Saturday, December 13, 2008

// // 18 comments

The Next Stage of Financial Meltdown

by Reb Akiva at Mystical Paths

The next stage of financial meltdown began 3 days earlier than I thought. Here's what's happening, three new financial disasters in parallel...

1. Disaster number 1 is easy to see and understand. Stores make 60% of their yearly PROFITS through the holiday sales season. The majority of stores, especially upscale stores, are having their worst holiday season in over 30 years. With the middle of December, these businesses have to decide how to stay alive. They'll turn to massive sales to clear out their inventory, and come January 2 will begin scaling back sales help and closing stores. The manufacturers who stock them will be reading the figures, understanding a drop in orders coming for 2009, and will cut production and staff.

The retail side of layoffs begins Monday and continues through mid-January.

(Note some stores are positioned to take advantage of this. Wal-Mart and Target sales are up, as are TJ Maxx and other similar 2nd market, downscale and budget store sales.)

2. As we come to the end of the year, the investment system begins to make sales and position adjustments, both for tax purposes and as people redeem funds for their own personal investment adjustments and tax purposes. Many funds are suddenly finding themselves with a basic run on the fund, people are clearing out.

And some funds haven't been totally honest, money is not readily available or necessary invested where thought, or worse losses have occurred that the fund hasn't been reporting!!!! (For if they did, people wouldn't keep investing.) Friday's $50 billion Madoff Hedge Fund case is still unclear, but the fund lost people's investments, lied in reporting it and used new investments to cover old redemptions. As the end of year pace of redemptions picked up, BOOM, the hollow balloon popped.

The people invested will be lucky to get 25% of their money back. While it's been advertised as an "only rich people's fund", the bad news is pension plans and an unusual number of JEWISH charities had their monies invested (one notable is Birthright, the fund that brings Jewish teens to Israel for a free heritage trip).

Even "good" hedge funds are in trouble, with another similar fund announcing "no more withdrawals" until March. So if you've got your money there, you can't get it out (to stop losses or to live on it!).

Again, we're talking Hedge Funds, with investments starting at $1 million or $5 million, but some of your pension or 401k mutual fund may be cross invested in such a hedge fund, so this is not a "rich only" problem.

As we come closer to the end of the year, the full scope of this problem will become more apparent. The funds in trouble are going to be forced to come out from under the covers.

3. Disaster number 3 has also been obvious for a while, but the impact has to be thought out. Car sales are down 30-50% (depending on the brand). Government loans can't help! Because, if you don't have a job or you're worried about the future, you're not buying a new car. Loaning the US company's may keep them from going bankrupt, but it won't increase car sales. So the equation is something like this (which no one is talking about):

No Loan = 30-50% layoffs, plant closings, dealership closings.
Loan = 20-30% layoffs, plant closings, dealership closings.

Either way, pain. Already foreign manufacturers, which have plants in the US (did you know that Honda exports cars from the US back to Japan?) are cutting workforce and factory production. They don't get US help.

A loan will help the US auto makers run smoothly for a while, but the ONLY way they can operate at current size is a FULL ECONOMIC RECOVERY before money runs out. And that's not happening. Which means, cutbacks. The only question is - how big.

---

This is really really bad - from a financial investing layoff monetary job perspective. Oh, did I mention the $50 billion Hedge Fund was set up and run into the ground by a Jewish guy? (Of course, Henry Ford hated Jews and his family has pretty much run Ford into the ground.)

18 comments:

Anonymous said...

Akiva,
What is "Mystical" about what you've written? What does this have to do with spirituality? What does it have to do with Emunah? In short nothing.

You still haven't learned your lesson.

Get your head out of the Gelut and start thiking Geulah. You don't have much time.

Devash said...

Good grief, man, THIS IS GEULA!!

josh said...

Wow. I just read about the Madoff fund last night.

This is major. Tzedakah Organizations across Israel (and the US) were already hit hard (some literally closed up shop), this is not just another sign, it's an earthquake in the Jewish world. Who knows how many Jews were sucked into these promised returns? How many tzedakah orgs were 'saving' money in this fund.

This is 'eit ratzon'. This comes every few years, a time of major 'paradigm shift' in which an opportunity arises for a major breakthrough. The question is do we take advantage of it, or just 'want it to pass'?

In related news, msnbc is reporting that Nintendo Wii lead video console sales in Novemeber with over 2 000 000 units sold. Can't deal with the crisis, escape into the fantasy world where people feel they have some control.

Writing from Israel, Unlimited. said...

Here we go again - looking at Gashmiut and calling it truth.

We will appease Eisav and escape because we have our 2 plans thought us before hand. We have our angels - those that scout for us and those that test our strength to see if we are worthy of fighting our adverseries and to merit being called Yisrael. And in the final analysis, we will endure our trials and tribulations and give thanks to Hashem for keeping us safe from our enemies and showing us His Chemla and allowing us to settle the Land as it has been promised to us. And in the very last stage - where we are right now - we will stand and watch as Eisav is destroyed. Is this going to be easy? No. Conflicting emotions abound. What to do to virtually SURVIVE this is the question. Will food, water and shelter be ours? Will our emunah sustain us? How to calm ourselves and live in bitachon in spite of the fury around us?

Those are the questions. Answers - please post.

Anonymous said...

These are questions are what Akiva should be asking, but I don't think he knows how to ask the questions. Time and time again the opportunity has been missed to talk about spirituality, bitachon, emunah, but time and time again he has missed it.

This is precisely why I don't follow Chabad or Akiva. He doesn't seem to have the necessary insight, even after reflecting over Shabbat on Chassidut.

Get your head out of the galut, Akiva!

ReuvenEzraF said...

B"H

Whoa Whoa Whoa Anonymous! If you are dissatisfied with what you view is an individual's lack of response to current events, then fine. That's your opinion and it's probably not worth making a comment about and speaking Loshon Hara. But don't throw all of Chabad into a pot and criticize it either. Chabad Chassidus is filled with emunah and bitachon related topics. The Rebbeim wrote about it extensively. As a matter of fact, one of the Alter Rebbe's chidushim was bringing the transcendent power of faith into the revealed levels of the soul by these teachings, when before (even though people had faith) it remained aloof and didn't fully become one with the conscious self. Bottom line, I love you as a fellow Jew, but don't tell me Chabad has no answers when it comes to Emunah. That's just an unenlightened statement from a person who simply hasn't found the information yet. Open up Tanya to Iggeret Hakodesh Epistle 11 or read all of Shaar Hayichud V'HaEmunah. Or "In Good Hands" compiled by Reb Uri Kaploun. Or how about any sicha where the Rebbe speaks about Mesirus Nefesh, tough situations, and tapping into the essence of the soul, the source of emunah. Or watch this: http://video.google.com/videoplay?docid=-2646026674220871709

Cool off for a minute and don't be so judgmental. G-d Bless

Devash said...

You can hide behind that "Anonymous" label and feel safe being rude to people, but Hashem still knows who you are.

This is like the Song at the Sea, l'havdil, describing the Great Fall of Eisav, calling it out minute by minute, day by day. It's amazing and awesome and it's further proof the prophecies are valid for our time. You can't take much more ruchniut than that.

Go see Lazer Beams if you need someone to hold your hand.

Shiloh said...

Nice post Akiva. Even the mundane of watching esav fall is from haShem, thus spiritual. You reported on the galut, how is Israel hanging on and how is the fall of esav affecting the work situation there? Shavua tov.

Anonymous said...

I group all of Chabad together for a few reasons. 1) There's a beit kenesset where I live that calls itself Beit Melech HaMashecach; 2)there are pictures of the last Chabad Rebbe with the words Melech HaMashiach, implying he's the Mashiach; 3) I saw a Chabad Rav SMOKING a cigarette inside of his shul on a yom tov. Despite what the alter rebbe says, many of Chabad have lost the way and have lost touch with spirituality.

While I do use Anonymous, the chances of anyone knowing me are slim to none. Just as some use Devash, Nightghost, and any of the other bloggers, etc. They are screen names.

If you want to learn about Emunah, you don't have to open a book. Try living on less than 2000 NIS a month for a family of four. Try living through being stabbed by an arab for absolutely no reason. Try living every day with a smile and joy and not getting angry.

What everyone seems to have missed is the point that the blog is called "Mystical Paths", but there's nothing mystical about what's being written. We can read it in the papers. Reb Akiva has been bitten many times by attempting to write about spirituality, but can't seem to hit the mark. The Chafetz Chaim also teaches that we shouldn't talk bad about goyim, however yesterdays post about blaming Ishmael for the world's economic problems is also called Lashon Harah. Let's apply all the rules as they should. I would recommend to all of you the Blog, Dreaming of Moshiach and Lazer Beams.

Writing from Israel, Unlimited. said...

You know what people? I think it's high time Moshiach came and settled all these disputes once and for all.

What do you say?

ReuvenEzraF said...

B"H

Anonymous, my friend, because of a Chabad shul down the street, you let your emotions explode on every Lubavitcher and claim they have all lost their way?? Did Rabbi Holtzberg and Rebbitzin Rivka of blessed memory, lose their way???? G-d forbid. Have all the other Chabadniks who have dedicated themselves to other Jews around the globe in the same manner, lost their way!!?? How many Lubavitchers do you know out of the thousands that exist?? You speak like they are all your neighbors. Do you think you are the only one who has had tzaraas in life my friend?? You think you're the only one who has had to fight to live with emunah?? Absolutely not. And the fact that you speak so negatively about others shows that you lack this level of emunah that you speak about. Someone with emunah doesn't say such things and attack a blog administrator. He simply WON'T READ THE BLOG. That's a swift and easy solution for you. We all read Nava's dreamingofmoshiach and lazerbeams. And I'm sure those two people would not approve of your negativity either. Emunah means Ahavas Yisroel, not the generalizing, categorizing, and bad-mouthing you're bringing forth. This blog has repeatedly posted the fact that world events are in G-d's hands and we must do teshuva because it's our avodah that can change things. G-d bless you...my intent is not malicious...but I think you should re-evaluate your approach and your emotions.

Anonymous said...

You missed one thing, That Devash slammed Lazer Brody. Why didn't you pick on Devash. You say one thing, but do another. The Rabbi and Rebetzin of Mumbai were exceptions, as you have just proved.

ReuvenEzraF said...

B"H

Friend, I am not picking on you, or anybody. Devash did not slam Lazer Brody, he mentioned his blog in a manner that was used to say something not nice to you. That's not cool either. We all must show more respect for each other. And I respect you as a fellow Jew. There are tons of Rabbis and Rebbitzins from Chabad doing the work the Holtzbergs were doing, G-d bless them. So you can't just say they're the only exceptions. That wouldn't be intellectually honest. I don't spend time on blogs bashing people, and I'm sure you don't either. Therefore that's not why I am having this discussion. We're all tired of disunity. It just isn't cool to call out Akiva and make generalizations about groups we don't have objective knowledge about. Anyway, I won't post to this thread anymore. We should all tap into emunah and join together. Otherwise we all lose. Blessings to you, and I mean that from my heart brother (or sister).

Anonymous said...

We should all tap into emunah and join together.


I second that emotion.

Isaac said...

Akiva and Nati - you started out with good intentions but somewhere along the way you've been sidetracked and blinded. I think some real introspection - and learning is needed right now. You seem to think that what you see is what is - when it's NOT. Hashem's ways are NOT our ways. It's all a cover, a screen - only a reflection of our own actions.
SO TRUE!

Yid said...

Isaiah 26:20
"Come, my people, enter thou into thy chambers,
and shut thy doors about thee; hide thyself for
a little moment, until the indignation be overpast."


commentator:
these are the rooms of the studyhalls and the synagogues,
the rooms of our houses where we do our studies and
where we do our prayers,
our sanctuaries.
He's telling us to go into the chambers of wisdom and the chambers of devotion,
of *torah study and prayer*
www.azamara.org

Yid said...

source of quote in previous comment :
Rabbi Greenbaum
http://www.azamra.org/

bavarian said...

While we obviously need massive restructuring to get us out of this mess, it's still somewhat satisfying to point fingers. History, after all, is all about learning from past mistakes to prevent future ones. This article I just read on the culprits of the collapse really has my head spinning. Clearly I'm not alone in my thinking:
culprits of the collapse

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