By Russ Henke on 12/28/2007 1:35 PM

New-home sales in the US fell 9% in November from October to a seasonally-adjusted annual sales pace of 647,000, the US Commerce Department reported December 28, 2007. Economists were predicting November 2007 new-home sales to decline by only 1.8%. Over the last 12 months, new-home sales in the US have plunged by more than 34%, the biggest annual drop since 1991 (i.e. under Bush 41).

"I think you can classify what we are seeing in the housing market as a crash," said Mark Zandi, chief economist at Moody's Economy.com, according to the AP. "Sales and home prices are in a free fall. The downturn is intensifying."

Fed by the persistent lack of federal regulation in the mortgage market, the housing debacle has significantly increased the odds that the US economy will soon fall into a recession, the second one under Bush 43. We recall that his daddy presided over only one recession.

By Russ Henke on 12/19/2007 8:07 AM

The five-person Federal Communications Commission approved a controversial new rule to allow broadcasters in the twenty largest US media markets to also own a newspaper. The existing ban against this practice had been in place for thirty-two years. The White House has already pledged to veto any congressional action that seeks to change the decision.

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By Russ Henke on 12/9/2007 6:59 AM

The November 2007 jobs report was “the clearest sign yet that the American economy was headed for a substantial slowdown.” Mark Zandi, chief economist at Moody’s Economy.com, said that the November job creation numbers are “indicative of a very fragile US economy that will come undone unless conditions improve soon.” Meanwhile, the average hourly wages among rank-and-file US workers (i.e. the vast majority of us Americans) was just $17.63 last month, simply emphasizing the long-term erosion of spending power for most American workers in the last seven years.

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By Russ Henke on 11/23/2007 6:06 PM

Crude-oil futures ended November 23, 2007 at the highest-ever closing level. Crude oil for January 2009 delivery settled up 89 cents at $98.18 a barrel on the New York Mercantile Exchange. The session touched an intraday high of $98.45. Crude ended the week up $4.34, or 4.4%. The US dollar also helped boost oil as it touched a new historic low of $1.4966 per euro before “recovering” to $1.4834. A sliding dollar makes oil cheaper for buyers holding other currencies. These buyers are likely to increase demand and bid up oil prices. You think?

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By Russ Henke on 11/21/2007 7:34 AM

On November 19, 2007 from Bloomberg News comes word that shareholders in the securities industry are having their worst year since 2002, losing $74 billion of equity. But it appears that won't prevent Wall Street from paying record bonuses for 2007, totaling almost $38 billion. That's billion with a "b", folks! By way of comparison, Bloomberg News reported that the industry's 2007 bonuses are larger than the gross domestic products of Sri Lanka, Lebanon or Bulgaria. The average $201,500 bonus is more than four times the $48,201 median household income in the US last year, according to US Census Bureau statistics.

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By Russ Henke on 11/19/2007 7:19 AM

Just in time for the Annapolis peace conference planned for the last week of November 2007 comes news over the weekend November 17-18 from PBS: In Israel, a new word has been added to the official Hebrew Dictionary. The new word is “Condel”. It means, “to run around, have lots of meetings, and get nothing done.” Condel is a real word, frequently used in Israel and spreading elsewhere, inspired by the US Secretary of State Condi Rice.

By Russ Henke on 11/12/2007 6:52 PM

If you missed paying $35 per share in the Blackstone IPO in July 2007, you’ll be somewhat gratified by this news. Shares of Blackstone Group traded as much as 11% lower November 12, 2007, as investors reacted negatively to the private-equity firm reporting a third-quarter loss. The company's quarterly loss amounted to 44 cents a share. On average, analysts had been expecting Blackstone to earn plus 30 cents a share for Q3 2007.

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By Russ Henke on 11/10/2007 9:34 AM

The Figure: Number of US deaths in Iraq in October was 39.The Lie: “This number of 39 proves the surge is working.”The Facts: Bush implemented “The Surge” in January 2007. As of early November, the year 2007 had already become the deadliest year yet for US troops in Iraq. At least 852 American military personnel have died in Iraq so far this year — the highest annual toll since Bush began the Iraq war in March 2003.The Figure: Six US troops were killed when insurgents ambushed their foot patrol in the high mountains of eastern Afghanistan on November 9, 2007.The Lie: “The US vanquished the Taliban in 2001, to avenge 9/11.”The Facts: The year 2007 has just become the deadliest for US troops in Afghanistan since the 2001 invasion. The war in Afghanistan has evolved into an increasingly bloody counterinsurgency campaign, especially after many US troops were withdrawn to invade Iraq. Afghanistan is now the opium/heroin Poppy capital of the world. Pakistan is also a mess today. Osama is still at large.Related Facts:...

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By Russ Henke on 11/8/2007 7:22 AM

The Figure: On November 7, 2007, the US national average gas price for Unleaded Regular reached $3.04 per gallon.

The Lie: Autumn always means falling gasoline prices, as demand eases after the busy summer travel season.

The Facts: The average price per gallon of Unleaded Regular Gas has gone up 28 cents in 30 days. In some states the average price is much higher. In California, the price on November 7 averaged $3.31.

Related Fact: The price of a gallon of Unleaded Regular Gas when George W. Bush took office on January 20, 2001: $1.46

By Russ Henke on 11/7/2007 6:09 PM

The Figure: Real US gross domestic product (GNP) -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.9% in the third quarter of 2007, according to advance estimates released by the US Bureau of Economic Analysis at the end of October 2007.The Lie: “The proves that the economy of the US is strong and resilient.” The Facts: The advance estimate of GNP proves nothing. It’s a very preliminary estimate. The dramatic impact on GNP of the value of the US dollar being at record lows against foreign currencies has yet to be analyzed.The Figure: The US economy added 166,000 jobs in October 2007, the fastest pace in five months, the Labor Department said.The Lie: “The proves that the economy of the US is strong and resilient.” The Facts: (1) Even if accurate,166,000 is well below the level needed just to take care of the number of people entering the US job market every month from sheer population growth. (2) Nearly half of the October...

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By Russ Henke on 10/9/2007 4:44 PM

Most economic writers hailed the monthly unemployment report from the Labor Department last Friday October 5, 2007, as evidence that a US recession is now less likely. Net jobs created in September 2007 were a “healthy” 110,000, they gushed. The same writers also seemed pleased that the originally reported loss of 4000 jobs in August, was restated as a net gain for August of 89,000. The stock markets dutifully rose.However, few writers pointed out the troubling facts behind those numbers. First, as has been mentioned in this blog space before, figures like 100,000 new jobs in a month are far below the levels needed just to take care of the number of people entering the US job market every month from sheer population growth. Indeed, the unemployment “rate” rose in September to 4.7%, the highest in just over a year.Second, one has to look at exactly what sectors of the US economy are producing the gains. In September, the increases came from services that produce little real wealth or productivity increases: health...

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By Russ Henke on 9/23/2007 5:26 AM

Did your personal net worth increase by more than $300 million in the last 12  months ending August 31, 2007? No? Then you’re probably no longer eligible for  the Forbes list of the 400 richest Americans! Indeed, if your net worth is not  greater than $1.3 billion, forget it! The collective net worth of America’s 400  richest people rose $290 billion, to $1.54 trillion from $1.25 trillion last year,  or a 23.2% increase. What’s that you say? You didn’t even get a 23% raise in the  last year? 

Wall Street led the charge for wealth creation, despite the stock market problems  of recent months. Nearly half of the 45 new members of the list of 400 made their  new fortunes in hedge funds and private equity. The youngest member of the Forbes  400 this year is 33-year-old John Arnold, a former Enron trader who now runs hedge  fund Centaurus Energy and has now amassed a $1.5 billion fortune. And private  equity got a nice bail out this past week, when the Fed lowered interest rates by  an unexpected half point,...

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By Russ Henke on 9/1/2007 9:20 AM

Among the many enervating political and economic factors that have emerged in the last six and a half years, is the unmistakable and increasing trend of a rich-get-richer, poor-get-poorer US income distribution.Over the last week, a report was issued by the Institute for Policy Studies and United for a Fair Economy that revealed quantitatively what we have known qualitatively for a long time; namely, that chief executives of American companies made an average of $10.8 million in 2006, more than 364 times the average pay of American workers.Moreover, according to this year's report, CEOs received an average of $1.3 million in pension benefits last year. By contrast, less than 60 percent of US households led by someone aged 45 to 54 had any retirement account at all.The 20 highest-paid CEOs of US public companies were paid an average of $36.4 million, three times more than the 20 highest-paid European CEOs, and 204 times more than the 20 highest-paid generals in the US military.Now let's see, just which American...

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By Russ Henke on 8/14/2007 8:07 AM

This blog entry was written on July 15, 2007:

Over the past few months, weaknesses in the US economy have been reported frequently in the blog entries in this space and of course in the financial press. Yet despite these weaknesses and the ongoing misery of ordinary folks dealing with the housing slump and higher gas & food prices, the nation's stock markets have ignored hedge fund and sub-prime loan problems, and soared to record levels. On Friday July 13, 2007 alone, the Standard & Poor’s 500 index closed above a high set in March 2000 and the Dow Jones industrials blew by 13,900 for the first time in history.

In related news, US retail sales dropped 0.9% in June, and the US Trade DEFICIT widened again in May. The United States’ oil import bill alone increased to $19.0 billion - the largest since September 2006. The US trade deficit with China widened 3.3% in May to $20.0 billion, and the June gap could be even larger. Meanwhile, China posted a record trade SURPLUS of $26.9 billion in June. China’s...

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By Russ Henke on 7/1/2007 3:59 AM

It’s often surprising to find immediate corroboration of a theme for blog entries that appear in this space. Not two days after the previous June 24 & 25 blog items were published here about “The Rich Getting Richer", Merrill Lynch and the Cap Gemini Group released their annual World Wealth Report. In 2006, the world’s wealthiest saw their combined riches grow by over 11%! Fully 800,000 more people were added in 2006 to the rolls of folks who hold over $1 million in financial assets (not including their primary homes), up from 8.7 million such individuals in 2005. The combined wealth of these fortunate few totals over $37.2 trillion. That's “trillion” with a “t”, and adds up to a fourth of the entire world’s total wealth, about three times the US GNP. Of course, the US leads the pack of such rich people.

But hey, these rich folks are generous. In 2006, the donated $285 billion to philanthropic causes. What’s that you say? That $285 billion is only 0.8% of their combined wealth? Hmmm. Well, at least entrepreneurs...

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By Russ Henke on 6/25/2007 4:14 AM

Some readers of yesterday's blog entry may be wondering if they might have missed the chance to ride the first day's price appreciation (over 13% in 8 hours) -- if only they had acted on Thursday June 22, the day before the Blackstone Group's IPO. Not to worry. It would have been difficult, since most Blackstone shares were already snapped up by money managers and big financial institutions.

But, hey, the stock is now publicly traded -- you can take your chances on future Blackstone appreciation -- call your broker! And remember, having watched what the Blackstone Group just did, other "alternative investment funds" may now choose to go public, such as KKR, The Carlyle Group, and more.

By Russ Henke on 6/24/2007 5:33 PM

Among all the factors plaguing the vast majority of US citizens, very little space in these blog entries to date has been devoted to the unremitting and enervating trend over the last six-and-a-half years, of the rich-getting-richer, and the poor-getting-poorer in the United States.With the US government (a) providing unwarranted tax cuts favoring the rich, (b) encouraging rising energy prices by condoning the lack of new oil refineries, (c) stoking international fear, anxiety and doubt, and (d) implementing countless other such policies, the resulting economic conditions have allowed the US wealthy to thrive while US workers’ wages have not even kept up with inflation, despite massive worker productivity gains during the period.In the last few days, we have witnessed a quintessential example of the “rich-getting-richer” syndrome. Run by billionaires, the private-equity giant Blackstone Group popped up again in the news June 21, 2007 when Representative Henry Waxman, Democrat and chairman of the House Committee...

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By Russ Henke on 6/5/2007 11:01 AM

In the June 3 blog entry in this space, Cadence was mentioned as one of the Big 3 EDA vendors. The New York Times reported on June 4, 2007 that Cadence is in talks with at least two buyout firms about a possible sale of the company. Cadence is said to have held talks with Kohlberg Kravis Roberts and the Blackstone Group. But they warned that a deal may not happen because of the “complicated risks in the company's business”. Other private equity firms apparently have looked at Cadence, but passed. Like the private equity purchase of MCAD vendor UGS several years ago, (prior to its acquisition by Siemens this year), a deal for Cadence would be one of the biggest moves by private equity firms into technology, a sector they are said to avoid because of its volatility and capital needs. Though both Kohlberg Kravis and Blackstone have invested in technology firms before — most recently, Kohlberg bought the First Data Corporation and Blackstone purchased Freescale Semiconductor — private equity has rarely approached...

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By Russ Henke on 6/3/2007 5:32 PM

On May 27, 2007, I had planned to use this space toreport the financial results of the top three MCADvendors and the top three EDA vendors for Q1 2007.However, comments on Memorial Day remembrances tookprecedence.For the record, in nominal Q1 2007, Autodesk brokeinto the rarified atmosphere of eclipsing $500 millionin total revenue for Q1 (at $509,000,000). DassaultSystemes posted $381,000,000 in revenue, and Siemens UGS came in at $302,000,000.An earnings' comparision will have to wait, as neitherAutodesk nor UGS reported earnings this quarter, eachfor different reasons.EDA vendor Cadence reported $385,000,000 in revenue inQ1, followed by Synopsys at $293,000,000, and MentorGraphics at $190,000,000.So the Top 3 MCAD vendors topped the Big 3 EDA companiesby a 1.4 to 1 ratio in revenue for Q1 2007.These performances are remarkable in light of the poorperformance of the US economy in recent times, especiallythe ongoing decline in overall US manufacturing employment for the 11th consecutive month in May, as announced...

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By Russ Henke on 5/27/2007 6:12 AM

The latest Q1 2007 financial results from the leading MCAD and EDA vendors are finally out,and I wanted to discuss them in today's blogentry.But Memorial Day 2007 is upon us, just about1487 days since the infamous declaration of "Mission Accomplished" in IRAQ. And thesituation there is getting worse, not better.Over 100 American GI's have been killed in May,with 5 more days to go. Some 104 soldiers werekilled in April. The last six months have beenthe most deadly six months of the war. Andthousands more GI's have been injured, many incapacitated for life. To say nothing about the tens of thousands of Iraqis killed and injured. And further, there is still no end to the IRAQ war in sight. Millions of Iraqis have fled the country, more by the day.And don't forget, the war in Afghanistan is worsening as well, along with casualties there.Yes, we have a lot to remember and grieve for today. Our hearts go out to the thousandsof families and friends of those killed or injured.Of course Memorial Day is for honoring theheroes...

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By Russ Henke on 5/20/2007 12:32 PM

Here are some more headlines from May 16 - 20:Because the US Army is so over-stretched today, more than 25,000 US National Guard troops are now serving in Iraq. Nearly 5,000 are also in Afghanistan and 6,000 more are stationed along the Mexican border. Because of equipment left behind in Iraq and Afghanistan, domestically-based Guard units have only 40% of the equipment they need for disaster response. Nearly 90% of stateside Guard units are rated less than fully ready (for domestic duty) because of equipment and training shortfalls.Scientists working with the US Defense Department have found evidence that a low-level exposure to sarin nerve gas — the kind experienced by more than 100,000 American troops in the Persian Gulf war of 1991 — could have caused lasting brain deficits in former service members.AAA asked the US Senate on May 15 to investigate why oil companies are making huge profits at a time when “glitches” at gas refineries are said to have caused pump prices to soar.Telemarketing fraud, once limited...

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By Russ Henke on 5/13/2007 7:20 AM

Again this past week, the economic news contained some ominous signs for the businesses and people of the United States.Here are just a few items: - The US Trade Deficit surged in March '07, up 10.4% from the February level. So far this year, the US trade deficit is running at an annual rate of $723 billion, just a tad below the $765 billion deficit set in 2006, the fifth consecutive year of record trade deficits. - And this was reported as good news: "In a reversal of recent trade trends, the trade deficit with China improved in March 2007, growing by (only) $17.2 billion compared with an increase of $18.4 billion in February." - Growth of the US economy, as measured by the GDP, slowed to an anemic rate of just 1.3% in Q1 2007, per recent reports. The new trade deficit number may end up lowering that Q1 GDP figure to 0.7%. - The Treasury Department said on May 10 that through 7 months of this fiscal year, the Federal Deficit grew by "only"...

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By Russ Henke on 5/5/2007 10:13 AM

On April 7, 2007, the blog entry in this space began as follows:  Yesterday, April 6, 2007, the US Labor Department reported that  180,000 new jobs were added to non-farm US payrolls in March.  This figure elevated the average number of new jobs added per  month in Q1 2007 to 151,000. While 151,00 per month may  seem large, and it is compared to the dismal record over the  last six years, 151,000 per month does not even keep pace  with the need for new jobs generated by normal US population  growth.Yesterday, May 4, 2007, the Labor department revised these numbers, having overstated the February and March job gains by some 26,000. This correction lowers the Q1 average per month to an even weaker 142,000.But the change in the February and March numbers was not yesterday’s blockbuster labor news. Rather, it was that April’s labor report came in at only 88,000 new jobs, the worst figure in 29 months. And the governmentaccounted for 25,000 of those 88,000! So US payrolls have grown by an average of only 129,000 per...

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By Russ Henke on 4/28/2007 6:08 AM

Recent blog entries in this space have dealt with headlines in the news that affect the daily lives of Americans in particular, and many more people everywhere. The latest news has not been encouraging. Here are several more recent news items for readers’ consideration:- The worst economic growth in four years is raising concern that troubles in the US housing market will spread and throw the country into a recession before the year is out. The economy practically crawled at a 1.3% pace in the opening quarter of 2007, the US Commerce Department reported on April 27. The reading on gross domestic product in Q1 2007 was the weakest since the 1.2% pace in Q1 2003, right before the US-led invasion of IRAQ. The 1.3% GDP growth in Q1 2007 was far weaker than the already-sluggish 2.5% rate in Q4 2006. The country’s bloated trade deficit alone shaved a half-percent off the Q1 GDP. These reports come as George W. Bush continues to suffer from mediocre poll ratings from the public on his economic stewardship.- Even though...

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By Russ Henke on 4/17/2007 9:27 AM

In the blog entry here on April 14, the followingparagraph was included:   On April 13, the Labor Department's Producer Price   Index came in flat for March 2007, an encouraging   result if one does not eat food or buy gasoline or   use electricity. However, including the real world   impacts of energy and food, wholesale prices rose   another full percent in March, following an even   larger 1.3% rise in February.Readers may be interested in these additional facts:Yesterday, April 16, the Consumer Price Index results for March were announced. Consumer prices shot up by the largest amount in nearly a year, driven by huge increases in the cost of gasoline and other energy products.The Consumer Price Index rose 0.6% in March, the biggest increase since April of 2006. Energy prices surged by 5.9% last month, the largest one-month increase since September 2005, when Hurricane Katrina shut down Gulf Coast refineries.The rise in inflation ate into workers’ paychecks, with relative weekly earnings declining in March....

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By Russ Henke on 4/14/2007 8:55 AM

One week ago, this space was devoted to just-released reports on relatively weak job creation in the US. Further, what new jobs there are, are arguably in service sectors that do not create real US wealth and productivity. On the other hand, the US Manufacturing Sector has been losing jobs for nine consecutive months. The April 7 blog entry ended with some economists suggesting that a US recession was nearly 50% likely soon.So in the interest of staying “fair and balanced”, this week was devoted to trying to find some good economic or political news to convey. Alas, here’s just a sampling of the many new reports from the last 7 days:The US dollar traded near a record low against the Euro on April 13, 2007. The Euro bought $1.3547 -- its highest level since January 2005, and only a cent short of its all-time high from December 2004 of $1.3667. (Kiss that new 2008 C-Class Mercedes goodbye!).On April 13, the Labor Department's Producer Price Index came in flat for March 2007, an encouraging result if one does not...

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By Russ Henke on 4/7/2007 9:26 AM

Yesterday, April 6, 2007, the US Labor Department reported that 180,000 new jobs were added to non-farm US payrolls in March. This figure elevated the average number of new jobs added per month in Q1 2007 to 151,000. While 151,00 per month may seem large, and it is compared to the dismal record over the last six years, 151,000 per month does not even keep pace with the need for new jobs generated by normal US population growth. Another concern, of course, is just where the jobs are being added. For example, in March, 75% of the new jobs were tallied in services sectors: Retailers added 36,000; educational & health care services expanded by 54,000; leisure & hospitality services picked up 21,000, while the government itself added 23,000. These services sectors are not where the real wealth and productivity of the nation are created. Indeed, the US Manufacturing Sector, where real national wealth is created, not only lost 16,000 jobs in March, but also March was the ninth consecutive month of manufacturing job losses!...

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By Russ Henke on 3/31/2007 10:04 AM

In my first Cyon blog entry on March 2, 2007, I mentioned that I would occasionally offer comments on engineering software, particularly for Mechanical CAD (MCAD) and Electronic Design Automation (EDA). On March 9, the blog entry related to the recent passing of pioneers in MCAD and EDA. Today it might be useful to take a moment to compare these two software industries in general, especially the oligopolies that seem to dominate each.In MCAD, one usually identifies four vendor companies whose worldwide revenues now make up a huge percentage of the entire MCAD software industry: Autodesk, Dassault Systemes, UGS and PTC. Each enjoys reported annual sales near or well-above one billion U.S. dollars. In EDA, observers usually refer to the “Big 3” vendors: Cadence, Synopsys and Mentor Graphics. Both Cadence and Synopsys revenues are well over a billion dollars per year each, while Mentor Graphics comes in around $800 million. The Big 3 in EDA collectively represent a remarkably high percentage of total EDA industry...

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By Russ Henke on 3/22/2007 3:26 AM

On the heels of my March 9, 2007 blog entry, lamenting the passing of two pioneers in MCAD/CAE and EDA, respectively, comes the news of the passing of John Backus at age 82, the creator of FORTRAN. As the early engineers and programmers of my generation recall, FORTRAN was among the first "high level computer programming languages" that allowed us to avoid machine coding. Many’s the late night of university thesis research and related software development, when we gave thanks to Mr. Backus of IBM.

But today I want to depart from MCAD and EDA briefly, to comment on the advent of Spring, the rising awareness of climate change, and finally doing something about it!

For example, while Applied Materials here in Silicon Valley sports over a thousand seats of commercial MCAD/CAE software, employing “virtual prototyping” to help design semiconductor manufacturing equipment, the company made other news on March 17, 2007, by announcing at its annual shareholders meeting that it would begin setting up “the...

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By Russ Henke on 3/9/2007 12:00 PM

In my first blog item on March 2, 2007, I indicated that topics related to both MCAD/MCAE and EDA would occasionally be mentioned in future blog entries. In reflecting on the current state of these two related industries, I realized that two authentic pioneers who helped advance the state-of-the-art were lost to us in recent months. Indeed, Dr. Jason R. Lemon and Dr. A. Richard Newton both passed away within a week of each other as 2006 ended and 2007 began.Dr. Jason R. Lemon was a bona fide pioneer in Mechanical Computer Aided Engineering (MCAE). Still serving as CEO of International TechneGroup Incorporated (ITI), Milford, OH, Dr. Lemon passed away on December 27, 2006 after a decades-long battle with cancer. He was 71 years old. In addition to starting ITI in 1983, Dr. Lemon earlier founded Structural Dynamics Research Corporation (SDRC) in 1967, as an outgrowth of his work at the University of Cincinnati. SDRC was ultimately merged with UGS in 2001 and of course, SDRC technology and many SDRC people still...

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