08:13 – My sketchy inventory system has let me down. We were planning to assemble 30 chemistry kits this weekend, but as it turns out we’ll assemble only six. The problem is that I thought I had 36 of the 250 mL glass beakers in stock, but I actually had only six. The other 30 went into the last batch of 30 chemistry kits but somehow never got deducted from inventory. So it seems we’re destined to continue using the OMGWO (Oh-My-God-We’re-Out) inventory system.
Not that that’s a major problem. In fact, it’s kind of an informal JIT (Just-In-Time) inventory system. I ordered another 12 cases of beakers (144 total) yesterday, and they should arrive this coming week. We’ll still assemble the 30 chemistry kits this weekend. It’s just that only six of them will move to the finished goods area to await shipping, with two dozen remaining in the final assembly area awaiting beakers. We’ll finish assembling those this coming week, and start on a new batch of 30 chemistry kits.
We out here will just keep close tabs on you and your inventory and by that gauge how it will work WTSHTF.
“OMG, all the store shelves are EMPTY!”
Right about then the number of desert-sand jeeps and trucks will double or triple in various areas.
Then the power brownouts and blackouts.
Desert-sand jeeps and trucks and little drones double and double again.
(this comes to mind because a couple of days ago on my way to work, it was evidently gonna be a Guard or Reserve weekend somewhere and I saw about forty or so such vehicles heading south on I-89.)
Meanwhile we’re trying to buy a house up here and my workload is about to double because OFD is gonna be covering for everyone taking vay-cay time. And the Saab wagon just lost the steering and got towed to the shop about an hour ago.
I still will not trade this for the weather out in the Midwest and West lately. 82 here, with blue skies, puffy white clouds, sunshine, and green, green, green as far as the eye can see.
80°F all day today with 80% humidity. Just enough spotty rain to make it really, really muggy. Ugh! Thank science for central air. Forecast is for near 100 well into next week.
I can only move so fast on big issues. The car I currently have has developed a weird problem. It is the last model year of the Buick Roadmaster (1995), a V8 engine that normally performs to perfection. But after dropping off the videotapes from work on 106°F Thursday past. It stalled and would not start. Initial thought was engine overheating, but it has both a temp needle and an idiot light. Neither was showing any problem. Opened the radiator access, and everything appeared normal—including the 15psi that had to escape as I slowly opened the cap. It gave me a hint of a problem the week before. While waiting at a stop light, the engine started faltering, but once I got some speed, everything was fine. So my guess is that something is temperature sensitive in the engine compartment—perhaps the fuel pump. When air is circulating via driving, no problems. For several reasons, I cannot move on the new car until August, so I have to live with this gas hog for another couple months. My mechanic cannot fit it in until after the 4th, but he is a genius and will figure it out. Fortunately, the air was working just fine Thursday past, or I would have melted. I took a sweat bath walking with the video equipment just 3 blocks from the parking lot to the office. They told me in the office where I did the video job, that they had the building guy cool the chiller to 45°F at 4:00am in preparation for that day’s record heat. Previous record for that day was 104°F in 1954. It has been slightly cooler, but much more humid since then.
Meanwhile, I continue shopping for a replacement car. What Bill says is true: every Subaru owner I know swears by them. This is what it was like regarding Toyota 20 years ago. I am finding Toyota owners ambivalent these days, even though a 1982 Celica GT was the best car I have ever owned. Subaru owners are not ambivalent, though. They love their cars.
Subaru is the “State Car” of Vermont, probably due to AWD in very varied climate, weather and road conditions, plus gas economy and familiarity of most shops with parts and repairs around here.
http://burlingtonsubaru.blogspot.com/2011/01/subaru-vs-vermont-winter.html
Just finished this week’s BBC Biz Daily podcasts at supper. The first segments of the programs for 6/28 and 6/29 pretty clearly describe what I have been saying here for a long time.
There just is no comparison at all between the finances of governments and individuals. You simply cannot apply the rules of personal finance to countries. Those 2 programs describe very clearly just a few of the many reasons why.
To quickly summarize a couple points—default does not solve any problems between countries; it exacerbates them. I borrow money from, let’s say, Chase; I spend it all, lose my job, cannot repay it, and declare bankruptcy. Chase will never have anything to do with me again, but what do I care? I go on finding another job and eventually finding another borrower, to whom I will have to pay higher interest rates because of my default. But I won’t ever have anything to do with Chase again.
However, countries of the EU cannot do that. They have to have a continuing relationship—in fact, a very tight relationship—with the other EU countries.
And WHO are the bondholders of the EU countries? Why, almost exclusively the other EU countries, as has been mentioned here by others several times lately. It is not people like you and me who are buying bonds of the EU countries—or even pension or mutual fund entities;—it is EU partner states.
Furthermore, these 2 BBC programs are able to make clear that there likely never will be equality between the countries. NEVER. From the past, and for the foreseeable future, the southern tier are going to be recipients of largess from the North; this crisis is not going to end that. But that is not bad, because what is clear, is that the North has benefited greatly from the union—more than the largess they pass to the South. The North prospers, some of that prosperity goes to its own citizens making them more wealthy, and some to the southern tier allowing them to survive and hopefully grow. Overall, the union offers greater wealth to the North than the cost of largess—or than they would have if there were no union. (And that latter one is overwhelmingly clear for anybody who lived in the EU during the last decade as the euro was implemented.)
ALL these countries know this. That is why the odds are 99 to 1 against an EU breakup or Greece leaving the EU. Because—as the program makes perfectly clear: the damage is already done. It is over. There is no advantage for anybody to leave the EU or the euro, because the costs would then compound with no hope of repayment. As I have been saying all along,—and these programs make clear,—Germany will be paying for these problems—period! Like it or not—there is no escape; they have already suffered the loss. The problem and defaults against the German banks who hold bonds of the troubled countries have already happened. Nothing Germany does can fix that in the short-term. Only by long-term letting those countries kick the can down the road, helping them make their bond payments and work throughout the whole EU on reducing the debt levels and improving productivity of the troubled countries, can the problem be solved with any hope of repaying the debt. Defaulting is no solution, because these countries must continue to have viable working economic relationships with each other—or even the northern tier will flounder, as the South seeks relationships outside the EU for their consumption needs because of poor relationships with the North. That simply is not going to happen.
Merkel has made no attempt whatever to explain this truth of the situation to the German people, and—IMO—she will be paying for that. There is no way out for the German taxpayers. None. And not explaining that to Germany will be her downfall. Her position is untenable; she will fall before the EU or the euro does. This whole episode would be over, were it not for her. She is not saving the German taxpayers from anything. She is shooting off her mouth with lies about what the actual state of affairs is. And that is that Germany has ALREADY taken the hit for the current euro crisis. Her delaying in guaranteeing bonds of the member countries is only dramatically increasing the total Germany, France, and other northern tier states will have to pay; it is not saving any of them from anything.
You can find those days’ programs in this RSS feed:
http://downloads.bbc.co.uk/podcasts/worldservice/bizdaily/rss.xml
On the topic of the EU, I read an interesting article today about the pressure Germany is under to accept EuroBonds. One of the main sources of pressure has become the USA. I’ve found this somewhat strange – why should the US government be putting pressure on Germany about this?
The article laid it out quite clearly, and it comes down to the (sadly) obvious: lots of US banks have apparently invested rather heavily in Greece/Italy/Spain/etc.. These banks stand to lose a lot of money (or already have big losses, sitting unrealized on the balance sheets). Big banks call political cronies in Washington, Washington calls Berlin.
Summary: who cares whether or not it’s a good idea, bail us out from our own stupidity. Washington jumps, all the more so because this is an election year, and the campaign funds need to flow.
I doubt that it could be more clear that it is not the troubled countries stupidity that caused the EU problem; if anything, it is the monetary mandates established by the EU guidelines which caused the problem.
The whole thing started because of people in positions of authority who could not identify the housing bubble in Europe. When it burst, it took banks everywhere down with it—along with personal and corporate wealth, just like in the US.
Now I am not sure how much debt is too much for a bad economy to cope with, but the US did pretty well with the double-whammy of housing bubble, and the year later second wham of the collapse of investment firms and banks caused by failures in the derivatives market.
I read somewhere recently (and may have posted it here) how much the average asset loss to individual and corporate wealth in the US was, but it was either 40% or 60% IIRC. Here we had all kinds of assistance from the Feds, in the form of loans, guarantees, and outright give-aways, so there was never a question about city or state bonds or bank deposited assets being repaid.
Every one of the troubled EU countries still has positive GDP numbers–even Greece at the last release of actual verified numbers. Excepting Greece, they CAN pay off bonds, if interest rates are not astronomical because of lack of a guarantee. I think those 2 BBC Biz Daily programs pretty clearly outline why NOT guaranteeing the bonds will cost all of the EU as much as—if not more than—guaranteeing them. Europe is going to collectively bear the costs of this crisis, whether member states want absolved of that expense or not (it is too late to avoid the costs; they have already occurred). And delaying the guarantee just increases the overall costs of recovery, while forcing the troubled states into corners where they cannot grow their GDP any longer, and the bailout they need grows ever-bigger.
I saw some figures recently (I just do not have time to save information and organize it for possible future reference), which indicated that the amount the US has in European bonds is so small that it will never affect the US economy, even if every EU country completely defaulted while dismantling the euro altogether. The threat to the US is in the possibility of a worldwide recession that could potentially be caused by the EU not solving their problems and/or having a catastrophic collapse. Our exports to the EU are something on the order of 1.5% of all exports. If US banks are worried about exposure, then they are getting influence that is out-of-proportion to their overall risk to the US economy. (Banks are detestable institutions.)
But the damage is already done. The flood, wind, rain, lightning, and earthquake happened. It is incorrect to say it was due to profligacy, because no one (except perhaps Greece, whose numbers are all lies) was that far out of line. When the bubble burst, obviously the debt permitted under Maastricht was too great for countries on the margin to cope.
A bailout IS now necessary and mandatory. It is useless to delay by arguing over who is responsible for it all having happened. Better to spend that time figuring out how to keep it from happening again. But get on with the bailout, because every day’s delay raises the cost of the bailout and damages the future of the troubled EU countries.
Germany needs to allow the guarantee of member states bonds. There is no other way out. Period. Full stop. This is not a matter of going against wisdom regarding supposed spendthrifts. The way the EU functions,—as those BBC programs point out,—the costs of this debacle already exist and WILL BE shared in some way, by ALL the EU countries. How stupid it is to prevent those troubled countries from borrowing because they cannot afford the excessive rates, rather than guaranteeing the bonds and letting them get on with reorganizing their economies so they can pay off the old bonds and start focusing on growing their GDP, instead of limping along day-by-day and losing more GDP income at every quarter. Just because the US has never had to put in place a formal guarantee for its member states’ bonds, does not mean that makes such a thing inappropriate for anyone else. Circumstances are radically different between our nation economies,—and the EU needs that guarantee.
Even if you think that is money down the drain and the guarantees will have to be paid, that is doable for the EU as a whole. And, as the BBC programs point out, there will ALWAYS be poor states in any union, carried by the larger ones. In the US, it is Maine, Wyoming, Nebraska, and North Dakota. We have different ways of distributing help to those states (of which most people are totally unaware), but they DO get it. Just like the US North having carried the US South for nearly a century after the Civil War (it was the South carrying the North before that, prior to the industrial boom), the FANG countries need to carry the South. ALL OF THEM come out better for doing so—and those BBC programs clearly describe how that works.