Jake at EconPicData looks at last week’s consumer credit report (a data release from the Federal Reserve that, for some unknown reason, comes at 3PM EST on Fridays) and wonders if the American consumer is once again in a spending mood.
Total consumer credit expanded by $5.0 billion in January, the first increase in 11 months and only the third gain in almost a year-and-half in what has otherwise been a decades-long credit and spending binge.
REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.
On March 8, 2010,
in Economy, Our Culture,
by Tim
It has long been a source of amazement to me that the California wine industry hasn’t already collapsed given that $15-$25 bottles of wine have got to be at or near the top of the list of things that once-home-equity-rich natives can cut back on now that housing ATMs have stopped dispensing thousand dollar bills.
This Bloomberg report tells of the latest developments for grapes in the Golden State.
Vineyard Defaults Surge, Lost Land Values Undermine Napa Wine
In California’s Napa Valley, producer of the most expensive U.S. wines, 2010 may be a vintage year for foreclosures as the industry is squeezed by falling land values and a consumer shift to cheaper brands.
As many as 10 wineries and vineyards in Napa will change hands in distressed sales or foreclosures this year and next, up from none in 2008, according to Silicon Valley Bank. In a bank survey of vintners, 7 percent called their finances “very weak” or “on life support.”
“We have 250 vintner clients saying this downturn is the worst in 20 years,” Bill Stevens, manager of the bank’s wine division in St. Helena, California, said in an interview. “Anybody who was late to the party won’t have staying power.”
It’s funny that, just a few years ago, it seemed everyone and their brother was trying to grow grapes and open up a winery throughout the state.
When we first visited Murphys, California about six or eight years ago they had two wine-tasting rooms on Main Street and, by the time we moved there in 2007, they had 17.
On March 4, 2010,
in Asia,
by Tim
The one thing about the Chinese economy that makes them hard to bet against over the long term is the simple fact that they’re moving up off of such a low base when it comes to developing a robust consumer class, the latest evidence of such coming in this USA Today story about rising auto sales and the nation’s growing fascination with private transportation.
Ahead of the lunar new year holiday that rates as this nation’s biggest party, buyers packed the Huaxiang car market in southwest Beijing. Some wanted to drive home a new car in a physical sign of their success in the soon-ending Year of the Ox; others wanted to trade up before the new Year of the Tiger that began Feb. 14.
Lu Guozhi, 50, a retired railway official, helps a friend shop for a car. They eye a Geely CK sedan, a popular Chinese brand, which comes with an attractive price tag — 39,800 yuan, or about $5,800 U.S. — and qualifies for a government tax break for smaller-engine cars. “I’d prefer a BMW, but I’ll never be able to afford one,” says Lu, who bought his first car a year ago. The Geely’s “exterior looks good, and it doesn’t use much fuel.”
Slightly more than a decade since China’s auto market took off, it’s at an enviable place: It overtook the U.S. last year as the world’s largest auto market. The upheaval ended more than a century of dominance by Detroit’s auto industry.
You can have a lot of booms and busts and both businesses and the government can make lots of costly mistakes, however, when you’ve still got decades of rising standards of living ahead of you, that is one very strong wind at your back.
Well, the good news about City Center in Las Vegas is that the elevators haven’t stopped working and the aquariums haven’t started leaking like they have in the Burj Khalifa in Dubai, the other White Elephant that Dubai World has a major interest in.
This Times Online story provides an update on the latest mega-project in Vegas:
JIM MURREN has heard it all. It started with “there’s no way you’re gonna survive this”, recalled the boss of the biggest casino group in Las Vegas, MGM Mirage. Then it was “well, it’s going to open but it’s going to be a pile of shit because you’re gonna cut corners”. And now they say: “It’s open but can you make money?”
…
At 18m sq ft, City Center is a city-within-a-city on the Las Vegas Strip, featuring, when fully complete, four hotels with 6,300 rooms, a giant casino, 2,400 homes, 42 restaurants and bars, four spas and a 500,000 sq ft shopping centre. Nothing, not even the Burj Khalifa in Dubai, the world’s tallest building, screams “boom-to-bust” louder. It was designed by world-class architects who command sky-high fees, including Britain’s Norman Foster. The boutiques — Gucci, Louis Vuitton, Cartier — are the stores nobody wants to shop in any more, even if they can afford to. Murren has also spent $40m on art, including sculptures by Henry Moore and Antony Gormley.
I’ll never forget what investor Jim Rogers wrote about the city of Las Vegas in his second book Adventure Capitalist – that it will be just a desert again in another century or two.
A note in this item from yesterday about never again commenting on the Hummer line of SUVs now that they appear to be headed to history’s scrapheap was clearly ill-advised.
In going over some old charts that integrated Case-Shiller home prices with various other data, the combination below was stumbled upon and updated for the occasion.
There is little hope that we’ll ever again see U.S. gasoline prices at under $2.00 a gallon for years at a time while home prices are also rising by 10 to 15 percent each and every year, but, if we do, don’t be surprised if the Hummer rises from the grave.
Yes, the historians are going to have a field day with that period – from about 2003 to 2006 when home equity crazed Americans were doing things they’d regret for the next ten years and alternative media such as blogs were there to document it all. For example, this item from early in 2006 captures the mood rather well, just before the bubble burst.
On February 28, 2010,
in Consumerism, Our Culture,
by Tim
Lost in last week’s news amid a bevy of horrid economic reports, heightened tension in the health care debate, and Congressional hearings on Toyota’s acceleration problems, one overlooked story seems worthy of note this weekend – the demise of the Hummer.
With GM’s sale of the Hummer line of gargantuan SUVs to China’s Sichuan Tengzhong Heavy Industrial Machinery now scuttled, what served as a cultural icon during the middle of the last decade will now be relegated to history’s scrapheap. It is the final footnote to an era a half-decade ago when the U.S. housing bubble was at its maximum point of inflation and, not only would banks let you borrow money for virtually anything, but the government provided incentives for small businesses to purchase these monstrous vehicles.
It comes at a time of profound change for this country and there is more than a little irony in the Hummer being cast adrift in the same year that California governor Arnold Schwarzenegger will meet the same fate, eight years after both were embraced back in 2002 as noted in this report in today’s Washington Post.
General Motors’ decision last week to shut down its Hummer brand is not merely one more sour note in a car-industry chorus of bailouts and bad brakes. It also appears to be the final chapter of a star-crossed love story, an American marriage of one man and one machine that couldn’t endure because of a hard truth: Even the biggest things don’t stay big forever.
The man, Arnold Schwarzenegger, was responsible for bringing the machine, Hummer, to prominence.
The little-known history of the street-legal H3 is detailed in this fine story, then the phoenix like rise of both the Gubernator and the H2 are chronicled.
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