American Economic Indicators

Much like Atlanta, Knoxville seems to have suffered according to Tam:

Meanwhile, the TeeWee talking heads are cooing at the Dow passing 13,000 again. Investors, they say, are excited about yet another Greek bailout. Let me get this straight: Germany has taken out another cash advance on its maxed-out credit card and given it to its deadbeat cousin, Greece, who swears that this time they’ll use the money to get a haircut and a job, instead of wasting it on hookers and blow again, and investors take this as a good sign?

Every time I hear the words “Leading economic indicators are…” come out of a newscaster’s mouth these days, I expect them to be followed by “…from the planet Mars.”

To add to that, places that should be seeing some kind of uptick in revenue (people not eating steak, but shifting to cheap fast food) are not:

Get this: these deals are usually priced in multiples of EBITDA, that is, the earnings before interest, taxes, amortization and depreciation. For non-accountants like me, all that matters is that annual EBITDA  for this package at the time the sale contract was signed four months ago was roughly $900k, so a sale price of 3x EBITDA (a steal, BTW) would be $2.7 million.

So what happened while we were doing all the due diligence, licensing, and other legal crap to actually complete the sale? Well, in the last three months of 2011, yes food costs rose, but more importantly sales plummeted. I am not going to quote numbers because I can’t, but I can say the combination dropped annual EBITDA to roughly $500k. That means that sale price of $2.7 million was transformed to more than 5x EBITDA, taking this from a really good deal to being some of the most overpriced restaurants in the country.

That also means much more than just “oh one year was $400k worse than the other.” It means that just this past quarter alone was SO bad that it caused that kind of drop to the annual figure for this package of stores.

Something to ponder. Spooky indeed.

Advertisements

The Opening Stages of Global Conflict

Great title eh? In lieu of actual content today, here’s something worth your time. Via Kerodin:

The situation is becoming, in the minds of the average Greek, Us versus Them…as such matters always devolve when push comes to shove. People fall back to Tribe.

The Greek national Police Union is now threatening to arrest IMF and EU officials for blackmail and other crimes against the Greek people.

Good on the Greeks.

I have respect for any people, even people I must put in the category of Enemies, who have FU in their DNA. (I do not consider the Greeks enemies, at all. They are Socialists, but the Banksters knew that when they loaned the money…)

We are watching the opening days of our next global war, folks.

Original Zerohedge here:

In a letter obtained by Reuters on Friday, the Federation of Greek Police accused the officials of “…blackmail, covertly abolishing or eroding democracy and national sovereignty” and said one target of its warrants would be the IMF’s top official for Greece, Poul Thomsen.

The threat is largely symbolic since legal experts say a judge must first authorize such warrants, but it shows the depth of anger against foreign lenders who have demanded drastic wage and pension cuts in exchange for funds to keep Greece afloat.

The bankers want their pound of flesh with interest. No bankruptcy for you! Indebted servitude for eternity! Cue maniacal laughter.

I say they show ’em Iceland Part II -The Sequel.

 

 

Agreed – Fair Warning from Denninger

I completely agree with Karl.

It is not often that one gets this sort of rotational warning in such a clear form, but you’re getting it now.  The same thing is true in the DOW, with IBM being the power mover there.

Beware folks.  Be very, very careful.

Though, my opinion is that we will see a run up to uncharted territory before the fall if crude doesn’t skyrocket over the summer. When you see the DJIA in the 19,000 to 22,000 range, it is literally time to head for the hills. The end result of that one will be five times what 2000 & 2008 were.

On a long enough timeline: Decade Scale Economic Trends

Here is a good primer of where we are based on what I have to say below.

It is my theory that we, as a nation, are just now experiencing the decline that began in the mid 1960’s. This decline was subverted using currency manipulation, global military intervention, and various ‘extend & pretend’ tactics employed by the state and international banking interests.

Do not get me wrong here. I’m not putting on the tinfoil hat and saying there is a grand cabal of Rothsscarries & Ubersteins lurking in the shadows. Not at all. This is complex, long term, and very large scale maneuvers that shape the course of history.

Post World War II, America found itself in a unique and powerful position. With Europe and Asia in ruin, America possessed an industrial capacity that quickly came to dominate the world. This made her wealthy beyond anything that had come before her. This industrial might led to a litteral global domination of economic markets and political influence.

And, like all other massive centers of power and influence, an inevitable shift in that power began to unravel.

As time marched on, regional & global powers came into being. Not necessarily through military might, but through natural resources, manufacturing, trade, etc. America defended her economic interested by going to war. To quote someone, “It’s all about the cost of labor.” America used military power, like all empires before her to secure trade and markets by which to sell her goods and services, as well as, to protect sources of her raw materials to feed her industrial might.

When this eventual unrest came home in many different forms, her leaders sought an extension of this power.

Sources of cheaper labor were opened up, currencies were fundamentally changed, and a different market, as well as, world emerged.

Perceived prosperity through credit became the norm, and that decline was halted as her people prospered through decadence. Though they perceived themselves wealthy, they were not – they were merely in more and more debt.

As this is written, America is coming to the end of an almost 100 year cycle of prosperity. Boom and bust cycles.

I personally believe that this the last of those. An organized source of cheaper labor does not exist anywhere on this planet. That scheme of moving and shifting markets globally to find the next center of profit is over. Some new paradigm will take it’s place, and that will be the environment with which Americans (or whatever they will be called in the future) will have to operate in.

My thoughts. I welcome yours.

It’s a new century. Time for another war.

Europe is about to go through one of those crisis’ that are usually a prelude to something horrible.

“Time is running out fast.  I think we have maybe a few months — it could be weeks, it could be days — before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it. So they have to act now.”

“The only two guns in town, one is only theoretical, and that is increasing the size of the EFSF to 3 trillion.  It should happen but it can’t for political reasons.  The other one, the only remaining share is the ECB.  They may have to hold their noses while they do it, and if they don’t do it, it’s the end of the euro zone.”

Just sayin’…