The steel industry is on its way down the drain again. Last week, John Boy suggested to the CEO of a fairly large steel industry supplier and steel processor that he look into starting a chain of topless car washes. I don't think things are quite that bad, but, maybe I'm understating the problem of foreign steel imports and capital formation too.
Tom
Carl Remick wrote:
> >From: "Nathan Newman" <nathan at newman.org>
> >
> >From today's NY TIMES, people are publicly saying what some folks have been
> >saying privately- it would be better for each party if their candidate lost
> >the Presidency.... Not that I
> >necessarily buy the argument, but here it is:....
> >
> >This year, "the winner may be the guy who's holding the bag on recession
> >...," said Roger Stone, a
> >Republican strategist.
>
> Stone's got that right. There's another very interesting article in today's
> NYT, one of the grimmest financial outlook pieces I have read in years --
> about the bleak state of the corporate bond market (which is much larger
> than the stock market) and what it may mean as a bellwether for the economy.
> The article, "Bond Believers See Prelude to a Fall" by Gretchen Morgenson,
> notes in part:
>
> " ... with the stock market in a swoon, investors looking for guidance are
> starting to heed the distress signals that the bond market has been sending
> up recently. And what some observers fear they see in these signs is a storm
> for the United States capital markets that may be tougher to recover from
> than the debacle in the autumn of 1998.
>
> "That year, a crisis was precipitated by the demise of one giant hedge fund,
> Long-Term Capital Management. But after the Federal Reserve Board lowered
> interest rates, recovery came swiftly to the stock market and the economy
> was relatively unscathed. This time around, market observers say, the
> turbulence will be set off by many troubled companies buckling under the
> weight of excessive debt lent to them at the height of New Economy euphoria.
>
> "That scares the pinstripes off the pants of some who heed the bond market's
> signals. If worried investors continue to shun corporate bonds as they turn
> away from risk, many companies will find it impossible to raise the capital
> that leads to new job creation and continued economic growth. And since much
> of the economic growth in this nation over the past few years came from the
> big money spent by companies that had raised cash in the anything-goes bond
> market, the economy could slow quite sharply as the money spigots go dry.
>
> "Finally, as more and more companies go under, their woes could turn a soft
> economic landing into a much bumpier one. And the longest American expansion
> on record could come abruptly to an end.
>
> "Byron Wien, chief United States investment strategist at Morgan Stanley
> Dean Witter, sees little good in the signals the bond market is sending.
>
> "'One,' he said, 'the hard landing possibility for next year is more
> realistic than the stock market believes. Two, even if there is a soft
> landing, corporate fixed expenses have built up during this nine-year period
> of prosperity and will be hard to roll back, so that a minor shortfall in
> revenues will cause a major shortfall in profits.'"
>
> And that's just the intro. The article is long, detailed and relentlessly
> gloomy. Full text is at
> http://www.nytimes.com/2000/11/19/business/19BOND.html.
>
> Carl
>
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