Global Debt Time Bomb explodes soon

[Pilsung]

http://www.businessinsider.com/financia ... off-2012-7

Of course, the corporate-owned media isn't about to bite the hand that feeds them by speaking truth to power.

[BigDaddyTX]

http://uk.reuters.com/article/2012/07/2 ... 0020120724

Moody's changes Germany, Netherlands outlooks to negative.

[phil_in_cs]

Chinese cash and loans have been propping up many countries

http://www.forbes.com/sites/gordonchang ... -declines/

Warning: Most Chinese Companies Reporting Losses, Profit Declines
Chinese companies are warning they will be reporting either losses or declining profits for the first half. Corporate results are forcing stock markets down and pointing to a contraction in the country’s economy.

China Rongsheng Heavy Industries, China’s largest private shipbuilder, lost 19% of its value when it issued a profit warning at the end of last month. Yards in the country are in a terrible state—the industry’s orders for new vessels in May were half of what they were a year earlier—yet Rongsheng’s poor prospects had largely been discounted. The company’s shares tumbled not only because it hadn’t announced any shipbuilding orders this year but also because the U.S. Securities and Exchange Commission implicated Zhang Zhirong, its chairman and founder, in an insider trading scheme relating to the acquisition of Canada’s Nexen by CNOOC, a unit of one of China’s state oil giants.

We can perhaps dismiss Rongsheng as an aberration, but poor results at other companies are indicative of the state of the country’s increasingly troubled economy. Take China Cosco, for instance. The Hong Kong-listed subsidiary of China’s largest shipping company warned that its loss in the first six months of this year would widen to at least 4.14 billion yuan ($648.8 million). In the same period last year, the company was 2.76 billion yuan in the red. China Cosco posted a loss of 2.69 billion yuan in Q1.

[raptor]

Here is an interesting tidbit that the news seems to have downplayed.

Royal Dutch Shell which is sitting on about $15 billion working capital cash pile has decided that European banks and the Euro is too much of a risk for their cash holdings. They are moving a chunk of it to US Treasury paper and US banks.

http://www.dw.de/dw/article/0,,16147043,00.html


The article says "some" but does not define the term "some". Other SEC filings will likely provide amount later.

What this says to me is that a major sophisticated player (RDSA.L) is saying the euro crisis (despite the Olympics and its good PR ) is still very much with us and does pose a very significant risk. A risk significant enough for an EU based major oil company to remove cash in a politically awkward way. They will piss off the local politicians by doing this. Something smart players like RDSA.L try not to do at all.

Their choice is also interesting, the USD.

BTW for the anti-FIAT money crowd you will not that RDSA.L chose not gold but USD. Now a good argument can be made that since RDSA.L has oil it does not need another commodity like gold. However, using that logic one can also ask why didn't RDSA.L invest the excess cash in other petroleum fields, its core business.

A good reason and answer for RDSA.L to do this BTW, is that RDSA.L has huge levels of operations in the US and will use these funds to invest in petroleum exploration and development in the US.

[Blacksmith]

I don't know about that good PR. Most of the stadium matches are over half empty and I have seen some bitching on foreign ticket buyers getting abused on prices.

[raptor]

This has not received the press it should. The USPS defaulted on a payment to the Treasury and will default on another.

WASHINGTON (AP) — The nearly bankrupt U.S. Postal Service on Thursday reported a quarterly loss of $5.2 billion and warned it will miss another payment due to the Treasury, just one week after its first-ever default on a payment for future retiree health benefits.

http://theadvocate.com/home/3588034-125 ... s-52b-loss

The USPS has an un-sustainable business model.

[williaty]

The USPS has an un-sustainable business model.

That's what happens when the USPS's boss (Congress) won't let it be run like a business and won't let it be run like a charity/infrastructure.

[duodecima]

This has not received the press it should. The USPS defaulted on a payment to the Treasury and will default on another.

WASHINGTON (AP) — The nearly bankrupt U.S. Postal Service on Thursday reported a quarterly loss of $5.2 billion and warned it will miss another payment due to the Treasury, just one week after its first-ever default on a payment for future retiree health benefits.

http://theadvocate.com/home/3588034-125 ... s-52b-loss

The USPS has an un-sustainable business model.

I thought it has had to overpay into retirement accounts, and if that were taken into account the balance sheets would look pretty good?

[raptor]

This has not received the press it should. The USPS defaulted on a payment to the Treasury and will default on another.

WASHINGTON (AP) — The nearly bankrupt U.S. Postal Service on Thursday reported a quarterly loss of $5.2 billion and warned it will miss another payment due to the Treasury, just one week after its first-ever default on a payment for future retiree health benefits.

http://theadvocate.com/home/3588034-125 ... s-52b-loss

The USPS has an un-sustainable business model.

I thought it has had to overpay into retirement accounts, and if that were taken into account the balance sheets would look pretty good?

Here is a good article.
http://www.businessweek.com/articles/20 ... ally-means


What I mean by its business model being unsustainable is that its business model calls for the universal delivery of mail to all of the US and its possessions for a fixed price. This while its basic costs rise. It key competitors email (even a fax transmission) are faster, cheaper and more importantly more convenient. Thus its volume is dropping while its fixed costs/overhead either remain level or increase. Thus there is less business over which the fixed costs cane be amortized.

To compound its problems FEDEX and UPS have grabbed more and more of the more lucrative business of document delivery and package delivery business.

Thus to cope with this the USPS must cut costs (i.e. people and services) while dealing with the legacy costs (pensions & retirement healthcare) and a declining revenue base due to less utilization while its operating expenses (like fuel, rent, etc.) are constantly increasing on a per unit basis. In short the business model is untenable.

[TacAir]

The USPS has an un-sustainable business model.

That's what happens when the USPS's boss (Congress) won't let it be run like a business and won't let it be run like a charity/infrastructure.

The Post Office isn't a business, or even a charity. It is a requirement.

Article I, Section 8, Clause 7 of the United States Constitution, known as the Postal Clause or the Postal Power, empowers Congress "To establish Post Offices and post Roads" - yup - it's in there.

This is something that I have really given some thought to - as did the Founders. A Postal system is a requirement for any kind of growth or commerce in a Nation. A working Postal system is a plot point in two of my books.

The cost of a working postal system is a driving factor. For years, the FedGov subsidized the postal service. I can remember twice a day delivery, and once on Saturday.

Now, well, it's different. The FedGov doesn't want to subsidize the service. I won't go into what I think are the core problems faced today, but with at least 100K workers looking at layoff/termination, I can only guess it is going to get a lot more expensive without some major changes.

Now, if CONgress would stop the freebies (free mail service for Federal prisoners, franking for .gov and so on) it would help, a little.

I have a dog in this fight. If I order an item from an on-line vendor, it can be mailed for under a few bucks, the same (small) item coming FedEx of UPS will cost at least 35 USD. Even from Seattle.

Example - a $14.95 kerosene lantern. Cost to ship UPS, 39+ dollars. UPS has a goofy UPS to mail service that is only slightly less expensive and horribly slow I've used out of necessity of no other choice Seems once Big Brown gets its hooks into a vendor, they are not allowed to ship via USPS..
I'll skip the frustration of "We don't ship to AK" outlets, owing mostly to thier being married to FedEx or UPS.

Folks living in the Bush have it worse, at least the USPS will deliver their medicine, some areas are just not serviced by the Big Boy package carriers.

I suspect the missed payments were a ploy to get the CONgress off their collective butts and allow for 'force shaping" (ie - layoffs) just like the military is going through.

What does the future hold?

Well, with flat rate boxes and folders, any store or other business can become a "post office" - I used these independents and love 'em...the postal workers Union, not so much.

So - fewer FedGov 'post offices' and more independent outlets - unfortunately owned here by - yup, FedEx (Kinkos). At least the folks at UPS are upfront as the "UPS store".

More independent contractors. For delivery and intake. And, only in the the FedGov - investigations --

"The U.S. Postal Service (USPS) is soliciting individuals with the right skill sets and availability to invest numerous hours a week to conduct EEO investigations in accordance with EEOC regulations and USPS quality and timeliness standards. Selected individuals will be home-based independent contractors, located throughout the United States, who will enter into Ordering Agreements with the USPS to provide investigative services in accordance with the terms and conditions set forth in the Agreement."
(shudder)

Slower mail service - no, it is possible for the mail to be slower - and fewer delivery days. No more mailbox at home, you will have neighborhood boxes or central PO boxes. And no choice - take it or leave it.

What else? Higher prices. Would you pay a dollar to mail a birthday card to your brother/sister/relative/friend? Don't forget, using the 'official USBLS inflation calculator' shows a dime in 1970 is $0.50 today. Go back a bit further a 1955 dime is $0.86 today.

Some classes of mail maybe no longer accepted. All oddball sizes may face very high rates or outright rejection. So, no more mailing bales of hay - or children!

(In 1914, a four-year-old named May Pierstorff, who lived with her parents in Grangevillle, Idaho, was going to visit her grandmother in Lewiston. Her parents calculated that Parcel Post was cheaper than full fare. At 48.5 lbs., the child came in under the weight requirement of less than 50 lbs. It was then legal, and still is today, to mail chickens, so her parents were charged postage at the chicken rate. The Pierstorffs pinned the fifty-three cents in postage to her coat and put May in the baggage car, under the care of the postal clerk. Though it was customary to leave packages in the post office overnight, when May arrived in Lewiston, the postmaster took her to her grandmother. By 1920, it was illegal to mail human beings, although not before an angry mother mailed a baby to the husband who had left her.)

No more subsidy to the general public - IWO, the end of so-called 'postal by-pass' rates. That's going to hurt.


There may be more, but, there will still be some form of "the US Mail".

[raptor]

The Post Office isn't a business, or even a charity. It is a requirement.

Article I, Section 8, Clause 7 of the United States Constitution, known as the Postal Clause or the Postal Power, empowers Congress "To establish Post Offices and post Roads" - yup - it's in there.

This is true.

IMO a working national postal system is vital to business and our country.

That said the current model remains unsustainable. IMO the whole concept needs to be reviewed, revamped and brought up to date in terms of technology, capability and costs.

The revamp really needs to start with a clean sheet of paper and some bold decisions.
Both things are rare in large organizations especially election years when there are a lot of other issues getting more attention.

BTW IMO the USPS does a great job.

Who else can you trust to deliver a paper document 1,000 miles away for only $.45....generally within 2 to 5 days.

[Blacksmith]

Here is a good article.
http://www.businessweek.com/articles/20 ... ally-means


What I mean by its business model being unsustainable is that its business model calls for the universal delivery of mail to all of the US and its possessions for a fixed price. This while its basic costs rise. It key competitors email (even a fax transmission) are faster, cheaper and more importantly more convenient. Thus its volume is dropping while its fixed costs/overhead either remain level or increase. Thus there is less business over which the fixed costs cane be amortized.

Lots of business do this. Telephone companies for example allow me to call anywhere even though it costs them a fraction more when I call Alaska or wherever as opposed to calling my neighbor.

Here is another POV to article you posted:

http://www.mpwu.com/post_office_in_crisis.htm

There are several other significant problems here aside from competition and changing technologies. The Federal Law has forced the Postal Service into a loss business model.

[raptor]

Here is a good article.
http://www.businessweek.com/articles/20 ... ally-means


What I mean by its business model being unsustainable is that its business model calls for the universal delivery of mail to all of the US and its possessions for a fixed price. This while its basic costs rise. It key competitors email (even a fax transmission) are faster, cheaper and more importantly more convenient. Thus its volume is dropping while its fixed costs/overhead either remain level or increase. Thus there is less business over which the fixed costs cane be amortized.

Lots of business do this. Telephone companies for example allow me to call anywhere even though it costs them a fraction more when I call Alaska or wherever as opposed to calling my neighbor.

This true. Newspapers, magazines and book sellers and physical video rentals face similar issues. Cable TV and land lines are next.

The difference is that if the USPS closes it is a nationwide problem. If the local newspaper, a magazine or a book publisher folds. the issue is minor...simply because the market has decided they are irrelevant. The market has decided to use other services, thus the disruption is evolutionary and minimal.

In the USPS's case, the market is seeking other choices but the need for the service still to some extent exists, will continue to exist in some form and is actually mandated by law to exist. In other words it is an expensive problem that is complicated by forces that are not all market driven.

[Blacksmith]

This true. Newspapers, magazines and book sellers and physical video rentals face similar issues. Cable TV and land lines are next.

The difference is that if the USPS closes it is a nationwide problem. If the local newspaper, a magazine or a book publisher folds. the issue is minor...simply because the market has decided they are irrelevant. The market has decided to use other services, thus the disruption is evolutionary and minimal.

In the USPS's case, the market is seeking other choices but the need for the service still to some extent exists, will continue to exist in some form and is actually mandated by law to exist. In other words it is an expensive problem that is complicated by forces that are not all market driven.

Video rentals are dead. Newspapers are still alive because they have friends. Cable TV will get blended with internet and disappear as a separate entity eventually.

The postal service could continue run for decades at a profit if they could make business decisions. However politics:

- have kept certain business rates artificially low at the expense of other
- Pushed them into a ridiculous funding program on retirements
- won't allow them to compete fully with package services

Congress knows it is doing this at the expense of other providers.

The postal service has a competitive advantage over everyone in the market place however.

[raptor]

Video rentals are dead.

The market decides what business live and die...that said there are niche markets for everything:

DVDs
http://www.worldtvpc.com/blog/redbox-re ... l-popular/

Buggy whips
http://www.ridethebrand.com/downloads/p ... /whips.pdf

8 track tapes
http://www.8trackheaven.com/archive/longlive.html

LP records:
http://www.amazon.com/Vinyl-Records-Alb ... =372989011

I particularly love the irony of being able to buy an LP album on line.


As for newspapers...as long as there are Sunday comics and advertisers, the Sunday paper at least will survive.


As for the USPS they have a monopoly on certain types of delivery. They simply need to change their current business model. That said no one likes change.

[crypto]

The postal service has a competitive advantage over everyone in the market place however.

Which clearly explains why they defaulted on their pension payment

[razi]

Found some interesting articles you all might like to read:

http://www.reuters.com/article/2012/08/ ... 5N20120810

U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.

http://www.dw.de/dw/article/0,,16153042,00.html

Germany's second-biggest lender, Commerzbank, says it will no longer participate in market speculation on basic food prices. The bank says it has removed all agricultural products from its funds for moral reasons.

This seems like an odd move by a major bank (given that they'd usually sell their children for profit if given the opportunity), especially since there will likely be a food crisis in the near future due to the US' drought (meat animals are being taken to market early due to the shortage of feed, which will raise prices later this year/next year due to shorter supply). it's not like cut-throat bankers would pass an opportunity to make a buck so quickly...

[Blacksmith]

This seems like an odd move by a major bank (given that they'd usually sell their children for profit if given the opportunity), especially since there will likely be a food crisis in the near future due to the US' drought (meat animals are being taken to market early due to the shortage of feed, which will raise prices later this year/next year due to shorter supply). it's not like cut-throat bankers would pass an opportunity to make a buck so quickly...

Not so odd in a historical or legal context.

Which clearly explains why they defaulted on their pension payment

True, but then we get into politics.

[Krustofski]

http://www.dw.de/dw/article/0,,16153042,00.html

Germany's second-biggest lender, Commerzbank, says it will no longer participate in market speculation on basic food prices. The bank says it has removed all agricultural products from its funds for moral reasons.

This seems like an odd move by a major bank (given that they'd usually sell their children for profit if given the opportunity), especially since there will likely be a food crisis in the near future due to the US' drought (meat animals are being taken to market early due to the shortage of feed, which will raise prices later this year/next year due to shorter supply). it's not like cut-throat bankers would pass an opportunity to make a buck so quickly...

Publicity stunt.
Commerzbank serves the general public, speculation on food prices is a devisive issue (what with being blamed for people starving and all that), and got quite a bit of media attention in Germany this summer.

[TacAir]

http://www.dw.de/dw/article/0,,16153042,00.html

Germany's second-biggest lender, Commerzbank, says it will no longer participate in market speculation on basic food prices. The bank says it has removed all agricultural products from its funds for moral reasons.

This seems like an odd move by a major bank (given that they'd usually sell their children for profit if given the opportunity), especially since there will likely be a food crisis in the near future due to the US' drought (meat animals are being taken to market early due to the shortage of feed, which will raise prices later this year/next year due to shorter supply). it's not like cut-throat bankers would pass an opportunity to make a buck so quickly...

Publicity stunt.
Commerzbank serves the general public, speculation on food prices is a devisive issue (what with being blamed for people starving and all that), and got quite a bit of media attention in Germany this summer.

Going hungry in Germany has a different social context than found in North America.

[raptor]

Germany's second-biggest lender, Commerzbank, says it will no longer participate in market speculation on basic food prices. The bank says it has removed all agricultural products from its funds for moral reasons.

This seems like an odd move by a major bank (given that they'd usually sell their children for profit if given the opportunity), especially since there will likely be a food crisis in the near future due to the US' drought (meat animals are being taken to market early due to the shortage of feed, which will raise prices later this year/next year due to shorter supply). it's not like cut-throat bankers would pass an opportunity to make a buck so quickly...

There are other less direct but equally effective ways to hedge exposure to agriculture than direct participation in agriculture futures.

I agree a PR stunt.

[Krustofski]

http://www.dw.de/dw/article/0,,16153042,00.html

Germany's second-biggest lender, Commerzbank, says it will no longer participate in market speculation on basic food prices. The bank says it has removed all agricultural products from its funds for moral reasons.

This seems like an odd move by a major bank (given that they'd usually sell their children for profit if given the opportunity), especially since there will likely be a food crisis in the near future due to the US' drought (meat animals are being taken to market early due to the shortage of feed, which will raise prices later this year/next year due to shorter supply). it's not like cut-throat bankers would pass an opportunity to make a buck so quickly...

Publicity stunt.
Commerzbank serves the general public, speculation on food prices is a devisive issue (what with being blamed for people starving and all that), and got quite a bit of media attention in Germany this summer.

Going hungry in Germany has a different social context than found in North America.

Heh. We're the fattest nation in Europe. Finally beat the British.
It is blamed for people starving in third world countries, obviously.


I've said it a million times, but I think it's an important point:
Why do France and Germany (others too of course, but you know, major players and all that) invest billions to keep the Euro alive? Why not end this charade and let it die in peace? Because both France and Germany are export-based economies with a lot of small and medium-sized businesses that love the Euro. That's a shitload of tax revenue right there.

[Gyrfalcon]

The USPS has an un-sustainable business model.

That's what happens when the USPS's boss (Congress) won't let it be run like a business and won't let it be run like a charity/infrastructure.

The Post Office isn't a business, or even a charity. It is a requirement.

Article I, Section 8, Clause 7 of the United States Constitution, known as the Postal Clause or the Postal Power, empowers Congress "To establish Post Offices and post Roads" - yup - it's in there.

This is something that I have really given some thought to - as did the Founders. A Postal system is a requirement for any kind of growth or commerce in a Nation. A working Postal system is a plot point in two of my books.

The cost of a working postal system is a driving factor. For years, the FedGov subsidized the postal service. I can remember twice a day delivery, and once on Saturday.

Now, well, it's different. The FedGov doesn't want to subsidize the service. I won't go into what I think are the core problems faced today, but with at least 100K workers looking at layoff/termination, I can only guess it is going to get a lot more expensive without some major changes.

Now, if CONgress would stop the freebies (free mail service for Federal prisoners, franking for .gov and so on) it would help, a little.

I have a dog in this fight. If I order an item from an on-line vendor, it can be mailed for under a few bucks, the same (small) item coming FedEx of UPS will cost at least 35 USD. Even from Seattle.

Example - a $14.95 kerosene lantern. Cost to ship UPS, 39+ dollars. UPS has a goofy UPS to mail service that is only slightly less expensive and horribly slow I've used out of necessity of no other choice Seems once Big Brown gets its hooks into a vendor, they are not allowed to ship via USPS..
I'll skip the frustration of "We don't ship to AK" outlets, owing mostly to thier being married to FedEx or UPS.

Do you believe that if the U.S.P.S. did not have a statutory monopoly, that FedEx and UPS would not find it profitable to retool their system for more economic delivery? Who in the free market would bother to compete with an institution that is allowed to flush the "customer's" money down the toilet and still continue in existence? Speaking of toilets, it allegedly costs the government $100 to procure a toilet seat. Somehow, the free market is magically able to ship one to my door via UPS for 25 bucks, shipping included. I assure you, that would not be the case if the government had a monopoly on providing toilet seats because the Constitution said it could have a monopoly.

But even so, the Constitution does not, in fact, enumerate (as all powers of the Federal Government must be, or else they are not powers) the power of the Postal Service to have a monopoly. Amendments IX and X actually say that private companies have the right to carry mail.

Furthermore, do you actually believe that a "company" that is $1,300,000,000,000 (that's 1.3 trillion dollars) in the red is actually covering the item's delivery by charging a mere "$4.95?"

Because it's not.

I assure you that if the U.S.P.S. could actually turn a profit, you'd be paying them $40 to ship your lantern.

Please don't force me to subsidize your life choices.

[Valarius]

I'll point this out and be done with it.

David Brin wrote an awesome book about United States mailman. Nobody's done that for UPS or Fed Ex.

Keep that in mind.