IMHO consumers might be of interest in green field investment. I fail to see how they affect decisions of investment in bonds.
Anyway I haven't entered this topic again to bump it or talk about US bonds. Actually right now I more preoccupied with the old good Europe.
During these 2 weeks the behemoth of crisis got nastier and nastier by hours and for me it's not even beginning of the end of bad messages. For those who do not pay attention, just a few of them:
- Wachovia Bank joined Freddie, Fannie, AIG, Lehman Bros, Morgan Stanley etc. in US
- Island is a one big mess with 3 banks nationalized, the scarry part is that the market capitalization of every one of them was bigger than Island GBP
- UK announced buying preference shares in Abbey National, Barclays, HBOS, HSBC Bank, Lloyds TSB Bank, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered Bank for total of 50 billion pounds. It freezes also actives of Island banks in UK.
- Germany puts 50 billion EUR in rescue plan for Hypo Real Estate. There are reports suggesting that German banks have average leverage of 52, and that if some of they fail, not even German treasury can save them. Basically they are to big to fail and to big to be saved.
- Fortis and Dexia saved by joined action of Holland, Belgium, Luxemburg and France
- rumors about Unicredito (one of the biggest bank in Italy) being seriously exposed to suprime & Lehman bankruptcy
But what's really scary it already started to affect real economy. Let's look at automotive sector (the one who get hit as first by any economic crisis):
- stock of GM and Ford dropped 30% and 22% in one day (the are news that they can have serious problems with cash in 2009)
- Daimler-Benz sold the rest stake it had in Chrysler. Since Chrysler is privately held nobody beside actual owners knows what's is it financial situation, but Daimler accepting huge loses from this operation just to get rid of the stock is everything I need to know.
- even Japanese car makers reported sales drop in US (IIRC in case of Toyota it was all time biggest of about 20%)
- in Europe Ford, Opel, Fiat, Renault, VW Group, all of them announced temporary closures (1-2 weeks) of some of their plants, because of falling demand. Some of them also announced reduction of work force (Volvo and Renault IIRC)
- Russian oligarchy stopped paying for the 20% stake in Magma Group (one of the biggest automotive suppliers), which means it's stock passed to be held by banks. It's possible it was heavily leveraged buy and he couldn't afford it in the new financial situation but I believe he figured out it's cheaper to cut the losses now then to risk loosing even more in future.
I'm scarred. Really. Maybe I should stop reading press. It won't save me from crisis, but at least I will live in sweet ignorance until I get hit.