Comments on economics, mystery fiction, drama, and art.

Wednesday, October 01, 2008

Not Just "Wall Street"

Lest anyone think that the financial crisis has so far affected, and will continue to affect, only "Wall Street," this should come as sobering news:

"[B]usinesses big and small said borrowing was getting harder as the cost of funds rose...Corporate-bond issuance in the quarter plunged to $76.7 billion from $337.3 billion in the second quarter ... Companies overall were forced to reduce their borrowings on the short-term commercial paper market by $212 billion between the end of February and last Wednesday, as investors continued to back away from the corporate IOUs."

this is also not very encouraging:

"Ford ... on Wednesday reported a 34.6% drop in September U.S. sales to 120,788 vehicles from 184,612 in September 2007. September marked the lowest sales month so far this year for Ford and the industry, the automaker said."

UPDATE: This goes beyond Ford:

Honda: DOWN 24%
Toyota: DOWN 32%
Lexus: DOWN 37%
Chrysler: DOWN 33%
Volvo: DOWN 52%
Porsche: DOWN 45%
GM: DOWN only 15%
Nissan: DOWN 37%
BMW US sales: DOWN 26%
Mercedes-Benz: DOWN 15%
Volkswagen: down, but only 9%
Hyundai US: DOWN 25%
Kia US: DOWN 28%

And September, we should remember, is usually a very good month for auto sales. This is really not good.

And this will not make you feel any better:

"It now appears that private non-residential construction has peaked, and I expect non-residential investment will decline sharply over the next year."

Cleaning up the mess will be difficult, and it will involve doing some things that we might prefer not to have to do. But not cleaning up the mess will almost certainly make things worse.


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