available, outside of US Treasury notes. 6% is roughly twice what these bonds would sell for in NORMAL circumstances.


Most people don't realize because our news media is commie, however the United States is the 2nd largest exporter of goods in the world, China being the first. The united states is the #1 exporter of value added goods, this means we take raw materials from other countries and turn those materials into things people actually use. If you strip energy costs out of the trade deficit, guess what their is no trade deficit.

Why is this important? The US economy thrives on EXPORTS, if the rest of the world implodes we are going down with them. Hungarians won't be buying apple computers for christmas, and if Russia goes insolvent, there goes our grain exports.

The factoring disaster I wrote about, may have been averted since the Fed bank has announced the week before that they will BankRoll the commercial paper market. This was part of the reason for Treasury forcing the 9 big banks to take the 250bil. There is no guarantee they will lend it though, since 6 of the nine need the money to keep their doors open.

Remember established money hates 2 things HIGH TAXES and RISK. Its the established money that makes our economy flow, and when they feel risk or an unfriendly tax environment they pull the money out and park it in US Treasuries and other Gov. backed paper until the environment becomes friendly to capital again.

Also, we should see DOW around 5000 in the next 30 days. The we can wait for next development.


Please, Please, Please don't vote for Obama - he wants to raise capital gains tax, and cut back on foreign trade, every time this has been done it was a disaster to the economy and we're on the brink NOW. His announced policies are reminiscent of H. Hoover, and the world Dominoes are arranged for a disaster of shoe leather eating proportions.

 

[louixo]

Nice report Easytrader. You mentioned that the factoring disaster has possibly been averted, which kind of goes along with my point about nobody really knows what`s going on, or how to fix it, and I`m not pretending I do know. What I alluded to in my previous post about fire them ALL, is anger, and also maybe good sense. I wonder what would happen if our congressmen really did vote the will of the people they represent. Before they passed the bailout deal, what I read and heard in the media was that the peoples correspondence to their elected representatives, was running 100 to 1 against, and then I heard some other reports after they passed it, that it was still running 50 to 1. So much for the will of the people. If they didn`t pass the bailout, the ones that would feel the most pain, would be the wealthiest, which includes our millionaires club congress. The average joe, is a stock market pawn, who keeps feeding the biggest gambling game there is, controlled by the elite of our nation, who spew the rhetoric via the media that was engineered by the incompetents we elected that allowed this to happen. If the market dives, and our currency goes with it, our elected officials would lose bigtime, and so would the elite they protect. They say the bailout was for the middle class. I`d like to believe that, but I don`t. What would happen if our dollar became useless currency like Hungary? We`d all end up in the same boat. Rich and poor. I don`t own stocks, nor do I sit on any board, and I am willing to bet millions of Ameicans don`t own stock either. If all failed we would have to devise some method of payment to keep our country going. Maybe we`d go back to gold, or the barter system, until we developed a new and hopefully better financial system. The problem with that scenario, is that our same lawmakers with the same system of NO accountability would be in charge. I personally think we`ll survive this crisis, but I also think the average person will, like always be the group that gets hit the hardest. We really do need a system of accountability from our lawmakers, and we need to be able to FIRE them for their incompetence, not just slap their wrists like an unruly child, and let them walk off with their retirement packages that are second to none, after serving just one term.

 

[EASYTRADER]

Had congress not dolled out the money. Many of us would be out of work today. Especially those who work for smaller firms with less access to capital.

What is happening in the financial markets right now is not unprecedented. It has happened several times in the history of the US and it has always resulted in disaster because the government failed to inject capital soon enough or as in 29 flat out refused any help period until ww2 brought us out.

Jefferson caused a calapse by blocking trade with britian and then raising taxes. This was the catalyst for bank failures bussiness closures and US citizens boiling there shoes for food.

After San Francisco burned we went through another crash which led to a depresion because the railroads didn't have the money to rebuild and again the gov refussed to help banks failed and shoe leather was the bill of fair for american families.

I am rusty on the dates but this same cataclism has happened five times in US history and all the previous times the Gov failed to inject capital where it was needed and people ate there shoes.

In 1874 a woman in New York was arested for eating her baby in the panic of the time.

These crashs affect the middle class the worst because whether we like it or not we are dependant on wealthy people for work. When they run out of play money we starve.

It is possible to know what to do especially today the problem is doing it fast enough. And being willing to do what is necessary.

It is true that we can't always tell where the boogy men are hiding especially as things get complex but the undisputable law of economics is Liquidity always creates growth and taxes always stunt it.

Lehman brothers was allowed to fail because of political pressure and of not knowing where the next boogyman was hiding. So Lehman went down as the American people wished and AIG failed next because aig had issued credit insurance on Lehmans debt. Had the gov allowed AIG to fail millions of innocent people would have been screwed out of insurance payments and policies through no fault of there own. Not to mention the Tens of thousands of AIG employees who would suddenly be out of work. AIG because the gov acted apropriatly will now die a slow death rather than a catclymic one allowing time for the economy to absorb the hit.

The reason we are coming in for a soft landing instead of a shoe leather eating nose dive is because of Henry Paulson and Ben Bernacke. They have been measured in their approach and they are doing what they think is the right thing.

This year is going to be slow most of next year is going to be worse but the US should come out ok we should ride this out like the seventies or even early eighties. Assuming of course Bernacke and Paulsons lead is followed. It is going to be very hard politically for congress to do it because most americans are financially illiterate and are rightfully ****ED about the whole situation.

It would be more productive to demand CRIMINAL prosecutions of the CEOs and boards of these companies direct your anger there but these companies themselves must be kept solvent.

PS more depressing news I recenty read an article claiming
Switzerland to be the next country to defualt like Iceland and Hungary.

One more thing in the 1930s my Grandfather had two brothers each owned a Farm one in Illinois and one in Indianna.

Two weeks apart one brother hung himself in the barn leaving his life insurance policy on the dresser for his wife to find. The other brother had no life insurance so he shot his two daughters in the head and him and his wife also hung themselves from a tree in their backyard.

My grandfather had no dependants so he muddled along laboring where he could before joining the Navy in 1938.

My two great uncles weren't wallstreet FatCats just farmers with bad luck and no prospects and seeminly no hope. Because the government in the face of a massive financial panic let the system fall
appart.

Ask your grandparents what they remember about the 30s. And you'll be darn glad Bernackes is running the Fed.