#OT# GM bankruptcy closer?

wrote:


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
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wrote: <snip>

<snip> ----------- 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).
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wrote:

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
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<thread hijack occurs here>
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
http://www.stats.gov.nt.ca/Statinfo/Economic/Multiplier/Multiplier%20Report-2007.pdf
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).
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http://www.stats.gov.nt.ca/Statinfo/Economic/Multiplier/Multiplier%20Report-2007.pdf
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:
http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program S&_submenuId=&_lang=en&_ts 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
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On Thu, 12 Feb 2009 14:32:24 -0500, "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).
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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
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Ed,
Do you know where to find this data -
http://www.census.gov/econ/census02/data/industry/E339113.HTM
For more recent years than 2002?
--

Dan

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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):
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-fds_name 0700A1&-_skip00&-ds_name=AM0631GS101&-_lang=en
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:
http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program S&_submenuId=&_lang=en&_ts 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
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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.
--

Dan

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Aha. Well, if you call, your data may be in one of three places I can think of.
ACES:
http://www.census.gov/csd/ace /
County Business Patterns (same as the link above):
Or BEA's Regional Economic Accounts:
http://bea.gov/regional/index.htm
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
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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.
--

Dan

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On Mon, 9 Feb 2009 00:24:15 -0800, "John R. Carroll"
<snip>

------------- Frankly, If I were in the Japanese position, I would be buying oil from Iran that won't take US$ payments, only Euros and Yen, and would be talking to other countries about Yen denomonated oil purchases or even countertrade.
You may be right, but for a view from another major player [PRChina]
============China is right to have doubts about who will buy all America's debt Chinese doubts about the value of US Treasury bonds highlight a crucial question: who will buy the estimated $2.7 trillion (1.9 trillion) to $4.2 trillion of debt expected to be issued over the next two years?
By Martin Hutchinson Last Updated: 12:14PM GMT 13 Feb 2009
With annual foreign purchases accounting for less than a tenth of the low end of that range, and domestic investors unable to bridge the gap, the Chinese are right to worry.
Yu Yongding, former adviser to the Peoples Bank of China, recently demanded guarantees for the value of Chinas $682bn of Treasury securities. Then Luo Ping, director of the China Banking Regulatory Commission, said that China had misgivings about the US economy, but despite this it would continue to buy Treasuries. The two statements appear designed to raise the issue non-confrontationally before new chief US diplomat Hillary Clintons visit to Beijing on February 20.
China worries about the dollars value against other currencies, particularly the yuan. With US interest rates so low, the dollars value may slide. However, President Barack Obama has repeatedly said he wants a strong dollar, and indeed its trade-weighted value rose 13.9pc between April and December 2008.
The other area of concern for China is the value of its Treasuries. Given the US borrowing requirement and its lax monetary policy, Treasury bond yields could well rise sharply, causing a corresponding price decline. If Chinas holdings match Treasuries average 48-month duration, then a 5pc rise in yields, from 1.72pc on the 5-year note to 6.72pc, would lose China 17.5pc of its holdings value, or $119bn.
Foreign buyers have absorbed a little over $200bn of Treasuries annually, a useful contribution to financing the $459bn 2008 deficit, but only a modest help towards the $1.35 trillion minimum average deficit forecast for 2009 and 2010.
Unless that changes substantially, there will be $1trillion annually to be raised by the Treasury from domestic sources, more than double the previous record from domestic and foreign sources together, plus whatever is needed to bail out the banks.
Even if the US savings rate were to rise from zero to its long-term average of 8pc of disposable personal income, that would create only an additional $830bn of savings -- not enough to fund the domestic share of the deficit. Interest rates would probably have to rise substantially to pull in more foreign investors.
Yu is right to worry. <snip> ---------------- http://www.telegraph.co.uk/finance/breakingviewscom/4611408/China-is-right-to-have-doubts-about-who-will-buy-all-Americas-debt.html
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).
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wrote:

China is dead George. Civil war is their future.
JC
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On Sun, 15 Feb 2009 14:56:16 -0800, "John R. Carroll"

=========As of today Japan ain't loooking too whoopie either
---------- Japan economy shrinks at fastest pace in 35 years
By TOMOKO A. HOSAKA, Associated Press Writer Tomoko A. Hosaka, Associated Press Writer 51 mins ago
TOKYO Japan's economy contracted in the fourth quarter at the fastest pace in 35 years as a collapse in global demand battered the world's second-largest economy.
Japan's gross domestic product, or the total value of the nation's goods and services, dropped at an annual pace of 12.7 percent in the October-December period, the government said Monday.
That's the steepest drop for Japan since the oil shock of 1974. It far outpaces declines of 3.8 percent in the U.S. and 1.2 percent in the euro zone.
<snip> =========http://news.yahoo.com/s/ap/20090216/ap_on_re_as/as_japan_economy ;_ylt=AtijBDlll1wp6fYwL8.44FayBhIF
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).
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wrote:

But they have cash.

Leading indicators have Japan at -10 percent George. They are flat lining.
JC
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It'll get them into the Toyota/Honda showrooms.
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And this just in.
------------------- Cadwalader, Rothschild Advising U.S. on Automaker Restructuring
By Tiffany Kary
Feb. 6 (Bloomberg) -- A law firm with bankruptcy expertise, three capital-markets lawyers and an investment bank are advising the U.S. government on how to restructure General Motors Corp. and Chrysler LLC, two people involved in the work said.
The U.S. Treasury Department hired Cadwalader, Wickersham & Taft LLP to evaluate several restructuring scenarios, including a government-funded bankruptcy, the people said. Cadwalader, hired last month, is working with Sonnenschein, Nath & Rosenthal, a Chicago-based law firm with capital-markets experience, and Rothschild Inc., an investment bank, the people said.
A key question the Obama administration wants answered is whether the governments $17.4 billion in loans to Chrysler and GM would be first in line for repayment, ahead of earlier lenders such as Citigroup Inc. and JPMorgan Chase & Co., the people said.
They certainly need sound advice on the complicated area of bankruptcy and implications for the economy, said Bruce Clark, an auto analyst at Moodys Investors Services.
<snip> --------------- http://www.bloomberg.com/apps/news?pid 601109&sid=aZiUAx5vtYKw&refer=home
If you are concerned write your Congressmen in addition to positing here. You can access their web mail here http://senate.gov / http://www.house.gov /
FWIW -- here is an email I just sent. Feel free to use all or any part of it. ------------------- This is a sad day for American manufacturing, but the choice is losing GM/Chrysler now or losing GM/Chrysler AND Ford 6 months from now.
Congress is now in the very unenviable position of having to choose between having GM and Chrysler go under on March 1, with a good possibility that Ford will survive and prosper, versus having all three companies collapse in 6 to 9 months, after "investing" tens of billions of additional taxpayer dollars.
Even after a one-month+ closure of their production facilities, Chrysler still has over 6 months of unsold new vehicle inventory at their factories and their dealers. While exact data is not available, GM is in much the same condition, as indicated by visual inspection of the local GM dealerships crammed with unsold vehicles, including many high value trucks, Hummers and SUVs. I encourage you to have one of your staffers take a day and drive past the area new car dealers, and report back.
The Obama administration appears to be engaging in some vital contingency planning by having at a preliminary evaluation of the GM/Chrysler bankruptcy option performed by experienced professionals, and I urge your support of these efforts. http://www.bloomberg.com/apps/news?pid 601109&sid=aM4zN4WmWxEc&refer=home
I caution that any attempted chapter 11 reorganization, will most likely involve considerable additional taxpayer funding, for example DIP [Debtor In Possession] financing. Such reorganization will be useless, as there is simply too much domestic production capacity available, the existing management/organizational culture at GM/Chrysler will not accept the required changes, AND CONTINUED TAXPAYER SUBSIDIZED VEHICLE PRODUCTION BY GM/CHRYSLER WILL SIMPLY DRIVE FORD OUT OF BUSINESS. Therefore immediate Chapter 7 liquidation of GM and Chrysler is the only viable option, if Ford is to have any chance of survival.
The taxpayer funds that would be wasted attempting to rejuvenate/regenerate GM/Chrysler will be far better spent on assistance for their displaced workers, and even more importantly on their suppliers, many of whom are involuntary GM/Chrysler creditors, as these also supply critical components to the other viable vehicle companies in the US.
Please discuss the critical need for immediate action to impose Chapter 7 liquidation on GM/Chrysler with your colleagues, ASAP after the submission of their "plans" on Feb 17. If it would be helpful, please feel free to forward this email. ---------------
If you work in the Automotive industry, good luck.
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).
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On Feb 6, 12:29pm, F. George McDuffee <gmcduf...@mcduffee- associates.us> wrote:

it's a huge idle capacity...and a larger footprint in the na economy at stake. the consequences of killing the saturn ev1 ten years ago might be comparible to the nazis developing the bomb first: we are too late with alternative technology to shift the production over at this critical juncture. house of cards.
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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. Treasurys 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. <snip> Delphi Talks
GM said today its 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 its also considering more plant closures, job eliminations and pay cuts for administrative workers. {note that Delphi has been in bankruptcy for 3 years} <snip> 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. <snip> -----------------
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).
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