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Daily Archives: December 2, 2013

Auto Makers’ Channel Stuffing Highest Since 2005 | Zero Hedge

Auto Makers’ Channel Stuffing Highest Since 2005 | Zero Hedge.

While the abundance of commercials for cars across all media this time of year is nothing new, the manufacturers (and even more so the dealers) are likely getting more desperate. As Bloomberg reports,inventory climbed to almost 3.4 million cars and light trucks entering November – at 76 days of supply, that was the highest for the month since 2005. This should come as no surprise as we previously noted GM’s post-crisis highs in channel stuffing as hope remains high that the recent slowdown in sales does not continue. The question, of course, is, “will manufacturers be responsible and curb production to keep inventory in check, or are some going to resort to old, bad habits and churn it out and then throw incentives on them.” We suspect we know the margin-crushing answer.

 

Via Wards Auto,

the levels harken back to early in last decade when steep price discounting was used to prop volumes,…

 

Excluding 2008 when the industry was heading into recession, LV inventory totaled 3.397 million at the end of October, highest for the month since 3.803 million in 2004. October’s 76-day supply, was the highest for the month since 77 in 2005.

 

By comparison, sales in 2013 mostly have run at highs dating to 2007, suggesting inventory is getting ahead of the curve.

GM just saw the biggest two month jump in inventory in the restructured company’s history.

 

 

Via Bloomberg,

Carmakers have boosted production to meet demand that has left the industry on pace for the best sales year since 2007. Swelling supply raises the stakes for sales in November after deliveries missed estimates in October and slipped in September for the first time in 27 months. If buyers don’t absorb enough inventory, more automakers, including Toyota Motor Corp. (7203) and Honda Motor Co., may need to follow Ford Motor Co.’s lead by trimming production to avoid margin-slicing discounts.

 

“Inventory has been so tightly managed, and it has been because demand has been there and production hasn’t been able to keep up,” Jeff Schuster, an analyst with researcher LMC Automotive, said in a telephone interview. “If you change that scenario around, the question is, does the discipline that we’ve seen the industry operate with lately stick around?”

 

 

“As the market begins to slow down and begins to peak, it’s going to get tougher for everybody,” Joe Langley, the head of North American vehicle production analysis for IHS Automotive, said by telephone. “Are manufacturers going to be responsible and curb production and keep inventory in check, or are some going to resort to old, bad habits and churn it out and then throw incentives on them? That’s what’s going to be interesting, to see how that plays out.”

 

 

Wesley Lutz, a Chrysler dealer in Jackson, Michigan, said his store has about 120 days supply of vehicles in stock, roughly double what he usually likes to carry. Lutz cited his anticipation of strong winter and spring selling seasons and his ability to borrow at less than 2 percent to finance the inventory on his lot.

 

“I’m probably not managing my inventory as well as I do at 8 percent, but I’m willing to roll the dice and stock some inventory in December and January, because I think we’re going to have a great market in February,” Lutz said by telephone. “We’re borrowing money so cheaply.”

 

 

“If it’s an underwhelming month, we’ll need to look to see if there are any decisions to start to ratchet back” production this month or in January, LMC’s Schuster said. “It could end up being the first real test that the industry’s faced since the restructuring.”

Sadly, there it is – due to intervention-driven low rates, mal-investment occurs from the bottom-up – and now we have the most inventory in 8 years… car makers and dealers (perhaps more so) will be hoping hard this season… the ‘field of dreams’ economy continues

 

NSA document raises questions about Canada in G8 spying – Politics – CBC News

NSA document raises questions about Canada in G8 spying – Politics – CBC News.

CBC News has released a top-secret document retrieved by U.S. whistleblower Edward Snowden showing the Canadian government allowed the largest American spy agency to conduct widespread surveillance in Canada during the 2010 G8 and G20 summits.

 

The four-page National Security Agency document was posted online at CBC.ca early Monday.

 

The document is one of thousands that Snowden entrusted to U.S. freelance journalist Glenn Greenwald, who co-authored the story reported exclusively by CBC News on Nov. 27.

 

Since then, CBC has offered the U.S. government an opportunity to retrieve and review the document from its files, and to comment on any information in the document it believes should not be released.

 

David Walmsley, CBC’s director of news content, says the public broadcaster “believes in transparency to support its journalism.”

 

Late Sunday, the NSA requested only that CBC News black out any information that could identify NSA and other U.S. government employees to protect their personal safety.

 

The network agreed with the request, and certain segments of the documents appearing online have been blacked out.

 

The U.S. State Department initially issued a statement in reaction to the original CBC story about the NSA’s spying at the G20 summit, pointing out U.S. President Barack Obama has already ordered a broad review of U.S. intelligence activities in the wake of Snowden’s earlier revelations.

 

But on Friday, a State Department official said there would be no comment on the publication of the actual secret document: “Thank you for the offer, but we cannot discuss allegedly classified materials.”

 

Later Friday evening, the White House requested an opportunity to review the document. An official sent CBC an email Sunday morning, saying: “We are not going to comment publicly on every specific alleged intelligence activity.”

Questions remain

 

Wesley Wark, one of Canada’s leading experts on national security and intelligence, reviewed the document and says it still leaves a lot of questions.

 

The biggest, he says, is Canada’s role in the NSA’s surveillance operations at the G8 and G20.

 

The document says only that the NSA’s surveillance plans were “closely co-ordinated with the Canadian partner” — the Communications Security Establishment Canada (CSEC).

 

Both agencies gather intelligence by intercepting phone calls and data, and by hacking into computer systems.

 

But Wark says it is not clear from the document what the NSA was “co-ordinating” with Canada before and during the Toronto summit.

 

“This may be commonplace and relatively banal or it may be very troubling,” Wark said in an interview. “But until we have more of this story, I don’t think we know where it goes.”

 

Both the U.S. and Canadian governments have refused to provide any details of security and intelligence operations during the summits.

 

“I don’t think we can accept at face value the assurances of the government about the legal mandate of CSEC,” Wark says. “Nor can we simply assume that something illegal happened here. We just don’t know enough from my perspective.”

 

While much of the U.S. intelligence gathering during the summit was related to security, the document also talks about snooping operations in support of policymakers.

 

“They would want to be collecting intelligence on the sort of personalities of key international leaders — often you get some very interesting information from these kinds of summit meetings, where they are close in with conversations and chit-chats among delegates in not always secure circumstances,” Wark says.

 

“They would want some political intelligence whatever (way) they could acquire it, and some economic intelligence.

 

“So there might be a whole range of things, and the document itself refers to various tasks that exist for the NSA [at the G20] in terms of that policy support.”

 

Defiant Thai PM rejects protesters’ demands – Asia-Pacific – Al Jazeera English

Defiant Thai PM rejects protesters’ demands – Asia-Pacific – Al Jazeera English.

Thai Prime Minister Yingluck Shinawatra has rejected the demands of anti-government protesters, who are attempting to topple her government and replace it with a “people’s council’, saying the demonstrations are unconstitutional.

In Depth
 
 

 Feature: Thai tumult keeps a fragile economy on edge

 Feature: Anti-government protests polarise Thailand

 In pictures: Bangkok protests

 

“Anything I can do to make people happy, I am willing to do… but as prime minister, what I can do must be under the constitution,” she said in a televised address on Monday on her first comments since violence broke out late on Saturday after weeks of peaceful protests.

“The armed forces will be neutral and I know they want to see the country in peace,” the prime minister said, adding her immediate aim was to restore “peace” to the capital restive streets. She also vowed that “police will not use force against the people”.

Her comments came amid fresh skirmishes between Thai security forces and opposition demonstrators.

Police used tear gas and water cannons at the heavily guarded government headquarters to drive thousands of protesters back, as demonstrators hurled sticks, stones, bottles and other projectiles at security forces, manning barriers at the besieged complex.

‘Live ammunition used’

Al Jazeera’s Robert Kennedy, reporting from Bangkok, said that a group of protesters about 200 metres away from the government office claimed live ammunition was fired earlier in the day, showing photos of a man with what looked like a gunshot wound to the thigh, and what looked like a bullet hole that had pierced a silver truck.

We want a revolution to be able to choose better representatives… The political system needs to be entirely changed.

Thana Narkboonnam, Thai anti-government protester

Thana Narkboonnam, 49, an anti-government protester, told Al Jazeera: “We want a revolution to be able to choose better representatives. This government is full of corruption, the political system needs to be entirely changed.”

Loud periodic booms rang out as tear gas canisters were launched, Kennedy said, adding that he saw medics rush a wounded man on a stretcher into an ambulance with a wound to the right side of his torso.

The protesters had set Sunday as “Victory Day” to topple the government, but failed to achieve their goal of seizing the prime minister’s office. 

The United Nations closed its main office in Bangkok, dozens of schools stayed empty and many civil servants did not show up at work on Monday after the unrest that rippled around the key government buildings in the capital over the weekend.

In an e-mailed statement to its staff, the UN’s security department said that “there could be violence [on Monday] on a large scale… staff should avoid government offices” and other protest locations.

Protest leader meets PM

Oppsition leader Suthep Thaungsuban said on Sunday that he met Yingluck Shinawatra but insisted there were no negotiations to end the political crisis.

Thaungsuban said he told the prime minister that the opposition would accept nothing less than her resignation and an appointed council taking over the government.
Thai PM Yingluck Shinawatra talks to Al Jazeera

The protests were triggered by an amnesty bill, which opponents feared would have allowed Thaksin Shinawatra to return to the country.

PM Yingluck Shinawatra told Al Jazeera on Sunday that the government was no longer trying to pass the controversial bill that would have pardoned many people involved in corruption.

The latest conflict in Thailand put Bangkok’s urban population against the rural supporters of Shinawatras.

Political instability has plagued Thailand since the removal of Thaksin Shinawatra from his seat in a 2006 coup.

Two years later, anti-Thaksin protesters occupied Bangkok’s two airports for a week after taking over the prime minister’s office for three months. 

 

Ukraine On The Edge: The 7 Minute Video Summary | Zero Hedge

Ukraine On The Edge: The 7 Minute Video Summary | Zero Hedge.

The following seven minutes of mayhem look eerily reminiscent of the violent pre-ambles to the middle-east’s recent coups or non-coups. As anti-government protesters demonstrated against the shunning of a European trade agreement (President Yanukovych – “I will not allow any serious economic losses and decline of living standards”); the clashes became ever more violent as the police cracked down. Following heavyweight boxing champion (and opposition leader) Vitali Klitschko’s call for a new government – “our main task is Yanukovych’s resignation. But the first step is the resignation of Azarov’s government” – the clashes left at least 265 people injured. The crackdown followed Interior Minister comments that they “won’t allow Ukraine to become another Libya or Tunisia, where uprisings toppled governments in recent years.” Of course, the main difference is the Ukraine is now squarely under Putin’s sphere of influence.

 

0:20 Initial fireworks followed by police flash-bangs and tear gas…

1:45 Some standard police beatings

3:00 Ubiquitous projectile exchange

3:30 Police charge…

4:30 Serious police beatings handed out

5:30 The two fronts stare each other down

6:00 Serious police reinforcements

 

 

Jeff Bezos Unveils Amazon PrimeAir – Drone Delivery | Zero Hedge

Jeff Bezos Unveils Amazon PrimeAir – Drone Delivery | Zero Hedge.

While the fundamentals continue to deteriorate, we are sure the idea of drone-based delivery (which fits with the 7500 drones the FAA expects within the next few years) will add a few multiple points to Amazon’s share price valuation. On a side note, with increasing awareness of the government’s surveillance, what better way for the NSA to keep an eye on everyone up close and personal (and to get an occasional invoice by the company that has made burning cash from operations into an art form).

 

The Amazon PrimeAir Drone…

 

 

 

In Action…

 

We suggest not buying fine glassware…

 

The flying machine already has its own twitter account – @AmazonDrone

 

Central Banker Admits Faith In “Monetary Policy ‘Safeguard'” Leads To “Even Less Stable World” | Zero Hedge

Central Banker Admits Faith In “Monetary Policy ‘Safeguard'” Leads To “Even Less Stable World” | Zero Hedge.

While the idea of the interventionist suppression of short-term ‘normal’ volatility leading to extreme volatility scenarios is not new, hearing it explained so transparently by a current (and practicing) central banker is still somewhat shocking. As Buba’s Jens Weidmann recent speech at Harvard attests, “The idea of monetary policy safeguarding stability on multiple fronts is alluring. But by giving in to that allure, we would likely end up in a world even less stable than before.”

 

Excerpts from Jens Weidmann – Europe’s Monetary Union

Harvard, 11/25/13 (Full speech here)

In the eyes of many politicians, economists, at least if they are central bankers, cannot have enough arms now – arms with which they are to pull all the levers to simultaneously deliver price stability, lower unemployment, supervise banks, deal with sovereign credit troubles, shape the yield curve, resolve balance sheet problems, and manage exchange rates.

 

It is probably safe to say that this change in attitude is not just due to a sudden surge in the popularity of economists and central bankers. Rather, it reflects the widespread view that central banking has come to be the only game in town. And quite a few economists seem to agree with this notion.

 

To some, the notion that the primary goal of central banks is to keep prices stable has become old-fashioned. Against the backdrop of the financial crisis, they argue that financial stability has become just as important, if not more so, than price stability.

 

 

By tearing down the walls between monetary, fiscal and financial policy, the freedom of central banks to achieve different ends will diminish rather than flourish. Put in economic terms:Monetary policy runs the risk of becoming subject to financial and fiscal dominance.

 

Let me explain these mechanisms a bit more in detail, starting with financial dominance.

 

The financial crisis has provided a vivid example of how financial instability can force the hand of monetary policy. When the burst of an asset bubble threatens a collapse of the financial system, the meltdown will in all likelihood have severe consequences for the real economy, with corresponding downside risks to price stability.

 

In that case, monetary policy is forced to mop up the damage after a bubble has burst. And, confronted with a financial system that is still in a fragile state, monetary policy might be reluctant to embrace policies that could aggravate financial instability.

 

 

Public debt and inflation are related on account of monetary policy’s power to accommodate high levels of public debt. Thus, the higher public debt becomes, the greater the pressure that might be applied to monetary policy to respond accordingly.

 

Suddenly it might be fiscal policy that calls the shots – monetary policy no longer follows the objective of price stability but rather the concerns of fiscal policy. A state of fiscal dominance has been reached.

 

Technically, fiscal dominance refers to a regime where monetary policy ensures the solvency of the government. Practically, this could take the form of central banks buying government debt or keeping interest rates low for a longer period of time than it would be necessary to ensure price stability. Then, traditional roles are reversed: monetary policy stabilises real government debt while inflation is determined by the needs of fiscal policy.

 

 

A lender-of-last-resort role would violate this principle of self-responsibility – in that same way as Eurobonds in this setting are at odds with it. Therefore, it would aggravate, rather than alleviate, the problems besetting the euro area.

 

 

The idea of monetary policy safeguarding stability on multiple fronts is alluring. But by giving in to that allure, we would likely end up in a world even less stable than before.This holds true especially for the euro area, where a Eurosystem acting as a lender-of-last-resort role for governments would upend the delicate institutional balance.

 

To disentangle the euro area’s fiscal and financial conundrums, we should practice the art of separation – especially with regard to the sovereign-bank doom loop. Or let me put it this way: Rather than for monetary policy to waltz with fiscal and financial policy, we need to erect walls between banks and sovereigns.

 

Of course, Taleb’s somewhat seminal piece on vol suppression remains a concerning glimpse of the inevitable.

ForeignAffairs

 

Document Sample: Click To View Full Document
ForeignAffairs

 

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