H/t reader squodgy:
“Is adrenaline brown Captain?”
* * *
The Chinese COMAC C919 airplane, which seeks to challenge the market dominance of the Boeing 737 and Airbus A320, has made its maiden flight.
The new narrow-body twin-engine passenger jet took to the skies of Shanghai on Friday. The maiden flight had been delayed at least twice since 2014 due to production issues, according to Reuters.The state-owned producer of the plane, Commercial Aircraft Corporation of China (COMAC), says there is a $2 trillion market for the new plane, which was first revealed last November.
I have been warning about the increasing likelihood of a serious global trade war for quite some time.
That warning is now my baseline scenario. Unless there is an immediate deescalation of rhetoric and a return to rational thinking, a very destructive global trade war is baked in the cake.
I seek ways that a global trade war does not start, but I come up short.
H/t reader squodgy:
“This will speed up the Sino-Russian project.
If the US sanctions screw up sales of planes by both puppet aircraft manufacturers Boeing & Airbus, the US are cutting everyone’s noses to spite Iran.”
Airbus has announced plans to cut more than 1,100 jobs across Europe and close one of its sites in the Paris region, capping a year marked by a series of losses.
The company has been running into headwinds with its A350 passenger jet – Airbus’s answer to the Boeing 787 Dreamliner – which has missed several targets to take off commercially.
Airbus has also suffered losses of about two billion euros on its A400M military transporter while its helicopter division has suffered from a weak market.
According to Airbus spokesman Jacques Rocca, the layoffs will be spread across four countries, with 640 jobs cut in France, 429 in Germany, 54 in Britain and 39 in Spain.
A mock-up of a wide-body passenger aircraft jointly being developed by Moscow and Beijing has been presented at Airshow China. The new plane is expected to challenge the Airbus-Boeing duopoly.
Manufacturers Russia’s United Aircraft Corporation and Commercial Aircraft Corporation of China (COMAC) have announced the start of the search for suppliers. They didn’t provide any details on financing or technical specification.
Iran plans to buy 114 civil aircraft from European manufacturing giant Airbus – Boeing’s major rival. The deal, reportedly worth over $10 billion and set to be signed next week, comes as Tehran emerges from years of international sanctions and isolation.
Transport Minister Abbas Akhoundi said Iran currently has just 150 operational planes out of a fleet of more than 250, AFP reported. He added that Tehran is seeking to modernize its ageing passenger plane fleet as soon as possible, as it has been hit by a shortage of parts due to trade bans.
It was meant to celebrate an aircraft model’s first-ever journey from the US, but this Qatar Airways charter flight carrying journalists and staff didn’t go as planned.
Nerve-wracking footage shows the moment the Airbus A350-900 XWB abandoned its takeoff attempt as it sped along a runway at New York’s JFK Airport and came to a screeching halt.
Passengers were left shaken and confused – and some wanted to get off the plane – as they tried to figure out whether the plane stopped due to an emergency.
– The Crash: Coming into Focus (Veterans Today, March 28, 2015):
Among the fabricated rumors, real intel inquiries emerge
Intelligence regarding the unintended altitude loss with incumbent loss of life related to Lufthansa 9525 from Barcelona to Dusseldorf is coming to light.
The plane may have been downed to end an investigation of massive banking fraud died to the CIA, Mossad, Crypto AG, Siemans and the Vatican Bank.
This event also gives us need to take a new look at the downing of Pan Am flight 103 over Lockerbie, Scotland in 1988. In the world of fax machines, Crypto AG had developed a hardware hack that created a backdoor on all encrypted fax communication, giving their “clients” virtual control of not only the world banking system but almost all diplomatic correspondence as well.
Next up from the liars: THE AGENDA. Lie#354: The suicide pilot Muslim tie-in to get support for that war in Yemen!
waiting, waiting, waiting . . . . .
– BREAKING: German Media Site Says Germanwings Co-Pilot Was Muslim Convert (TPNN, March 27, 2015):
According to a German media site, it is speculated that the 28 year old copilot who crashed a Germanwings flight this week had converted to Islam. Andreas Lubitz had stayed for a time in Bremen, home of the radical mosque, Masjidu-l-Furqan, where he trained at the Lufthansa Flight Training School.
Michael Mannheimer of Spiesa.com wrote:
H/t reader squodgy:
Here’s some more info….this time from good old Jim Stone, who loves digging deep on things like this. But like he says…..
“Don’t expect an honest answer. There are no honest governments.”
Source: Jim Stone
(The following is an UPDATE to the article down below.)
My remote control claims are well founded:
As mentioned farther down this page, In 2002 I got proof the A320 has remote hijack recovery as a standard feature in all models when I “accidentally” got into a secure area of the Boeing web site where pilots were discussing the differences between aircraft from various manufacturers. They were discussing this remote hijack recovery system they all know exists and were questioning why it was not used to stop 911 because both the 757/767 had this system as well. When I say France crashed this airplane on purpose, I have a damn good reason to say so.
Dear Remi, as the plane had remote hijack recovery built in, why was that system not activated during the eight minutes during which the plane was in difficulty and without pilot communication? There was plenty of time to recognize that the plane was out of control and would crash without intervention. Why did you not activate the hijack recovery system? Perhaps you had a different agenda. Perhaps that system was instead being used to fulfill that agenda.
Next up from the liars: THE AGENDA. Lie#354: The suicide pilot Muslim tie-in to get support for that war in Yemen!
waiting, waiting, waiting . . . . .
An intentional pilot initiated crash is the only way out for the liars
UPDATE: Cockpit lock out story is a LIE. The manual override that keeps the cockpit door locked only lasts 5 minutes, per TV reports. That would leave 3 to 5 minutes to storm the cockpit and take at least some evasive or corrective action.
As I said right from the beginning, this crash was intentionally created via remote control, and the plane hit the mountain in perfect working condition. The investigators know this. I wondered what they would come up with to hide the fact that this was a government hit. And so, now, they are going to say one pilot locked the other out of the cockpit and then intentionally crashed the plane. Go figure, but here is Remi suggesting a pilot did it on purpose:
– German Airbus crashes in French Alps with 150 dead, black box found (euronews/Reuters, March 24, 2015):
SEYNE-LES-ALPES, France (Reuters) – An Airbus operated by Lufthansa’s <LHAG.DE> Germanwings budget airline crashed into a mountainside in the French Alps on Tuesday, killing all 150 people on board including 16 schoolchildren.
Germanwings confirmed its flight 4U 9525 from Barcelona to Duesseldorf went down with 144 passengers and six crew on board.
(Since June 1, 2012 Tom Enders is the CEO of EADS.)
Germans have the great choice between Bilderg Merkel and Bilderberg Steinbrück in the upcoming elections. Good luck Germany!
– Adelbert Delbrück (Wikipedia):
Gottlieb Adelbert Delbrück (* 16. Januar 1822 in Magdeburg; † 26. Mai 1890 in Kreuzlingen) war ein deutscher Unternehmer und Bankier. Er war einer der Gründer der Deutschen Bank.
Adelbert Delbrück gehörte zu der weit verzweigten Familie Delbrück, die im 19. Jahrhundert in Preußen und Deutschland einige einflussreiche Positionen innehatte. Sein Vater Gottlieb Delbrück (1777–1842) war Beamter in Magdeburg und Kurator der dortigen Universität. Sein Sohn Ludwig Delbrück (1860–1913) übernahm erfolgreich die Leitung der Bank Delbrück Leo & Co. Adelberts Vetter Rudolf von Delbrück war als Leiter des Reichskanzleramts enger Vertrauter Bismarcks.
Adelbert Delbrück war verheiratet mit Luise Jonas (1831-1922), einer Tochter von Ludwig Jonas; Paul Jonas war ihr Bruder.
Peer Steinbrück – von 2002 bis 2005 Ministerpräsident des Landes Nordrhein-Westfalen, von 2005 bis 2009 Bundesminister der Finanzen und SPD-Kanzlerkandidat für die Bundestagswahl 2013 – ist ein Urgroßneffe des Bankgründers.
Bilderbergtreffen 2011 – Peer Steinbrück für 2013? – Kulturzeit
“Thanks to the fantastic work of Bilderberg activists, journalists and the Swiss media, we have now been able to obtain the full official list of 2011 Bilderberg attendees. Routinely, some members request that their names be kept off the roster so there will be additional Bilderbergers in attendance.
– For Pilot in Stevens Crash, Flying Ran in the Family (New York Times)
Whatever problem the plane carrying former Senator Ted Stevens encountered before it crashed on Monday night, it was not pilot inexperience.
The pilot, Theron A. Smith, known as Terry, was a second-generation bush aviator and a 28-year veteran of Alaska Airlines, where fellow workers voted him a “Legend of Alaska” in 2001. He belonged to a flying family with a history of pioneering and of tragedy.
His father began flying in Alaska in the early 1940s. His wife, Terri Ellis Smith, a bush pilot herself, frequently co-piloted with him in their vintage Grumman. She is related to a founder of Ellis Air Lines, one of the carriers that merged to become Alaska Airlines.
And the Smith’s son-in-law, Maj. Aaron Malone, a pilot in the Alaska Air National Guard, was killed on July 28 in the crash of a C-17 cargo plane at Elmendorf Air Force Base in Anchorage. Three other airmen were also killed in the crash. Major Malone was married to the Smith’s daughter, Melanie.
Another child, Brian M. Smith, is a private pilot.
The plane that Terry Smith was flying on Monday, a single-engine DeHavilland DHC-3T, owned by GCI, an Alaska telecommunications provider, was not nearly big enough to need a cockpit voice recorder or a flight data recorder, so investigators will have to work without the “black boxes” to piece together what happened. And it was also flying in an area without radar coverage.
ANCHORAGE Alaska (Reuters) – Former Senator Ted Stevens, who for several years played a leading role in controlling the nation’s purse strings, died with four other people in a small plane crash in his home state of Alaska, officials said on Tuesday.
Four people survived Monday night’s crash near Bristol Bay in southwest Alaska. Among them was Sean O’Keefe, North American chief of European aerospace giant and Airbus maker EADS, and a former NASA Administrator who was a former aide and longtime friend of Stevens.
O’Keefe’s son, Kevin, also survived, the company said in a statement, but details of their condition were not disclosed.
Stevens, a gruff, hard-charging politician who rose to become chairman of the powerful Senate Appropriations Committee, served 40 years in the Senate, longer than any Republican, before losing a 2008 reelection bid amid a corruption scandal.
He had been convicted days before the election on charges of failing to report over $250,000 in home renovations and other gifts from an oil executive. The case was later thrown out because of prosecutorial misconduct, including the withholding of exculpatory evidence from defense lawyers.
Stevens and O’Keefe, 54 and who once worked for the senator on the Appropriations Committee, were on a fishing trip in a remote part of Alaska with other former Senate staff members and their children, according to one congressional source.
Sitges, Spain 3-6 June 2010
Final List of Participants
Honorary Chairman BEL Davignon, Etienne Vice Chairman, Suez-Tractebel
DEU Ackermann, Josef Chairman of the Management Board and the Group Executive Committee, Deutsche Bank AG
GBR Agius, Marcus Chairman, Barclays Bank PLC
ESP Alierta, César Chairman and CEO, Telefónica
INT Almunia, Joaquín Commissioner, European Commission
USA Altman, Roger C. Chairman, Evercore Partners Inc.
USA Arrison, Sonia Author and policy analyst
SWE Bäckström, Urban Director General, Confederation of Swedish Enterprise
PRT Balsemão, Francisco Pinto Chairman and CEO, IMPRESA, S.G.P.S.; Former Prime Minister
ITA Bernabè, Franco CEO, Telecom Italia S.p.A.
SWE Bildt, Carl Minister of Foreign Affairs
FIN Blåfield, Antti Senior Editorial Writer, Helsingin Sanomat
ESP Botín, Ana P. Executive Chairman, Banesto
NOR Brandtzæg, Svein Richard CEO, Norsk Hydro ASA
AUT Bronner, Oscar Publisher and Editor, Der Standard
TUR Çakir, Ruşen Journalist
CAN Campbell, Gordon Premier of British Columbia
ESP Carvajal Urquijo, Jaime Managing Director, Advent International
FRA Castries, Henri de Chairman of the Management Board and CEO, AXA
ESP Cebrián, Juan Luis CEO, PRISA
ESP Cisneros, Gustavo A. Chairman and CEO, Cisneros Group of Companies
CAN Clark, W. Edmund President and CEO, TD Bank Financial Group
USA Collins, Timothy C. Senior Managing Director and CEO, Ripplewood Holdings, LLC
ITA Conti, Fulvio CEO and General Manager, Enel SpA
GRC David, George A. Chairman, Coca-Cola H.B.C. S.A.
DNK Eldrup, Anders CEO, DONG Energy
ITA Elkann, John Chairman, Fiat S.p.A.
DEU Enders, Thomas CEO, Airbus SAS
ESP Entrecanales, José M. Chairman, Acciona
DNK Federspiel, Ulrik Vice President Global Affairs, Haldor Topsøe A/S
USA Feldstein, Martin S. George F. Baker Professor of Economics, Harvard University
USA Ferguson, Niall Laurence A. Tisch Professor of History, Harvard University
AUT Fischer, Heinz Federal President
IRL Gallagher, Paul Attorney General
USA Gates, William H. Co-chair, Bill & Melinda Gates Foundation and Chairman, Microsoft Corporation
USA Gordon, Philip H. Assistant Secretary of State for European and Eurasian Affairs
USA Graham, Donald E. Chairman and CEO, The Washington Post Company
INT Gucht, Karel de Commissioner, European Commission
TUR Gürel, Z. Damla Special Adviser to the President on EU Affairs
NLD Halberstadt, Victor Professor of Economics, Leiden University; Former Honorary Secretary General of Bilderberg Meetings
USA Holbrooke, Richard C. Special Representative for Afghanistan and Pakistan
NLD Hommen, Jan H.M. Chairman, ING Group
USA Hormats, Robert D. Under Secretary for Economic, Energy and Agricultural Affairs
BEL Huyghebaert, Jan Chairman of the Board of Directors, KBC Group
USA Johnson, James A. Vice Chairman, Perseus, LLC
FIN Katainen, Jyrki Minister of Finance
USA Keane, John M. Senior Partner, SCP Partners
GBR Kerr, John Member, House of Lords; Deputy Chairman, Royal Dutch Shell plc.
USA Kissinger, Henry A. Chairman, Kissinger Associates, Inc.
USA Kleinfeld, Klaus Chairman and CEO, Alcoa
TUR Koç, Mustafa V. Chairman, Koç Holding A.Ş.
USA Kravis, Henry R. Founding Partner, Kohlberg Kravis Roberts & Co.
USA Kravis, Marie-Josée Senior Fellow, Hudson Institute, Inc.
INT Kroes, Neelie Commissioner, European Commission
USA Lander, Eric S. President and Director, Broad Institute of Harvard and MIT
FRA Lauvergeon, Anne Chairman of the Executive Board, AREVA
ESP León Gross, Bernardino Secretary General, Office of the Prime Minister
DEU Löscher, Peter Chairman of the Board of Management, Siemens AG
NOR Magnus, Birger Chairman, Storebrand ASA
CAN Mansbridge, Peter Chief Correspondent, Canadian Broadcasting Corporation
USA Mathews, Jessica T. President, Carnegie Endowment for International Peace
CAN McKenna, Frank Deputy Chair, TD Bank Financial Group
GBR Micklethwait, John Editor-in-Chief, The Economist
FRA Montbrial, Thierry de President, French Institute for International Relations
ITA Monti, Mario President, Universita Commerciale Luigi Bocconi
INT Moyo, Dambisa F. Economist and Author
USA Mundie, Craig J. Chief Research and Strategy Officer, Microsoft Corporation
NOR Myklebust, Egil Former Chairman of the Board of Directors SAS, Norsk Hydro ASA
USA Naím, Moisés Editor-in-Chief, Foreign Policy
NLD Netherlands, H.M. the Queen of the
ESP Nin Génova, Juan María President and CEO, La Caixa
DNK Nyrup Rasmussen, Poul Former Prime Minister
GBR Oldham, John National Clinical Lead for Quality and Productivity
FIN Ollila, Jorma Chairman, Royal Dutch Shell plc
USA Orszag, Peter R. Director, Office of Management and Budget
TUR Özilhan, Tuncay Chairman, Anadolu Group
ITA Padoa-Schioppa, Tommaso Former Minister of Finance; President of Notre Europe
GRC Papaconstantinou, George Minister of Finance
USA Parker, Sean Managing Partner, Founders Fund
USA Pearl, Frank H. Chairman and CEO, Perseus, LLC
USA Perle, Richard N. Resident Fellow, American Enterprise Institute for Public Policy Research
ESP Polanco, Ignacio Chairman, Grupo PRISA
CAN Prichard, J. Robert S. President and CEO, Metrolinx
FRA Ramanantsoa, Bernard Dean, HEC Paris Group
PRT Rangel, Paulo Member, European Parliament
CAN Reisman, Heather M. Chair and CEO, Indigo Books & Music Inc.
SWE Renström, Lars President and CEO, Alfa Laval
NLD Rinnooy Kan, Alexander H.G. Chairman, Social and Economic Council of the Netherlands (SER)
ITA Rocca, Gianfelice Chairman, Techint
ESP Rodriguez Inciarte, Matías Executive Vice Chairman, Grupo Santander
USA Rose, Charlie Producer, Rose Communications
USA Rubin, Robert E. Co-Chairman, Council on Foreign Relations; Former Secretary of the Treasury
TUR Sabanci Dinçer, Suzan Chairman, Akbank
ITA Scaroni, Paolo CEO, Eni S.p.A.
USA Schmidt, Eric CEO and Chairman of the Board, Google
AUT Scholten, Rudolf Member of the Board of Executive Directors, Oesterreichische Kontrollbank AG
DEU Scholz, Olaf Vice Chairman, SPD
INT Sheeran, Josette Executive Director, United Nations World Food Programme
INT Solana Madariaga, Javier Former Secretary General, Council of the European Union
ESP Spain, H.M. the Queen of
USA Steinberg, James B. Deputy Secretary of State
INT Stigson, Björn President, World Business Council for Sustainable Development
USA Summers, Lawrence H. Director, National Economic Council
IRL Sutherland, Peter D. Chairman, Goldman Sachs International
GBR Taylor, J. Martin Chairman, Syngenta International AG
PRT Teixeira dos Santos, Fernando Minister of State and Finance
USA Thiel, Peter A. President, Clarium Capital Management, LLC
GRC Tsoukalis, Loukas President, ELIAMEP
INT Tumpel-Gugerell, Gertrude Member of the Executive Board, European Central Bank
USA Varney, Christine A. Assistant Attorney General for Antitrust
CHE Vasella, Daniel L. Chairman, Novartis AG
USA Volcker, Paul A. Chairman, Economic Recovery Advisory Board
CHE Voser, Peter CEO, Royal Dutch Shell plc
FIN Wahlroos, Björn Chairman, Sampo plc
CHE Waldvogel, Francis A. Chairman, Novartis Venture Fund
SWE Wallenberg, Jacob Chairman, Investor AB
NLD Wellink, Nout President, De Nederlandsche Bank
USA West, F.J. Bing Author
GBR Williams, Shirley Member, House of Lords
USA Wolfensohn, James D. Chairman, Wolfensohn & Company, LLC
ESP Zapatero, José Luis Rodríguez Prime Minister
DEU Zetsche, Dieter Chairman, Daimler AG
INT Zoellick, Robert B. President, The World Bank Group
GBR Bredow, Vendeline von Business Correspondent, The Economist
GBR Wooldridge, Adrian D. Business Correspondent, The Economist
Source: Bilderberg Meetings
– Schwarzenegger Says Deficit has ‘Incapacitated’ State (Bloomberg):
Jan. 15 (Bloomberg) — Governor Arnold Schwarzenegger said California has been so “incapacitated” by a fiscal crisis that threatens to leave it unable to pay bills within weeks that the only issue he and lawmakers must consider is how to fix it.
– Charter misses $74 mln in debt interest payments (Reuters):
NEW YORK, Jan 15 (Reuters) – Charter Communications, the fourth largest U.S. cable operator, said on Thursday it missed interest payments of $73.7 million as it continues to negotiate a debt restructuring with bondholders.
The company said it has until Feb. 15 to make the payment and avoid default, which could push it into bankruptcy.
– ECB cuts rates by 50 points to 2% (Financial Times):
Eurozone interest rates fell by half a percentage point to their lowest in more than three years on Thursday as the European Central Bank said that it expected the recession to deepen and signalled that borrowing costs could fall further.
Jean-Claude Trichet, ECB president, warned that growth forecasts published only last month would have to be revised downwards in a sign of the ferocity of the downturn.
– Pfizer May Fire 2,400, One-Third of U.S. Sales Force (Bloomberg):
Jan. 15 (Bloomberg) — Pfizer Inc., the world’s biggest drugmaker, may fire almost a third of its U.S. sales force, or as many as 2,400 workers, in a plan under consideration by senior management, people familiar with the discussions said.h the discussions said.
– JPMorgan chief says 2009 will be bleak (Financial Times):
The US financial and economic crisis will worsen this year as hard-hit consumers default on credit cards and other loans, Jamie Dimon, chief executive of JPMorgan Chase, has predicted in an interview with the Financial Times.
– JPMorgan Profit Drops 76 Percent on Asset Writedowns (Bloomberg)
– Yet another blow to the US newspaper industry (Guardian)
– Aircraft industry shocked by view from ground (Financial Times)
– Airbus forecasts ‘very challenging’ year (Financial Times):
Airbus on Thursday said its new commercial aircraft orders had fallen sharply last year, as the European aerospace group forecast “a very challenging year” for the industry in 2009. Net new orders fell by 42 per cent last year to 777, from a record 1,341 won in 2007.
– Irish government fears IMF intervention (Guardian)
– Ireland plans drastic cuts to prevent debt crisis (Telegraph):
Ireland is to demand pay cuts for civil servants and public employees to prevent the budget deficit soaring to 12pc of gross domestic product by next year – becoming the first country in the eurozone to resort to 1930s-style wage deflation to claw back competitiveness.
– Hedge funds ‘encourage bankruptcies’ for profit (Guardian)
– Spain’s Debt Costs Rise at Bond Sale After S&P Alert (Bloomberg)
– Banks gird for commercial property collapse (FinancialWeek):
Some of the biggest financial institutions have huge, potentially troublesome commercial real estate stakes, Standard & Poors data shows. Based on information in their most recent financial reports, Citigroup and Barclays each had more than $20 billion worth of commercial mortgage-related investments. Merrill Lynch, acquired by Bank of America last year, had some $19.7 billion in such investments, according to S&P.
Nov. 6 (Bloomberg) — Airbus SAS and Boeing Co. may end up with as many as 200 new planes without buyers next year because airlines are unable to obtain funds to pay for them amid a global credit squeeze, a consultant said.
“There’s a funding gap and we don’t really know where the money is coming from,” Eddy Pieniazek, a director of aviation adviser Ascend, said at a conference in Hong Kong yesterday. “If the money doesn’t arrive, you can quite easily see 200 new aircraft, or whitetails, parked in a desert.”
Airbus and Boeing, the world’s two-biggest airplane makers, will probably deliver about $65 billion of large commercial aircraft next year, according to a report by JPMorgan Securities Inc. Leasing companies and banks, which will account for about 60 percent of the aircraft financing market in 2008, are likely to “pull back substantially,” creating a funding gap as wide as $20 billion, the report said.
“Nobody is getting out of this alive,” said Bill Cumberlidge, director of aviation asset finance at Allco Finance Group, which on Nov. 4 handed over operations to outside managers after warning it may default on its debt. “The debt market is dead.”
Vincent Quinones works on the floor of the New York Stock Exchange Wednesday after the Federal Reserve issued a mixed assessment of the economy. Yesterday, the Dow Jones industrial average closed down 358 points. (By Andrew Harrer — Bloomberg News)
So much for that second-half rebound.
Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal.
It ain’t gonna happen. Not this summer. Not this fall. Not even next winter.
This thing’s going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge fund meltdowns and 6 percent unemployment. We’re caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.
Only this will be a different kind of recession — a recession with an overlay of inflation. That combo puts the Federal Reserve in a Catch-22 — whatever it does to solve one problem only makes the other worse. Emerging from a two-day meeting this week, Fed officials signaled that further recession-fighting rate cuts are unlikely and that their next move will be to raise rates to contain inflationary expectations.
Since last June, we’ve seen a fairly consistent pattern to the economic mood swings. Every three months or so, there’s a round of bad news about housing, followed by warnings of more bank write-offs and then a string of disappointing corporate earnings reports. Eventually, things stabilize and there are hints that the worst may be behind us. Stocks regain some of their lost ground, bonds fall and then — bam — the whole cycle starts again.
It was only in November that the Dow had recovered from the panicked summer sell-off and hit a record, just above 14,000. By March, it had fallen below 12,000. By May, it climbed above 13,000. Now it’s heading for a new floor at 11,000. Officially, that’s bear market territory. We’ll be lucky if that’s the floor.
In explaining why that second-half rebound never occurred, the Fed and the Treasury and the Wall Street machers will say that nobody could have foreseen $140 a barrel oil. As excuses go, blaming it on an oil shock is a hardy perennial. That’s what Jimmy Carter and Fed Chairman Arthur Burns did in the late ’70s, and what George H.W. Bush and Alan Greenspan did in the early ’90s. Don’t believe it.
Truth is, there are always price or supply shocks of one sort or another. The real problem is that the underlying fundamentals had gotten badly out of whack, making the economy susceptible to a shock. The only way to make things better is to get those fundamentals back in balance. In this case, that means bringing what we consume in line with what we produce, letting the dollar fall to its natural level, wringing the excess capacity out of industries that overexpanded during the credit bubble and allowing real estate prices to fall in line with incomes.
The last hope for a second-half rebound began to fade earlier this month when Lehman Brothers reported that it wasn’t as immune to the credit-market downturn as it had led everyone to believe. Lehman scrambled to restore confidence by firing two top executives and raising billions in additional capital, but even that wasn’t enough to quiet speculation that it could be the next Bear Stearns.
Since then, there has been a steady drumbeat of worrisome news from nearly every sector of the economy.
American Express and Discover warn that customers are falling further behind on their debts. UPS and Federal Express report a noticeable slowdown in shipments, while fuel costs are soaring. According to the Case-Shiller index, home prices in the top 20 markets fell 15 percent in April from the year before, and Fannie Mae and Freddie Mac report that mortgage delinquency rates doubled over the same period — and that’s for conventional home loans, not subprime. United Airlines accelerates the race to cut costs and capacity by laying off 950 pilots — 15 percent of its total — as a number of airlines retire planes and hint that they may delay delivery or cancel orders of new jets from Boeing and Airbus. Goldman Sachs, which has already had to withdraw its rosy forecast for stocks, now admits it was also too optimistic about junk bond defaults, and analysts warn that Citigroup and Merrill Lynch will also be forced to take additional big write-downs on their mortgage portfolios.
May 23 (Bloomberg) — Airbus SAS, the world’s largest commercial aircraft maker, is valued at “less than zero” after this year’s 32 percent drop in the shares of parent European Aeronautic, Defence & Space Co., according to Lehman Brothers Holdings Inc. analyst Joe Campbell.
“The market is viewing Airbus as a liability, rather than an asset,” said Campbell, 62, who is based in New York and has ranked among the top five aerospace analysts for six consecutive years in an Institutional Investor magazine poll.
EADS, based in Paris and Munich, on May 13 reported an additional three-month delay in deliveries of the A380 superjumbo jetliner, which was already two years behind schedule. Before the latest setback, the company had cut its profit forecast by $6 billion through 2010.
Airbus, based in Toulouse, France, is also six months to a year late on the A400M military transport. It has a 20 billion- euro ($31.4 billion) contract with six European governments and Turkey for 180 of the planes. Additional cost overruns and penalty payments may drain cash needed for the $16 billion expense of developing the Airbus A350, a long-range jet competing with Boeing Co.‘s 787 and 777.
A February 2007 recovery plan meant to help Airbus cope with a weakening dollar as it competes with Chicago-based Boeing for dominance of the $60 billion-a-year airliner market has stumbled. The planemaker sought in part to shift investment for new planes to subcontractors who would buy Airbus plants. It chose local companies in France and Germany that lacked the capital to shoulder the risk and the plan fell apart.