(Bad) Sign Of The Times

TREASURY BILL IS TRADING NEGATIVE FOR FIRST TIME EVER

For the first time ever, the 3-month Treasury Bill has a negative rate of return:

“If you invested $1 million in three-month bills at today’s negative discount rate of 0.01 percent, for a price of 100.002556, at maturity you would receive the par value for a loss of $25.56.” – Bloomberg

People are so panicked over the economy, they’re willing to take a small loss on their money, simply to put their money into a safe place. When is the last time you heard of investors scrambling to ‘invest’ in something where they knew they were going to take a loss on their money?

What do they know about the coming economic conditions that would make them invest in a negative return? I think it’s obvious that people are not over scared, they’re starting to panic. No, you don’t see this panic in the grocery stores yet, but we may soon.  Thousands of jobs are being lost every month – More then half a million jobs were lost just last month!

FOOD CRISIS CONTINUES – NEARLY 1 IN 6 PEOPLE STARVING TO DEATH

“The food crisis has pushed the number of hungry people in the world to almost 1bn” – FT.com

963 million people currently are not getting enough food to eat. Now, this is a perpetual problem in many third-world countries, but the number is rising due to high food prices.  Poorer countries can’t afford the rising costs, which are caused by the shortages of food.

As the global economy worsens, this problem will only get worse.

GLOBAL DEMAND FOR OIL PLUMMETS

While this might sound like a good thing, it’s actually bad news. The demand for oil is dropping as the economy worsens, because governments and companies are using less oil. They’re using less oil because they can’t afford it. The CEO of Gulf Oil believes that gasoline could drop to as low as $1 per gallon.

So, enjoy the lower gas prices while you can (good time to stock up), but know that these lower prices are a bittersweet reprieve.

MORE COMPANIES CUTTING JOBS

Here’s the job cut totals so far this month:

  • Sony – 16,000 (no, not 8,000 – they just increased their number)
  • AT&T – 12,000
  • DuPont – 2,500
  • Anheuser-Busch InBev – 1,400
  • JPMorgan Chase – 9,200 (mostly from the acquisition of WaMu)
  • NBC Universal – 500
  • Level 3 – 450
  • Wyndham Hotel Group – 4.000
  • Danaher Corp – 1,700
  • NFL – 150
  • Principal Financial Group – 550
  • U.S. Steel – 3,500
  • State Street Corp – 1,800
  • Dow Chemical – 5,000
  • General Motors – 2,000
  • Avis Budget Group – 2,200
  • 3M – 1,800
  • Sprint Nextel may close as many as 20 call centers in 2009
  • Many, many smaller companies that don’t make headlines

That’s 62,550 jobs that have been announced to be cut so far this month. Not all of these people will lose their jobs this month, but soon.  The number doesn’t reflect any of the Sprint call centers, nor the numerous smaller companies that are having to lay off people every day.

Even if the automakers get a bailout from the US Government, they will most likely still have to lay off many people in order to restructure their operating costs.

WORLD BANK PREDICTS GLOBAL GLOOM

“In a report assessing economic prospects, the Bank has predicted that the world’s annual economic growth will slow to 0.9%, from 2.5% this year.” – BBC

This report outlines how every country is going to be affected by the global downturn. This is not a short-term event, we’re looking at years, possibly a decade, of “economic yuckiness” (My words, not theirs).

BLACK FRIDAY SALES DECLINE FOR THE FIRST YEAR EVER

While initial reports stated that sales for Black Friday were better than last year, the NPD Group is showing that sales for the weekend after Thanksgiving are actually down, FOR THE FIRST TIME EVER, 8.4%. 

With 533,000 jobs lost in November and 1.8 million jobs lost so far this year, this isn’t a surprise.

Folks, if you aren’t paying attention, allow me to spell it out: Things are bad and they’re going to get worse. Don’t be caught unprepared – Your job may be the next one to be cut. Cut back on your spending and start saving your pennies. This is going to be a long crisis. Start setting yourself up to withstand years of economic hardship. Start making plans and considering what options you have. There’s still time to do all of this, but you have to start getting ready today.

– Rob

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