Before they disappear...

Outdoor advertising, mainly billboards, are suffering in the current business slowdown.

Online, the only platform that is expected to grow this year, will grow 9% this year and reach 14.9% share of global ad expenditure by 2011. Newspaper and magazine ad expenditures will continue to decline through to 2011. Television, cinema and outdoor will return to growth in 2010, followed by radio in 2011. [More]

Like painted barn roofs and sides, we could see the slow decline of this medium.

But before they go, some true masterpieces (these are my 3 favs):

 

 

[More]

[via infonation]

A little visual help...

To get our minds around the stimulus package. (Not the 2010 budget).

Matt Yglesias provides this quick graph to help sort out where all those billions are headed to.

 

I’m not sure it will convince anyone, per se, that the bill is a worthwhile one. But at a minimum, it can help keep things in perspective. It’s worth noting that the least-controversial elements—tax cuts, state fiscal aid, and relief to the needy—together constitute a clear majority of the spending. These days, a surprisingly large number of economists seem to have been bewitched by very strange models which indicate that stimulus is impossible. But those who believe that it’s possible for a stimulus plan to work, generally agree that these three things are stimulative and it’s not a coincidence that they compose a majority of the funds being disbursed. [More]

To be sure, all kinds of questionable things lurk in the remaining slices on the chart.  But as farmers wanting new locks and dams, bridges and roads, broadband, and electric grid upgrades for their wind farms, should we be surprised at the size of other sectors' shopping lists? I haven't seen farm leaders back off on their must-have lobbying efforts because those items are making the stimulus package too big. 

We're part of the spending problem, I'd say.

Another connection to keep in mind...

I have been trying to shed a little light on how the "bailouts" so many folks are upset about are more than simply solving a problem in New York.  I'm not crazy about the excesses and can certainly empathize with the desire for comeuppance to be ladled out in full measure the pretentious twits who thought they could create money from thin air.

But it is important to set aside the longing for just deserts and contemplate the institutions where these bad guys worked and how they impact my life here on 2100th Street.  Bailing out the banks is not simply about rich guys.

For example, where exactly do you think your life insurance company stashes the premium you send each month?

It's easy to blithely say "Why don't they just make the bondholders take a haircut?"  Harder when you think about who those bondholders are:  insurers.  pension funds.  the bond component of your 401(k).  Financial debt makes up something like a third of the bond market, and the largest holders are pensions and insurers.

The insurers are the biggest problem, because they're just so heavily regulated.  They're not allowed to hold risky assets.  Convert their bonds to equity and they will be forced to dump that equity at prices that will trend towards zero.  Many insurers will see their capital impaired below the regulatory limits, requiring a government bailout.

Pension funds are the next biggest problem.  They're already in big trouble because of stock market declines.  The bonds are the "safe" portion of their portfolio, the stuff that's supposed ot be akin to ready cash.  Convert their bonds to equity--or worse, default--and suddenly they're illiquid and even further underwater.

Nor is the 401(k) problem small.  Bond funds are typically held most heavily by the people closest to retirement; they're for income, not capital gains.  What is your mother going to do when a third of her mutual fund income gets converted to equity that produces no cash and can't be sold because the insurers have all had to dump their shares on the market at once?  Or simply disappears into the land of bankruptcy lawsuits? [More]

Not only are insurance premiums for any kind of insurance you can imagine going to zoom upward, even the highly regulated insurance companies are at enormous risk if we do not find a way to make our banks work again.  Contemplate the shattering impact of life insurance policies being voided, and then try to get to sleep.

Nor is the crisp, neat idea of nationalization as straightforward as it seems. One reason the administration tiptoes around this suggestion is an increasingly clear picture of the consequences.

The most obvious problem with nationalization is the risk of contagion. If the government wipes out equity holders at some banks, why would investors want to put money into healthier but still marginal institutions? A small number of planned nationalizations could thus lead to a much larger number of undesired nationalizations. [More]

We have woven an enormous web of economic ties throughout our nation, and just because you can't get good cellphone reception, it doesn't mean you are safe from the financial implosion that only appears to be centered on Wall Street.

For those of you who came in late...

This may be useful in understanding where the credit crisis came from.


The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.


[via sullivan]

Possible side-effects include...

An intriguing mix of speculation about how the recession will affect us other than economically is emerging (although it may be fair to say they simply spring from the financial turmoil).

For example, we may become more spiritually inclined.  Pastors have long admonished their flocks that we should attend to our duties of faith all the time, but without doubt our interest in a beneficent deity perks up as we face hard times.

The feeling of loss of control may be the key.

Uncertain times cause us to cast about more widely for explanations of our circumstances - and rational reasoning, alas, does not always come naturally when we are desperate for answers. It is ironic that science is revealing our modern, sophisticated, scientific world view to have a fragile hold on our minds (see "Natural born believers"). But there are also lessons to be learned. First, we ought to be more understanding of seemingly irrational world views. Many psychologists now see irrationality as the default state of the human mind. No wonder the idea that life arose spontaneously has such a hard time trumping creationism: overcoming that "natural" perspective takes a lot of cognitive effort. Research into irrationality may also provide insights to help guide the treatment of those suffering from obsessive-compulsive disorder and related mental illnesses.

The other lesson is more direct: be careful. In a recession, or any other time of uncertainty, you are more likely to make bad decisions. By all means play the lottery if it provides a momentary diversion from the gloom. But keep your head. However seductive and comforting the idea of a win, and however tricky your circumstances, playing the lottery is not a rational path to riches. Even if God did tell you this week's numbers. [More]

But not only our worship patterns may change. Leisure may take on a new, more laid back - and certainly less expensive - style.

First, consider entertainment. Many studies have shown that when a job is harder to find or less lucrative, people spend more time on self-improvement and relatively inexpensive amusements. During the Depression of the 1930s, that meant listening to the radio and playing parlor and board games, sometimes in lieu of a glamorous night on the town. These stay-at-home tendencies persisted through at least the 1950s.

In today’s recession, we can also expect to turn to less expensive activities — and maybe to keep those habits for years. They may take the form of greater interest in free content on the Internet and the simple pleasures of a daily walk, instead of expensive vacations and N.B.A. box seats. [More]

One less obvious change in how we operate as a society may be an increasingly favorable view of women in higher positions of power in business.  Testosterone-laced traders seemed to have made a bit of a mess, and one answer is to leaven the decision-making groups with more females.

Wall Street is one of the most male-dominated bastions in the business world; senior staff meetings resemble a urologist’s waiting room. Aside from issues of fairness, there’s evidence that the result is second-rate decision-making.
“There seems to be a strong consensus that diverse groups perform better at problem solving” than homogeneous groups, Lu Hong and Scott E. Page wrote in The Journal of Economic Theory, summarizing the research in the field.
A fascinating British study supports that conclusion with evidence from the drool of financiers. The researchers, using the saliva of male traders, tracked natural variations of testosterone in the morning and the amount of profits they earned for the firm that day.
“We found that a trader’s morning testosterone level predicts his day’s profitability,” reported the study, published last year in The Proceedings of the National Academy of Sciences. Higher testosterone meant more risk-taking and, usually, more money.

On its own, that might suggest that men have an advantage on the trading floor. Yet the same study also suggested that elevated testosterone levels could lead to greater assumption of risk; high testosterone levels “may shift risk preferences and even affect a trader’s ability to engage in rational choice.” In other words: when male traders crash ... boy, they crash. [More]

For me this idea of women in financial leadership positions rings true, as I have worked with a woman banker for years and her attitudes help offset my ruggedly manly brain malfunctions. I have also noticed mixed committees at church or Farm Bureau seem to be able to get more done with less hassle. Maybe we're about to improve productivity by simply acknowledging this capability in our midst.

Oddly this change may come about partly because we could soon have more women at work than men as this is shaping up to be a male-targeted recession.  The longer the recession goes, the more likely this outcome could be.

The proportion of women who are working has changed very little since the recession started. But a full 82 percent of the job losses have befallen men, who are heavily represented in distressed industries like manufacturing and construction. Women tend to be employed in areas like education and health care, which are less sensitive to economic ups and downs, and in jobs that allow more time for child care and other domestic work.

“Given how stark and concentrated the job losses are among men, and that women represented a high proportion of the labor force in the beginning of this recession, women are now bearing the burden — or the opportunity, one could say — of being breadwinners,” says Heather Boushey, a senior economist at the Center for American Progress.

Economists have predicted before that women would one day dominate the labor force as more ventured outside the home. The number of women entering the work force slowed and even dipped during the boom years earlier this decade, though, prompting a debate about whether women truly wanted to be both breadwinners and caregivers.

Should the male-dominated layoffs of the current recession continue — and Friday’s jobs report for January may offer more insight — the debate will be moot. A deep and prolonged recession, therefore, may change not only household budgets and habits; it may also challenge longstanding gender roles. [More]

All things considered, I think we will not be the same society as we were when all this is over. Of course, that is a "well, duh" statement, but something about this experience seems to suggest widespread and fundamental changes lasting for decades.

I think agriculture will not escape this transition either.

Won't you help?...

You can be the difference.   (And you will.)



I think we're going to be seeing a lot of humor in this vein.

[via mcardle]

Folks are getting tetchy...

And one thing that has really set them off is the proposed auto-industry bailout.  Part of the issue is routine anti-union feeling, although I suspect much of that is simple envy.  We'd all love to have secure jobs with automatic raises and pay higher than comparable work elsewhere.

Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping to shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations and unworkable work rules such as "job banks," a euphemism for paying vast numbers of employees not to work.

The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It's the ultimate in lemon socialism. [More]

On the other hand, the already huge TARP bailout is widely - if incorrectly - seen as a bailout to fatcats on Wall Street, so why is helping autoworkers so wrong?

I don' think the bailout will make it through this lame-duck session and it's possible it will be too late by next February. Automakers are burning cash way too rapidly.

Meanwhile, the apocalyptic scenarios being painted of what happens if GM goes broke are flooding the media.

A GM bankruptcy could create a cascading set of bankruptcies among these part suppliers, other auto makers and suppliers. That's because a bankrupt company could take months, if ever, to pay its pre-bankruptcy bills. Such delays would put stress on suppliers that already run on thin working capital and that feed just a few end auto makers, they argue.
This spillover would most directly hit Chrysler and Ford, who have greater GM overlaps. GM officials are telling lawmakers that the failures at the parts makers would bring them down, too.
The failures could also hit Asian car makers like Toyota and Honda, say automotive experts, who estimate 20% to 25% of suppliers are shared by those two auto makers and Detroit's Big Three.
In all, as many as 5,000 parts suppliers dot North America, with combined annual sales around $150 billion to $200 billion, according to Craig Fitzgerald, a partner at accounting firm Plante & Moran, which advises parts makers.
In addition, the parts business has three times as many workers as the auto makers. There were approximately 489,500 auto-parts production workers at the end of last year, a figure which fell to 415,700 at the end of September, according to the Department of Labor. There were approximately 151,000 auto-assembly workers in the U.S. at the start of 2008, a number that slid to 127,300 at the end of September.

Beyond suppliers, a collapse at GM also carries a risk to thousands of auto dealerships and to the government's pension-benefit insurance arm.
On average, auto dealerships employ 7.3% of a typical state's payroll, and 740,000 dealership jobs nationwide come from the Big Three makers. GM's 6,000-plus dealers employ about 325,000 of those people, according to estimates from the National Automotive Dealer Association.
One of the biggest fears in Washington is how a bankruptcy filing by one or all of the auto makers would affect the federal agency that insures the retirement savings of almost 44 million Americans. The Pension Benefit Guaranty Corp. ended 2007 with a $14 billion deficit, though that shortfall was expected to shrink to about $11 billion. Were GM to place its pension burden on PBGC, it would more than double the agency's current shortfall. [More]

This description is more or less the same as dozens of others I have read. Which leads me to my real point.  Assuming these are even half-right, it seems an odd time for Congress to get fiscal religion, especially after voting for the $700B financial system bailout. Three million jobs is a LOT of social unrest, folks.

Even chunk downward in our economy, every million jobs lost; every business that fails shifts die-hard conservatives involved into a new political category. When it's your recession, you can flip your thinking about what the government should do on a dime.  

And guys like Sen. Shelby can't seem to see this coming.  He may be right, but I'm not sure voters will admire his principled (and frankly geocentric, seeing as the plants aren't in his state) stand when reelection time comes around.

The political bailout genie is out of the bottle. Rightly or wrongly (and I favor the latter) it will be seen as THE answer to every hard-pressed corner. Those who don't get one, won't forget.  You can lump agriculture in there too, as I'm sure our organizational leaders are working on our own bailout requests.  (All the other kids...)

I think the best we can hope for is to slow the downward decline of the national economy until market forces reverse direction.  For example, when really sound companies are too cheap to resist buying - something that is already happening.

Nobody know what the correct path is, but my thinking is the neo-Hooverism being heard from sectors as yet unravaged by the downturn (such as economists with tenure) will produce the same lamentable results as they did in 1930.