Welcome to the Great Depression, Part Deux: Bad News Is Contagious

Synod financial challenge
The Conference of Presidents (COP) and the Synodical Council (SC) met jointly in Milwaukee last week to discuss synodical matters, including the tremendous financial challenges that are expected to become reality in 2009-2010. The stock market decline and rising unemployment have impacted all of our congregations, and the synod is feeling the crunch. Income to the synod budget both from the Schwann (sic)Foundation and from the large donor in Canada will be severely reduced this coming year. There is the severe possibility that revenue shortfalls could approach $7 million dollars! This number, if it becomes reality, will necessitate severe cuts in our synodical work. Let’s work together, by God’s grace, to close that projected gap and continue supporting our shared work in the WELS.

So this Canuck gave a $15 million pledge over 5 years when the going was good, but he is canceling out after 2 payments? I can understand that. All the financial geniuses were turned into roadkill from this mortgages-for-illegals scam. Goldman Sachs is turning down their bonuses for 2008 and will have to survive on their salaries of $600,000.

Mrs. Ichabod said, "How sad for them."

WELS got addicted to Schwan money: it was crack cocaine for them. Unfortunately, spelling is not as habit-forming for Wisconsin. If someone gave me millions per year, I would learn to spell the guy's name, especially if he delivered ice cream bars to my home.

Here are some chilling facts about the economy:

The world markets are undergoing deflation in commodities, one of the hallmarks of the Great Depression. When China cooled down their steel plants, minerals in America lost their luster and prices sank for iron and copper. Oil is down because of decreased demand. Some suspect that speculating caught up with some big traders.

So far, these industries are laying off people in droves: banks (Citibank - 50,000 people), retail (Circuit City gone, Best Buy scared, Linens and Things gone, Mervyns gone, Shoe Pavilion gone), mines, and technology. The technology companies said someone turned the switch to off in October. Cisco reported a 9% reduction in orders for that month.

Hedge funds and mutual funds would like to buy stocks, but they are selling off assets to pay for people cashing out.

Foreclosures may be slowing down, but commercial real estate is just starting to crater. The great Trump is in deep trouble with two different huge projects. We may not have to look at his comb-over much longer. Phoenix has a rows of newly built but empty commercial buildings.

Ford Motor Company's market cap is worth $4 billion today. $1.72 a share.

GM is worth $1.9 billion, market cap. $3.10 a share.

Credit card defaults are so bad that American Express (with supposedly good clients) sought refuge as a bank and asked for a few billion dollars in bailout money. Waves of defaults are expected at the companies where credit risk was greater. Bankruptcies are expected to increase with higher amounts than before, probably from people using cards to keep their mortgages going.

Nobody knows what will happen with derivatives and credit default swaps. I understand very little about them, except they leverage risk.