Pet Peeve Friday

Jetblue is now Sissy Air.

I realize that they are in a no-win situation, but why should 1 major debacle make them so timid? I was supposed to fly to NY today, but apparently there was a rain drop outside so they cancelled my flight. I'm now scheduled to leave tomorrow.

Jetblue, the Blue Sky Airline.

They can have that one for free.

The other shoe starts to fall

It's like watching a slow motion video of a car sliding into a wreck:

After years of piling debt on their homes, Americans are becoming more cautious about using them as a piggy bank. A cooling housing market and higher interest rates have made homeowners more reluctant to tap the equity they may have built up in their residences. The amount borrowers owe on their home-equity lines of credit has slipped in the past six months, to $561 billion at the end of March, the first such decline since 1999, according to new data from Equifax Inc. and Moody's Economy.com Inc. Although that decline was partly offset by a pickup in fixed-rate home-equity loans, total home-equity borrowing rose just 9% in the 12 months through March, well below the 21% average annual growth rate of the past five years.

That was from yesterday's WSJ. The last sentence is particularly amazing to me - the growth in equity extraction was 21% per year over the last 5 years?! This is bad news for the economy. Not unexpected, but bad news for sure. If people stop extracting equity from their homes, they will be unable to pay off their credit cards which is the funding mechanism they've been using to continue their consumption beyond any reasonable or rational limit (the current US savings rate in negative for the first time since the Great Depression). If they can't pay off their credit cards, they can't spend because they have no other method to pay for it. Net-net, the economy comes screeching to a halt.

This is from today's WSJ:

The U.S. economy slowed sharply in early 2007, retreating to its weakest pace in four years under the weight of the housing slump, while inflation accelerated... The surprisingly anemic pace lagged the fourth quarter's rate of 2.5% and reflected the slowest growth in GDP since 1.2% during the first quarter of 2003. Price-inflation gauges rose sharply in the first quarter. For instance, the price index for personal consumption expenditures rose by 3.4% after decreasing 1.0% in the fourth quarter. The PCE price gauge excluding food and energy grew 2.2%, after increasing 1.8% in the fourth quarter.

This is a double-whammy. With the economy slowing, job gains and income gains will likely cool as well, but at the same time the Fed, being laser-focused on inflation will feel some pressure to raise interest rates, which would ripple though the, yes, the housing market raising everyone's adjustable mortgages and lines of credit. It's a very tough place to be in when you simultaneously have a slowing economy and rising inflation because the levers that can help one will harm the other.

This is going to get really, really ugly.

You don't get that rich by being an idiot

Sir Richard Branson announced this week that he was buying a number of Boeing Dreamliners and exploring whether jets could run on biofuels. In the open skies initiatives that were being negotiated between the US and the EU, Branson was pretty vocal in his desire to expand Virgin Atlantic's reach beyond the London-NY route to some US domestic routes.

Think dropping a billion or two at Boeing (vs Airbus) will help that cause any?

McSweeney's Friday

Today, we check in on the state of the race for the Democratic nomination.

Throwing the weather flag

Snowing in Maine today - no posting for me.

The big question

In the housing implosion is this: who pays?

Lenders lent money like drunks buying drinks at a bar - no income? No problem! People bought houses they couldn't afford (whether they knew it or not). So, who pays?

Housing

There are two groups that are going to need support as the housing implosion unfurls: those subjected to predatory lendors and communites where much of the sub-prime and alt-a loans were made. Everyone else can (and should) crash and burn if they've taken on too much risk. I've got a few drafts on this working.

Opened it back up

Blog is published publicly again, comments are open for anonymous posting.

Who's been lazy?

ME!

Well, not really, things have been a tad busy over the last week. Hope to be back to regular posting today.

Oooof!

This is going to hurt:

A judge issued an injunction Friday that would bar Internet phone carrier Vonage from signing up new customers as punishment for infringing on patents held by Verizon Communications Inc.

It could be game over for Vonage. Their IPO was already disappointing and if they are prevented from growing subscribers for a period of time I'd imagine that all future valuations go out the window and the stock goes in the toilet. This is the last thing they needed in a time of increasing competition (and ever lowering switching costs).

I'm a Vonage customer, but I don't know for how much longer.

Pet Peeve Friday (redux!)

Yes, it's back again, Pet Peeve Friday!

Today, my pet peeve is liberal bloggers looking for intellectual honesty and consistency from those on the right - it isn't going to happen.

For example, this whole Pelosi is wearing a headscarf thing. They can post as many pics as they want of Laura Bush wearing a headscarf and it won't make a bit of difference - they don't care if they are being consistent and they are too shameless to feel even a small desire to be.

When you point out that Republicans do the same thing you reduce the argument to "everyone does it" (which is different from "it's the right thing to do"), and all it does is help their cause. Remember, they HATE government, and the more that can be done to make government look corrupt and inept helps their cause of milking the government for all that they can. They want to breed cynicism in the general population and "everybody does it" is designed to do just that.

Instead, they should be treated with scorn and amusement, after all has any one group been more wrong about more things in less time?

Na-na-na-na

Hey-hey-hey-GOODBYE:

“I think abortion is wrong,” he said. “But ultimately, I think it is a woman’s right, a woman’s choice. And government should not interfere with it by imposing criminal penalties on people.”

Kudos for Rudy for being honest about this, too bad he's lost the nomination. It's OK though, he was going to lose it anyway.

Bad Idea

Circuit City:

Circuit City spokesman Bill Cimino said the 3,400 layoffs follow a market-by-market review of wages for similar jobs. The review, by the company with help from outside parties, identified workers paid "well above the market-based salary range for their role," the company said. Circuit City had 42,359 employees as of Feb. 28. Those workers will be given severance packages, and Circuit City said it intends to replace them with employees compensated at "the current market range for the job." Mr. Cimino wouldn't provide specifics on the changes but called the practice "not an uncommon occurrence" among retailers.

I really don't know how this helps them in the long run because it effectively destroys employee morale. In a world where people are looking for assistance with TV's, computers, etc. having a demoralized sales force would have to be seen as a hindrance. Instead of firing them, why not offer them their jobs at reduced salaries?

This is another illustration of where I think the pendulum has swung too far in favor of corporations over employees. The Walmart flexible schedule system is another example. The key is going to be how employees begin to regain some clout in the places they work.

Um, um, oh wow.

Ladies and gentlemen, Mr. Keith Richards:

In comments published Tuesday, the 63-year-old Rolling Stones guitarist said he had snorted his father's ashes mixed with cocaine. "The strangest thing I've tried to snort? My father. I snorted my father," Richards was quoted as saying by British music magazine NME. "He was cremated and I couldn't resist grinding him up with a little bit of blow. My dad wouldn't have cared," he said. "... It went down pretty well, and I'm still alive."

As my lovely wife pointed out, Richards' father died in 2002, so Keith snorted his father up when he was 58 years old.

This just in...

Wow!

Senator Barack Obama’s presidential campaign announced today that it had raised at least $25 million in the first quarter of the year, a tally that is tantalizingly close to Senator Hillary Rodham Clinton’s fundraising in the same period. The campaign says that more than 100,000 people sent contributions during the first three months of the year. Half of those people contributed through the Internet, the campaign says, which made up $6.9 million of the total amount raised. And 90 percent of the online contributions were donations of less than $100, the campaign announced during a conference call for donors this morning.

It's still waaay early, but a quarter or two more like this and we may have a 2-person race. The numbers here are stunning though, very powerful. He was very smart to sit on them for a few days.

Coolest bike ever?

Could be.

I'll be providing a first-hand review over the next several months.

Housing and Spending

From today's WSJ:

With subprime mortgage lenders pulling back, some working-class Americans are already finding it harder to buy a new home or refinance the one they already own. The big question now for the nation's economy: Will it also get harder for these consumers to buy cars, shop at the mall and dine out?

The answer, of course, is yes. But don't worry:

Even if the poorest customers curtail their spending, it shouldn't be enough to shake the economy off of its trajectory of moderate growth. In the cold science of economics, rich people who have more to spend matter more to the economy than the poorer folks who don't. According to the Labor Department's 2005 consumer expenditure survey, the lowest 40% of earners represent about $1.1 trillion, just a fifth of total consumer spending.

I refer you to this.