#OT# GM bankruptcy closer?

Right. But here's another key phrase: They all think they're smart enough to get out before the downturn comes. And some of them are.

For those living on fees, like a lot of the investment bankers, all a downturn means is that they have to find a new cash cow. The money lost is their clients', not theirs.

All of which does nothing to stop the cycle.

Let me rephrase that. Of course, if there *is* a downturn before (I) get out....

You'll want to discuss that with Treasury and the Fed. d8-)

-- Ed Huntress

LOL The good news is that the Japanese are savers and their currency valuation is killing them right now. The US is going to help with the valuation issue ( we have in the past) and they are going to load up about a trillion dollars worth of T-Bills that will be part of what's going to be required to fund Tim Geitner's four trillion dollar plan.

JC

The footsteps are getting closer....

----------------- GM, Chrysler May Face Bankruptcy to Protect U.S. Debt (Update3)

By Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) -- General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury?s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called ?debtor in possession? or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

Delphi Talks

GM said today it?s in negotiations to take back portions of Delphi Corp., a parts supplier the automaker separated from a decade ago, in order to maintain portions of its supply chain. GM said it?s also considering more plant closures, job eliminations and pay cuts for administrative workers. {note that Delphi has been in bankruptcy for 3 years}

Chrysler has $7 billion in loans from a group of banks, including New York-based JPMorgan, Goldman Sachs and Citigroup. It also has $2 billion in loans from owners Cerberus Capital Management LP and Daimler AG. Cerberus owns 80.1 percent of Chrysler. Daimler owns the remainder.

GM has $6 billion in loans secured by assets from lenders including JPMorgan and Citigroup.

-----------------

The same names keep popping up in the [bad] economic news.....

Q: Why would anyone make a loan if the collateral can be preempted at anytime by the government? Are all loans now in effect unsecured? How much impact is this having on the credit markets?

If you are a business owner/manager, would you sell to GM or Chrysler on anything other that a COD or pre-pay basis after bankruptcy? If you have an existing contract or "on-going business relation," can the courts force you to keep extending credit, even though you are sure to get "stiffed?"

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

------------ Low by over 50% {and more to come...}

============== U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes

By Mark Pittman and Bob Ivry

Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government?s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation?s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps.

================

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

"John R. Carroll" wrote in news:4ORjl.6725$ snipped-for-privacy@flpi144.ffdc.sbc.com:

Which is what they have done in every recent recession except this one for some reason. I was figuring that perhaps their banks were teetering on the verge of collapse or something.

Maybe they were waiting for a suitable bribe from the Chicago crowd in the White House.

They don't need a bribe. They're desperate for any excusable way to depress the value of their currency right now. As John says, their exports are on a death watch because they've saved too much money, and it's driven the value of their currency up. If they don't have enough domestic spending and they can't export, they're headed for another period of flatline economy.

That's not good when your economy is a neo-mercantilist one and it depends on exports.

-- Ed Huntress

"Ed Huntress" wrote in news:4991157f$0$10173$ snipped-for-privacy@cv.net:

They are past flatline and well into decline already. My point was that the history is they work to weaken the yen and strengthen the dollar during downturns, but they've held off this time. I'm wondering why the change/delay.

I don't know, but I saw a headline somewhere in the past couple of days to the effect that economists expect Japan to start making some moves to devalue the yen.

-- Ed Huntress

----------- While it is impossible to prove a negative, it may well be that there is no reason.

Many of the "reasons" advanced for macro socio-economic and geo-political change appear to be "ad hoc propter hoc," i.e. "A" occurred just before "B" so "A" must have caused "B."

Even when these events are highly correlated across considerable time, it very frequently occurs that both "A" and "B" were caused by a third unidentified factor, with a time lag in the manifestation of "B" compared to "A" giving the illusion that "A" caused "B."

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Oil trading around 150.00 USD per barrell in a dollar denominated market. Devaluation of the Yen would have crushed them last summer Japan was caught between the hammer and anvil.

JC

Particularly for Ed and John, but everyone else feel free to chime in...

I am in the process of attempting to make some sense of the distribution of appropriations in the latest US "stimulus" package.

To do this I need what are called "industry intensity factors."

StatCanada appears to have done this is some detail for their provences/terratories, but I have been unable to locate equivalent data for the US, preferably by SIC/NASIC code to insure accurate sector identification.

An example of the StatCanada data can be seen at

although the data is less detailed than I would like.

What I am looking for is the same data for the aggregate US [and then possibly by region/state]

i.e. (1) GDP [generated] at basic prices per dollar of output (2) Labor income per dollar of output (3) Jobs per million$ of output by detailed SIC/NASIC code.

[Data in following discussion is on page 9] What is obvious from the Canadian data is that very different results are obtained when the industrial sectors are ranked by each of the above three factors. I.e., is the intent to maximize the GDP dollar amount produced, the wages paid, or the number of jobs created, as the result of say a 50 million "stimulus investment."

It is also clear from the example that a simple "sort" to determine the high "multipliers" may be misleading, as the data is for what the current economy does, and makes the assumptions that there is no "marginal utility" effect [the law of diminishing returns is not operating], and that the responses are linear.

There is also the problem of just how you can inject or invest the money. In the NWT Canada example, a simple sort would indicate that if the intention is to maximize the number of jobs, investment should be made in "educational services," with 20.3 jobs generated for every million$C of input. The problem being, who is going to utilize the additional educational services. If the intention is to maximize GDP generation, then "Waste Management Services" with a 0.85 would seem to be the #1 choice, but again just how much waste is there to manage in the NWT, i.e. is the market saturated? [Read the paper for explication as to why the GDP coefficients are all less than one. In short the NWT is a capital sink for Canada.] {As a follow on, it would be interesting to see just how many states/MSAs in the USA, if any, are similar capital "sinks.}

I would like to study the US distributions, and being a cheap screw, I am looking for the data for free, if possible in an xls file.

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

I didn't take the time to compare Canada's methods with ours, but it sounds like you want the Annual Survey of Manufacturers data from Census:

If you want other years, or if you want finer NAICS categories, let me know. The data is sort of spread around. You may find what you're looking for by clicking on "Economic Census Main Page" and digging down. But don't beat your brains in. If the ASM isn't what you want, I may know where your data is.

-- Ed Huntress

>

---------------- Thanks for the tip.

Key US phrase seems to be "total commodity output multiplier" at least for GDP effect.

Problem here is the data is dated [1997] and fragmented across 7 tables.

BES had some 2007 data but it was highly aggregated, however enough could be extracted to show that something does not appear right in the stimulus allocations.

The 4 digit number on the right is the "total commodity output multiplier" which is how much output a 1.00$ input to the specific sector generated in 2007.

Very preliminary rank ordered data indicates:

IOCode Name Total Commodity Output Requirement  05 Manufacturing 2.4121  09 Information 2.1364  01 Agriculture, forestry, fishing, 2.1265 and hunting  04 Construction 2.0809  14 Other services, except government 1.9304  08 Transportation and warehousing 1.9205  13 Arts, entertainment, recreation, 1.8877 accommodation, and food services  02 Mining 1.8105  15 Government 1.7808  03 Utilities 1.7474  12 Educational services, health care, 1.7392 and social assistance  11 Professional and business services 1.7377  10 Finance, insurance, real estate, 1.6455 rental, and leasing  07 Retail trade 1.5839  06 Wholesale trade 1.5514  16 Other /1/ 1.0000  S002 Scrap, used and secondhand goods 1.0000

As indicated, different rank orderings would result if the criteria was total wages paid or number of jobs generated [not yet available].

Still, it appears that the stimulus is ignoring the high multipliers sectors such as manufacturing in favor of education and finance. However Construction [infrastructure] ranked #4, does appear scheduled for some funding.

The number two ranking of hunting and fishing (aggregated with agriculture) may help explain how the bow-and-arrow manufacturers [manufacturing #1] managed to get some bailout funds. [On the other hand Robin Hood could have been lobbying...]

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

>>

Okay, if you can make something of this, I'll be interested.

I'm a little skeptical, however, because one fact that keeps coming up (or used to, when I did that work) is that government data is compiled for one purpose, and we usually use it for another, which screws us up. I learned this in sometimes painful ways.

Those factors doubtless are based on assumptions and agreed definitions, which I would have to dig into deeply before I'd use the data in the way you're intending to. It's never simple and it's rarely what it appears to be on the surface. I hope there's good methodology available online for those reports, and that you can find it.

If you can, it's a promising way to analyze things, assuming that factors such as future prospects for those job types and so on is factored in. That's when it becomes a job for a big government bureaucracy, or for someone with a lot of time on his hands. d8-)

-- Ed Huntress

"John R. Carroll" wrote in news:TLXkl.10594$ snipped-for-privacy@flpi149.ffdc.sbc.com:

Excellent point. I hadn't given oil the weight it deserves. They import

100% of what they use and they are the number two consumer IIRC.

"Ed Huntress" wrote in news:49947947$0$20299$ snipped-for-privacy@cv.net:

Ed,

Do you know where to find this data -

For more recent years than 2002?

What you have there is the full Economic Census data, which is rolled out in pieces over several years. The next Census was 2007 and the *compiled* data for the NAICS categories you're looking for isn't available yet.

However, most of what's in there, except for establishment data (number of companies, etc.) is available from the Annual Survey of Manufacturers (ASM):

Take a look at this page. This is the main page, more or less, for the recent ASMs, and you can get the other years up to 2006 from here:

You can get the establishment data for recent years from County Business Patterns. You can access it from the smae page I pointed to just above. Find the tab for Business Patterns, and follow the links. You can enter the NAICS code(s) you want and it will give you the establishment data for the whole US.

If you need more, it's worth a try to call them. When I've needed unpublished data for articles, I've called them and they often were able to send me preliminary data by e-mail.

Let me know if I've led you to the wrong stuff. It's late, I'm tired, and I may have screwed something up.

-- Ed Huntress

"Ed Huntress" wrote in news:49950a95$0$20288$ snipped-for-privacy@cv.net:

That's what I figured. Bummer.

I came across that data but the time it would take to compile it is kind of daunting.

That's a good idea.

No you were right on. I thought that maybe I was missing more recent reports. I'm interested in certain NAICS codes by area (state is good county better), and the capital equipment investment numbers.

Data from 6-7 years ago is an eternity nowadays.

Thanks Ed. I appreciate your help.

Aha. Well, if you call, your data may be in one of three places I can think of.

ACES:

County Business Patterns (same as the link above):

Or BEA's Regional Economic Accounts:

I think the most likely place is County Business Patterns.

One tip that may keep you from spinning wheels: You probably know that the government collects a lot of data for internal compilations and analyses that they don't publish, either for statutory reasons or other legal reasons, because it would reveal too much competitive information to competing businesses if they published it. Sometimes they'll give you this data anyway, if you ask. And sometimes they just don't publish it for space reasons.

So, again, it's worth asking.

Glad to help.

-- Ed Huntress