burnside writes:
Well, it must look like a tailspin to Starbucks. Though I believe Paul Volcker has a less fraught version of the economy's condition.
burnside | 03.19.08 - 5:43 pm | #

It is me from Europe writes:
First...and in a tailspiiiiiiiiiiiiiiiin
It is me from Europe | 03.19.08 - 5:43 pm | #

uncle toby writes:
Well, when times are tough, I guess the first thing you give up is a $4 cup of coffee.
uncle toby | 03.19.08 - 5:43 pm | #

David Jackson writes:
Consumers are increadingly responding to the growing economic decline by cutting back on spending. This will lead to a further decline in economic activity.
David Jackson | Homepage | 03.19.08 - 5:44 pm | #

would this work? writes:
chuck yeager for Fed Chair...
would this work? | 03.19.08 - 5:45 pm | #

chickenlittle writes:
Economy in a tailspin....worst financial crisis since WWII.....has anyone called Washington?
chickenlittle | 03.19.08 - 5:50 pm | #

Bob_in_MA writes:
Yeah, I think he took an odd approach. It reminded me of Carter's malaise speech. It might be true, but Reaganesque happy-talk goes down a lot easier.

He certainly didn't make anyone want to invest in his company.
Bob_in_MA | 03.19.08 - 5:51 pm | #

4runner writes:
Consumers are increadingly responding to the growing economic decline by cutting back on spending. This will lead to a further decline in economic activity.

How much economic activity is generated by the minimum wage Starbuck's employees?
4runner | 03.19.08 - 5:51 pm | #

Elvis writes:
I have a hard time believing people can pull themselves away from Starbucks crack despite the economy. Half the population is addicted. $4 for a fix isn't that much to set you free.
Elvis | 03.19.08 - 5:54 pm | #

Crispy&Cole writes:
Fed will now allow Coffee Beans as collateral - problem solved!
Crispy&Cole | Homepage | 03.19.08 - 5:54 pm | #

Justin writes:
I read they are switching to sell energy drinks. How long before it is bottles of colt 45?
Justin | 03.19.08 - 5:55 pm | #

MiTurn writes:
Really? I'm shocked! No, really, I didn't know! No one sent me the memo!
MiTurn | 03.19.08 - 5:56 pm | #

Nemo writes:
New Starbucks Opens In Rest Room Of Existing Starbucks
Nemo | Homepage | 03.19.08 - 5:57 pm | #

LastManStanding writes:
I wonder if reading the coffee grounds at the end of my latte qualifies me to run the Fed?
LastManStanding | 03.19.08 - 5:58 pm | #

Cobradriver writes:
chuck yeager for Fed Chair...
would this work? | 03.19.08 - 5:45 pm |

Well after the talk he gave at Oshkosh a few years ago,I can say without a doubt, there would be some interesting/colorful language used in his speeches...

Chris
Cobradriver | 03.19.08 - 6:01 pm | #

Elvis writes:
What the F##k did Chuck say?
Elvis | 03.19.08 - 6:03 pm | #

smelly cat writes:
334 visitors and only 20-odd comments? come on lurkers, step up to the plate!
smelly cat | 03.19.08 - 6:03 pm | #

ac writes:

We are dealing with things that we haven't seen before in terms of how people are responding to how tough it is.

That's the biggest danger, IMO -- because we've gone so long without any serious economic stress we're going to overreact and screw things up even more.

Periods of fear and distress generally aren't the best times to make long term life-changing decisions, though I suspect we'll be hearing louder and louder calls to do just that.

ac | 03.19.08 - 6:06 pm | #

Marcus Aurelius writes:
All of the sudden, the comments have become focused on a commodity that no one seems willing or able to do without.

Interesting.

I see that coffee futures also took the hit - but it was on the 17th (from what I could tell). With the sentiment on this board, I think I'll keep an eye on coffee over the next few days.
Marcus Aurelius | 03.19.08 - 6:08 pm | #

FFDIC writes:
I rather drink J&B.
FFDIC | 03.19.08 - 6:10 pm | #

Nemo writes:
We are dealing with things that we haven't seen before in terms of how people are responding to how tough it is.

You mean they are cutting back on the triple-shot non-fat double-decaf half-caf with a twist of lemon grande, and only going for the double-shot low-fat decaf tall with no lemon?
Nemo | Homepage | 03.19.08 - 6:10 pm | #

Elvis writes:
FFDIC writes:
I rather drink J&B.

In the morning with my bacon and eggs.
Elvis | 03.19.08 - 6:10 pm | #

RE writes:
Angry Saver (from prior thread) ,
“…I disagree. It's the constant change in inflation rates that is so damning. Under the gold standard periods of inflation were offset with periods of deflation. Business planning was easier and hence real growth greater. “

I don’t have the figures handy for the U.S. under the gold standard but do have them for the U.K. It isn’t averages that matter. Look at the volatility in this chart from Buiter:

http://img2.freeimagehosting.net.../ 0e8c1debc1.png

Given real data, I don’t think that your contention that business planning was easier holds.

Note though that I am heavy gold investor since 2002. I do believe in responsible central banking and that if that cannot be achieved, we will have to revert to some kind of a commodity based standard. As a gold investor I am actually not unhappy at all that we aren’t on a gold standard anymore. There is far less manipulation of the price and gold now acts very much as its own currency and will IMO continue to do so.
RE | 03.19.08 - 6:11 pm | #

Gareth G writes:
I've never been in a Starbucks. The notion of paying $4 for coffee from a national chain repulses me. I get a cheaper and I believe a better cup from local shops, which includes wonderfully inefficient service from people with lots of piercings. Keeping it human.
Gareth G | 03.19.08 - 6:11 pm | #

sk writes:

We are dealing with things that we haven't seen before in terms of how people are responding to how tough it is.''


And with trading equities too. I've been doing this for almost 20 years; I'm throwing every rulebook out of the book; don't run your wins for longer than a day or two, cut your losses within a 1/2 or less seems to be all that works - its astounding.

I blame the Fed. Such massive intervention in ways never seen before and then it doesn't work but they don't give up - they just pile it on - but people have no idea what to do with it.

I liken it to one of those Lowry paintings ( though not how he intended it ) at the moment - matchstick people behaving robotically who've lost their mojo/soul and are aimlessly trading in and out..

-K
sk | 03.19.08 - 6:12 pm | #

X writes:
"We are dealing with things that we haven't seen before in terms of how people are responding to how tough it is.''

Yes Mr. Schultz. And so are customers when they walk up to the register and your employee has the nerve to say, "that will be $7 for your triple reverse layup quadruple macchiatto with a hint of skim and extra heavy cream with a coconut drizzle."
X | Homepage | 03.19.08 - 6:13 pm | #

NSA writes:
Cutting back from a peppermint soy latte to just plain ol' living at Starbucks.
NSA | 03.19.08 - 6:13 pm | #

Bob Dobbs writes:
Gloomy is the only wise thing for this guy to be. He sells one of the first things that people can easily cut down on.

This quote is too true for the service industry:

"We are dealing with things that we haven't seen before in terms of how people are responding to how tough it is.''"

The last time things were really tough, back in the early '80s, people didn't drink so much fancy coffee. They didn't eat out nearly as much, nor employ so many gardeners, nor travel so much. And they weren't innearly so much in debt. Mr. Starbucks doesn't know what's going to happen. And he's afraid. And he ought to be.
Bob Dobbs | Homepage | 03.19.08 - 6:14 pm | #

Elvis writes:
Gareth G writes:
"I've never been in a Starbucks. The notion of paying $4 for coffee from a national chain repulses me. I get a cheaper and I believe a better cup from local shops..."

The obvious question comes to mind. How do believe it is a better coffee if you never have had Starbucks? Maybe those crackheads are onto something...
Elvis | 03.19.08 - 6:14 pm | #

ac writes:

Well, when times are tough, I guess the first thing you give up is a $4 cup of coffee.

To me Starbucks is kind of an icon for the bubble-era US superconsumer.

I almost wonder if the company as we think of it is viable without them.

ac | 03.19.08 - 6:16 pm | #

neil writes:
Elvis writes:
I have a hard time believing people can pull themselves away from Starbucks crack despite the economy. Half the population is addicted. $4 for a fix isn't that much to set you free.
Elvis | 03.19.08 - 5:54 pm |

Its not voluntary. No HELOC, no spending. No MEW, no money to give the kid as the "cool parent" so they can lounge at SBUX during college. Not to mention, when working two jobs to survive, the office coffee pool sufices.

For the record, I love Starbucks coffee and what they did for American coffee in general. (Remember smoke filled coffee shops? Ugh...) But its been six months since I stepped into a Starbucks(typical) and months since the wife found a coupon making it worth buying their beans at the market.

Got Popcorn?
Neil
neil | Homepage | 03.19.08 - 6:16 pm | #

Gareth G writes:
The obvious question comes to mind. How do believe it is a better coffee if you never have had Starbucks?

I admit, it's an act of faith.
Gareth G | 03.19.08 - 6:16 pm | #

Markel writes:
The price of a cup of Starbucks is, to a large extent, the price of healthcare for their employees, including part-timers.

So, we cut back and that'll have to go, just like it does in other third-world nations.
Markel | 03.19.08 - 6:16 pm | #

Marcus Aurelius writes:
RE | 03.19.08 - 6:11 pm

Is there a chart that runs from 1800 to today? I'd like to see the Breton Woods/Breton Woods decoupling on the line. I'll bet you'd be startled.
Marcus Aurelius | 03.19.08 - 6:16 pm | #

Bits_of_Real_Panther writes:
"many would say the consumer is in a recession"

I'll wait for a shred of evidence thanks
Bits_of_Real_Panther | 03.19.08 - 6:16 pm | #

Elvis writes:
By the way, coffee is a fundamental. People will not stop drinking it. If they can somehow end their Starbucks addiction, they will seek cheaper alternatives like McDonalds. Kind of like beer.
Elvis | 03.19.08 - 6:17 pm | #

Kett82 writes:
Starbucks over-roasts their beans and calls it great coffee.

No thanks...give me that sweet stuff from Dunkin anyday.
Kett82 | 03.19.08 - 6:17 pm | #

Jan in Stone Mtn writes:
You know that economists and politicians and CNBC can blather on all day, but when Starbucks says they're lowering prices to try to bring in some business, reality starts to break through.

If someone you know doubts the economic situation in this country, and there are still a few who do, tell them what Starbucks has to say about it.
Jan in Stone Mtn | 03.19.08 - 6:17 pm | #

Elvis writes:
By the way, pass me a Natural Light. Anybody see how much microbrews cost today? I could drink the Natty Lite in college, so I can drink again. I'll do my part to tighten the belt.
Elvis | 03.19.08 - 6:20 pm | #

Bob Dobbs writes:
"By the way, coffee is a fundamental. People will not stop drinking it. If they can somehow end their Starbucks addiction, they will seek cheaper alternatives like McDonalds. Kind of like beer."

You can still have the good stuff cheap if you grind your own beans and carry a thermos. Startup costs, $30 max.
Bob Dobbs | Homepage | 03.19.08 - 6:23 pm | #

Bob_in_MA writes:
They opened a Starbucks across from this building I had an office in, back in 2000 probably. There was ALWAYS a line. I'd work late on a Saturday and at 6pm there would be a line of 20-somethings out the door. When I was 20-something, NO ONE stood in line for coffee. If I had had half a brain, I would have bought shares then....
Bob_in_MA | 03.19.08 - 6:26 pm | #

Anonymous writes:
Schultz can run The Fed, but Bernanke can't run Starbucks! Where is Warsh?
Anonymous | 03.19.08 - 6:26 pm | #

Kett82 writes:
By the way...if they install the Clover machines he mentioned, I will try their coffee again.

With those, each step of the brewing process can be controlled:

http://www.economist.com/ busines...ory_id=10150312

Regards
Kett82 | 03.19.08 - 6:27 pm | #

Bob_in_MA writes:
Imagine you have three little kids, both you and your spouse are working, doing well, but suddenly you worry about one of you maybe losing a job...

The $4 cup of coffee is first off the list...
Bob_in_MA | 03.19.08 - 6:28 pm | #

Anonymous writes:
I found this as stupid as Starbucks:

http://www.youtube.com/watch?v=v...h? v=vFLs9RI8mSA
Anonymous | 03.19.08 - 6:31 pm | #

Cutting Back writes:
Personally, I don't think I've ever had that infamous $4 cuppa at Starbucks. Mostly the $2 and under version. I'm sure the $4 coffee is tasty, but so is filet mignon. I don't have that every day (or ever) either.
Cutting Back | 03.19.08 - 6:32 pm | #

KirkH writes:
I hear they're starting to do lines of Folgers crystals on Wall Street due to the layoffs. Could bode well for SBUX.
KirkH | Homepage | 03.19.08 - 6:35 pm | #

Bob Dobbs writes:
"Imagine you have three little kids, both you and your spouse are working, doing well, but suddenly you worry about one of you maybe losing a job..."

I work in a large establishment full of well-educated but poorly-paid people. So a lot of units have coffee clubs; they dig up a drip machine, buy decent coffee, establish a rota, and charge two bucks a week.

As we realize we can't all have our own, we'll get more interested in operating things in common.
Bob Dobbs | Homepage | 03.19.08 - 6:35 pm | #

Curlydan writes:
Mostly I drink green tea for $0.05 a bag (shop at a Chinese grocery store and get the 100 count package).

I have one big cup, set aside the tea bag, then have another big cup by re-using the bag. Call me crazy, but it's good!
Curlydan | 03.19.08 - 6:35 pm | #

AllenM writes:
Fantastic skiing the last couple of days at Brian Head. Of course, I go on a limited access ski vacation and the world blows up!!! Promised the misses that I wouldn't connect much;-}

Boo hoo, wtf happened to steely bernanke ?

Caved liked a novice blackjack player.

Well, hope everyone is coming through this mess right side up- gotta finish my laundry and get in the hot tub.

Someday this war's gonna end...
AllenM | 03.19.08 - 6:36 pm | #

Elvis writes:
Bob_in_MA writes:
"Imagine you have three little kids, both you and your spouse are working, doing well, but suddenly you worry about one of you maybe losing a job...
The $4 cup of coffee is first off the list..."

Bob, You obviously don't understand addictions. A kid would be first off the list.
Elvis | 03.19.08 - 6:36 pm | #

nades writes:
Elvis writes:
By the way, pass me a Natural Light. Anybody see how much microbrews cost today? I could drink the Natty Lite in college, so I can drink again. I'll do my part to tighten the belt.
Elvis | 03.19.08 - 6:20 pm | #

No kidding. Hopps, wheat and barely have gone thru the roof... It sucks for anyone how enjoys and IPA ever so often...
nades | 03.19.08 - 6:37 pm | #

X writes:
"You have an economy that really is in a tailspin"

You know, I was actually hoping "the perfect storm" metaphor or "six sigma event."

hmmmmmmm.......we need a new disaster movie...
X | Homepage | 03.19.08 - 6:38 pm | #

Kett82 writes:
at least the third kid...they are always the first to go...
Kett82 | 03.19.08 - 6:38 pm | #

Jack Staub writes:
My my, Starbucks offering discounts!
A double latte defla(tion), anyone?
Jack Staub | 03.19.08 - 6:38 pm | #

Max writes:
Hey, do what I do. If you gotta have an espresso drink every day, get yourself a decent home machine. I can make the equivalent of a $4 Starbucks "Grande White Mocha" at home for 40 cents, including disposable cup. In 200 days, you can pay for a Rancilio Silvia and a decent grinder. It's all profit after that.
Max | Homepage | 03.19.08 - 6:38 pm | #

KirkH writes:
I always assumed that Starbucks would be the last vestige of elitism that people would cling to as we slid into the recession.
KirkH | Homepage | 03.19.08 - 6:38 pm | #

Troy writes:
Quick! Somebody FedEx a Wright Model B to Seattle!
Troy | 03.19.08 - 6:43 pm | #

Nemo writes:
The 13-week T-bill is at its lowest yield since 1958. For those keeping score.

But hey, what's the worst that could happen?
Nemo | Homepage | 03.19.08 - 6:43 pm | #

ugh writes:
For the record;

Sbux at my airport has a $1.50 cuppa, the same price as other coffee slingers in the terminal like Tim Horton's.

Not all crack is created equal.

No lines at Sbux. Ever.
ugh | 03.19.08 - 6:44 pm | #

Cutting Back writes:
I always assumed that Starbucks would be the last vestige of elitism that people would cling to as we slid into the recession.

KirkH, no, that'll be the Burberry Giant Check Stole scarf ($550).

http:// www.burberryusaonline.com...rentPage=family

Same idea, though.
Cutting Back | 03.19.08 - 6:45 pm | #

Siobhan writes:
hat tip hiker90 ?
Siobhan | 03.19.08 - 6:47 pm | #

Marcus Aurelius writes:
We migh literally get the chance to find out what's "to die for".
Marcus Aurelius | 03.19.08 - 6:47 pm | #

m writes:
alan greenspan quotes

http://thinkexist.com/quotes/ala...alan_greenspan/
m | 03.19.08 - 6:49 pm | #

TradingStats writes:
http://quotes.ino.com/chart/?s=C...ZB.H08.E& v=dmax

is this a breakout chart or exhaustion or just contract expiration?
TradingStats | 03.19.08 - 6:51 pm | #

Navspecwarcom writes:
Been shorting SBUX for a while. Sure appreciate Mr. Schultz candid comments at the shareholder meeting. Might get me an extra latte tomorrow morning after the opening bell.

The most laughable items at a Starbucks shop are the tip jars of the baristas.
Word has it baristas make $20-40 in tip each week. Since they didn't want to share the hefty tip jar with the store managers, they sued in court and now stand to make millions. Only in a America...

http://www.starbucksunion.org/node/1980
Navspecwarcom | 03.19.08 - 6:56 pm | #

RayOnTheFarm writes:
He certainly didn't make anyone want to invest in his company.

Perhaps not, but he certainly can't be blamed for painting an overly rosy picture then get slammed with problems a few months on. We just saw that with BSC (only their collapse happened much faster than a few months).

During the last AAPL conference call, they projected lower sales. The market didn't like that. They punished Apple for trying to call a spade a spade.
RayOnTheFarm | 03.19.08 - 7:01 pm | #

hiker90 writes:
Thanks Siobhan. I think this is another case of by the time I read through the comments and add my comment, CR is already composing the next 2 or 3 blog posts. Note my comment was, as usual, towards the end of that particular comments section. Sometimes, it's a pisser having to be productive here at work.

Best,
hiker90 | 03.19.08 - 7:02 pm | #

stealthwii writes:
I just bought a burr grinder and I get whole beans for $10 a pound roasted fresh several days a week from a local coffee shop.

I just pop the fresh grinds, from the freshly roasted beans into a french press (cheapest coffee machine) and bam - coffee 10x better than starbucks for 50 cents or less a large cup.

The grinder is an investment, it was expensive but it should last 20 years.

I used to work at starbucks as a kid, but its a crappy place and I stopped buying coffee there 2 years ago after cutting back there year after year.
stealthwii | 03.19.08 - 7:02 pm | #

Lawyerliz writes:
I actually like McD's coffee better than Starbucks. And I only get the plain stuff because the other stuff is too sugary.

At home I grind my own.
Lawyerliz | 03.19.08 - 7:03 pm | #

malabar writes:
Does anyone know more?

There is a rumor that John Merriwether of LTCM fame has blown up another hedge fund. Net result unwinding some gold futures to pay the creditors.
malabar | 03.19.08 - 7:04 pm | #

Cobradriver writes:
What the F##k did Chuck say?
Elvis | 03.19.08 - 6:03 pm | #

The classic...
"Did those motherf&%$#ng Nazis actually think they could catch a good ol' boy from WV in the woods? I ran circles around those dumbasses. Nazi f%$#%rs. Good G.. D... riddance."

You could hear all the chuckles from the WW2 era guys over the gasps of everyone else.

He was asked a question about firing a antisat missle from the F-15. I.E..."Did it actually happen?"

The stare the guy got actually gave me chills...Mr. Yeager never said a word.

Oh,and the story about strafing and firebombing Mt. Blanc in Switzerland is hilarious...

Chris
Cobradriver | 03.19.08 - 7:05 pm | #

Cutting Back writes:
During the last AAPL conference call, they projected lower sales. The market didn't like that. They punished Apple for trying to call a spade a spade.

RayOnTheFarm, during yesterday's GME conference call, they offered good results and guidance. Stock has gone nowhere (or fallen).
Cutting Back | 03.19.08 - 7:06 pm | #

thoth writes:
I roast my own beans in a Gene Cafe roaster. A pound of green beans costs $4. That's a buncha cups of great coffee as fresh as I want it. The $500 roaster pays for itself mucho pronto. Green beans stay acceptably fresh for at least a year without special storage.

So the poor folks who can't afford a $4 cup can move up to truly fine coffee, sans Schultz, if they've a mind to.
thoth | 03.19.08 - 7:07 pm | #

Cutting Back writes:
malabar, try this:

http://www.bloomberg.com/apps/ne...Gr2E& refer=home
Cutting Back | 03.19.08 - 7:08 pm | #

Nemo writes:
malabar --

Well, Bloomberg is running the story on Meriwether's fund
Nemo | Homepage | 03.19.08 - 7:08 pm | #

Max writes:
I just pop the fresh grinds, from the freshly roasted beans into a french press (cheapest coffee machine) and bam - coffee 10x better than starbucks for 50 cents or less a large cup.

Perfect! There's a reason SBUX spends so much effort on "things other than coffee." They're trying to distract you from the markup.
Max | Homepage | 03.19.08 - 7:09 pm | #

solo writes:
SELL APPLE, SELL! SELL!, the status symbol of sitting in Starbucks with your Mac laptop sipping your latte is over.
solo | 03.19.08 - 7:12 pm | #

Bill Melater writes:
It never fails to amaze me that the construction workers I work with, who eat off the "roach coach" (lunch truck) twice every day, are invariably the first to run out of cash before the end of the week.

It further amazes me that people who are quite serious about their other finances and investments, blithely fail to do due dilly on the commonplace items they take for granted.

$4 a cup? $12 a day is probably a reasonable assumption - excluding muffins and such.

$12/day for 300 days (presuming the addict doesn't fix on Sundays,) is

$3600.00 a year for... coffee.

How's that working out on 36K a year?
Bill Melater | 03.19.08 - 7:13 pm | #

Siobhan writes:
hiker90,
You're welcome, I think you were first. I posted it for CR and "for the record" (bd keeps track of these things!)
Siobhan | 03.19.08 - 7:14 pm | #

X writes:
Lawyerliz writes:
I actually like McD's coffee better than Starbucks.

Amen. I just wish it was as hot as it used to be. That dang lawsuit ruined it for everybody.
X | Homepage | 03.19.08 - 7:15 pm | #

david_in_ct writes:
Foreclosure inventory at countrywide is actually falling. Most unusual.
http://bp2.blogger.com/_A2btxwmK...s1600-h/ reo.gif
david_in_ct | 03.19.08 - 7:19 pm | #

X writes:
Also I was at COSTCO today and bought the Kirkland New Guinea 3 pounder for $13.49. It is delicious.

The crap Starbucks was like $18 for two pounds.....whatever.

Shultz' "ego has written checks his body can't cash." (Top Gun).
X | Homepage | 03.19.08 - 7:19 pm | #

Max writes:
It never fails to amaze me that the construction workers I work with, who eat off the "roach coach" (lunch truck) twice every day, are invariably the first to run out of cash before the end of the week.

Yeah, I had some friends who made $7/hr that spent $2000/year on cigarettes. Nothing you can do with that.
Max | Homepage | 03.19.08 - 7:20 pm | #

X writes:
Max writes:
It never fails to amaze me that the construction workers I work with, who eat off the "roach coach" (lunch truck) twice every day, are invariably the first to run out of cash before the end of the week.

Yeah, nose candy and pot definitely put a dent in the wallet.
X | Homepage | 03.19.08 - 7:21 pm | #

X writes:
you think they only sell food outta that truck?
X | Homepage | 03.19.08 - 7:21 pm | #

Fed writes:
Gimme your tax dollars so I can give them to the investment bankers!!!
Fed | 03.19.08 - 7:22 pm | #

Jack Staub writes:
malabar writes:
"Does anyone know more?
There is a rumor that John Merriwether of LTCM"

Here's the Bloomberg article:
http://www.bloomberg.com/apps/ ne...id=aelEnkvIESkg
Jack Staub | 03.19.08 - 7:22 pm | #

Bush writes:
I are a gud prezididnt.
Bush | 03.19.08 - 7:23 pm | #

Max writes:
To Ben: "The simple fact is you feel responsible for market liquidity and it has a confidence problem."
Max | Homepage | 03.19.08 - 7:23 pm | #

ZackAttack writes:
Christ, this day had a seriously deflationary feel to it.

3 month now yielding 0.47. Down from 1.35 last week. In what kind of world do treasuries trade like a penny

I felt like we were around *a* (not *the*) tradeable bottom, so I tried to find some groups that would work.

Only thing was *some* pharma, and there you had to pay up for a gap up. I wasn't going to do it.

The thing that kept me in the game was a basic materials short against my oil longs.
ZackAttack | 03.19.08 - 7:24 pm | #

Max writes:
"Now I'm not gonna sit here and blow sunshine up your ass, Bernanke. A good Fed Chair is compelled to evaluate what's happened, so he can apply what he's learned. Up there, we gotta push it. That's our job. It's your option Bernanke. All yours.
Bernanke: Sorry to bother you on a Sunday, Sir, but thank you very much for your time.
Volker: No Problem. Good luck. "
Max | Homepage | 03.19.08 - 7:25 pm | #

RE writes:
Marcus Aurelius,

Here is the inflation chart for the US since 1914:

http://img2.freeimagehosting.net.../ a81531b176.png

Clearly less volatile though very volatile right after the formation of the Fed.
RE | 03.19.08 - 7:29 pm | #

Outsider writes:
So why all this about Starbucks, but the cigarette companies aren't in the press complaining?

Surely there is a difference between habit and addiction. Coffee pales in comparison.
Outsider | 03.19.08 - 7:29 pm | #

s0mebody writes:
Bush writes:
I are a gud prezididnt.


LMFAO!!
s0mebody | 03.19.08 - 7:30 pm | #

Anonymous writes:
why?....'cause RED BULL GIVES YOU WINGS !!
Anonymous | 03.19.08 - 7:31 pm | #

m writes:
and another one might bite the dust

http:// business.timesonline.co.u...icle3587120.ece
m | 03.19.08 - 7:31 pm | #

m writes:
The five rumours

Rumour
HBOS is seeking emergency funding from the Bank of England
Reply
Denied by HBOS. The Bank of England, which usually declines to comment on individual banks, also made it clear this rumour was false

Rumour
The Bank of England has cancelled staff Bank Holiday leave to deal with an impending financial crisis
Reply
Denied. Bank of England staff will be caught in the Bank Holiday travel chaos like everyone else

Rumour
Mervyn King, the Governor of the Bank of England, has cancelled his trip to Asia so that he can deal with financial crisis
Reply
There was no trip to Asia. He did defer a visit to the Midlands

Rumour
Lloyds TSB faces liquidity crisis
Reply
Investors told “we do not have a problem”

Rumour
HBOS cuts off credit to small businesses
Reply
Denied. Small businesses subject to same credit checks as usual
m | 03.19.08 - 7:32 pm | #

ipodius writes:
You gotta love all the memes on here about $4 coffees. First of all, you can get a normal cup of coffee there for under $2, just like everywhere else. In fact, it's free if you buy a bag of coffee, so factor that into the price. Pick up the bag when you get the coffee. 1 lb can be had for around $10 to $12 depending.

And yes, they changed the face of coffee forever. I remember the swill people used to call coffee. Ick. The issue is their business model and overexpansion. Also the fact that they lost the coffee bar culture along the way. Now they're just like going to McD's and DD's. That's the problem not the price.

Your taste is your taste but when talking about Starbucks as a business, frankly, the fact that you like McD's doesn't matter. And, btw, they pay better than anyone else in the biz, and I personally know one manager that bought her house from the Starbucks stock she's gotten in her history there. She's only a store manager. Try that at McD's or Walmart.
ipodius | 03.19.08 - 7:41 pm | #

LTCM writes:
One thing I do not understand is this: LTCM came very close to wrecking the financial markets over a 4 billion loss. The bank losses we are talking about are in the hundreds of billions of dollars, yet we are somehow going to weather the storm???
LTCM | 03.19.08 - 7:43 pm | #

Elvis writes:
"Your taste is your taste but when talking about Starbucks as a business, frankly, the fact that you like McD's doesn't matter."

You say that like it is a fact, but, you'd have a hard time convincing me that it is true.
Elvis | 03.19.08 - 7:44 pm | #

ipodius writes:
You say that like it is a fact, but, you'd have a hard time convincing me that it is true.

Of course it is true, they have a customer segment that they aim at, they don't aim at everyone. I NEVER shop at Walmart so they don't worry about people like me. I don't eat at McD's EVER, so why would they waste time worrying about my percentage?

There are people that don't (and won't)like Starbuck's coffee. n% you don't worry about. You also don't worry about the people that love your coffee and drink it all the time. You worry about the people that are *ambivalent*, they are where the growth is.
ipodius | 03.19.08 - 7:49 pm | #

Elvis writes:
ipodius,
I'm sure you have a point, but I'm not getting it.
Elvis | 03.19.08 - 7:51 pm | #

rich writes:
>I've never been in a Starbucks. The notion of paying $4 for coffee from a national chain repulses me.

Come on. Live a little. I spend 2 hours every Saturday in a Starbucks, not because I want to but because I'm trying to kill 2 hours.

It's a very nice place to kill time, if you have to. You can get a big cup of black coffee for $2 and a refill for 50 cents. And nobody kicks you out, even if you fall asleep on the sofas.

I think the CEO of Starbucks saying these things is very important and honest. He can see the economy, especially discretionary spending, a lot better than most. He's telling you that American consumers are changing in front of his eyes.

Starbucks is a company based on experience. The idea is -- if people feel at home in a place and hang out there a lot, somehow you'll squeeze money out of them. Now, people are still hanging out, but you can't squeeze money out of them.
rich | 03.19.08 - 7:52 pm | #

Wee R. Toest writes:
Who could be next?

Amazon- Seattle-based consumer discretionary retailer, with drag (high fuel costs, free shipping) on margins.....trading @ 63XPE, 25X book value and PEG >2.00.

How much longer can Amazon's high wire act continue in the perfect storm of the economic "tailspin" and consumer-led recession of 2008-9?

IMHO.
Do your own due diligence
Wee R. Toest | 03.19.08 - 7:53 pm | #

ipodius writes:
One more thing - you don't personalize business items. Honestly, I can't even imagine having a business discussion with someone that based their take on another business by what they personally thought of the product. You analyze the business, not your personal preferences.

I don't care how much I don't care for a product. If the business is going to do the right thing, has great management, a good strategy and the numbers work, I invest. I've owned stock for many companies whose products I'd never use. I just won't own one I have a fundamental personal issue with, like Walmart.
ipodius | 03.19.08 - 7:54 pm | #

FFDIC writes:
I just saw and learned of the impressive Dr. Ann Lee, Peking University ..on Bloomberg TV. Here is Dr. Lee's blog titled: Wall Street's House of Cards (worth a read)
http://www.annsjournal.sampasite...se-of- Cards.htm
FFDIC | 03.19.08 - 7:56 pm | #

Elvis writes:
ipodius,
So you invested in the pet rock?
Elvis | 03.19.08 - 7:56 pm | #

ipodius writes:
Come on. Live a little.

Honestly, you can't take it with you. Frankly I invest to have a good time with the money, not to sit on a box of gold and die. It's nice to have a rich, creamy, tasty $4 cup of coffee once in a while. Just like a good steak. Not every day, but once in a while.

And you're right on the money on the business strategy. But they lost it somewhere and they lost that coffe-house, hang out feel. They have to get that back, and they'll continue to squeeze. Just in a different way and maybe a bit less.
ipodius | 03.19.08 - 7:58 pm | #

Angry Saver writes:
RE,

Good link. But I still think a constant of slightly falling inflation rate allows for a more stable economy and easier future planning.

On a cpi purchasing parity basis for $1000:

1800: $1000
1913: $788
2007 $21,598

When you consider that interest gains due to inflation are taxed, most can't keep up. The data flys in the face of Bernanke's deflation theory. We're better off working for ourselves than for government sponsored inflation.

Just thoughts.
Angry Saver | 03.19.08 - 7:59 pm | #

Elvis writes:
If a product (Starbuck's coffee) is replaceable by another product that is widely distributed, available, and cheaper (McDonald's coffee), you should care about the product.
Elvis | 03.19.08 - 7:59 pm | #

ipodius writes:
So you invested in the pet rock?

a little before my time, but I'm sure I would have recognized it as a fad and got in on the way up and out on the way up. Sort of like Real Estate now ;)
ipodius | 03.19.08 - 7:59 pm | #

ipodius writes:
If a product (Starbuck's coffee) is replaceable by another product

That's the issue here Elvis. I contend that substitution (in the classic marketing sense) isn't possible here because, and this is the crux of Starbucks, it isn't about the coffee, it's about the experience. That was the marketing. I did an analysis of Starbucks for a bschool class, so I know what the marketing was about. I assure you that it was, at the base, about a good cup of coffee, but that's substitutable. It was about the drama, the hand-made part of it, and hanging out inside.

And that's why they are sucking because they started to do the DD/McD's thing. When you do that, then you are just another cup of coffee.
ipodius | 03.19.08 - 8:04 pm | #

blogenfreude writes:
@elvis - By the way, coffee is a fundamental. People will not stop drinking it. If they can somehow end their Starbucks addiction, they will seek cheaper alternatives like McDonalds. Kind of like beer.
I have been to a SBUX maybe 8 to 10 times in my life. The coffee sux. Early on, I learned to use the one-cup machine in the office to make weapons-grade espresso. Half Dark Magic and half concentrated French whatever.
blogenfreude | Homepage | 03.19.08 - 8:10 pm | #

Bill Melater writes:
I won't stand to lay another urban myth to rest but,

X writes:
you think they only sell food outta that truck

in 40 odd years of exposure to lunch trucks, I've never encountered "extraneous products." And that, statutes of limitations long passed, isn't because I didn't have an intimate knowledge of the subject.

Driving a lunch truck isn't a glamorous way to make a living. There are fairly narrow windows to get to job sites and get people served before having to be at the next site to repeat the process.

A much more prevalent scenario was copping at the bar after work.
Bill Melater | 03.19.08 - 8:22 pm | #

mjc writes:
Curlydan:

Regarding tea: I have 32-oz mug. I put one tea bag, sweeten to taste, and fill with hot water from the "cooler". I leave the bag in.

Lasts a whole meeting:)
mjc | 03.19.08 - 8:30 pm | #

Keep It Simple, I'm Stupid writes:
I homebrew my iced tea in 2-quart increments. Of course, since I'm unemployed, there's no reason to make it portable. My biggest expenses are mint and generic nutrasweet, but I could do without.
Keep It Simple, I'm Stupid | Homepage | 03.19.08 - 8:34 pm | #

tg writes:
You are all wrong this is more serious than $4.00 koffee. AG's productivity miracle came after starbox. Coinicidence, I think not.
tg | 03.19.08 - 8:49 pm | #

Periwinkle writes:
Mini Gold down to $924 on Reuters
Periwinkle | 03.19.08 - 8:51 pm | #

michi_doc writes:
Suspect many would be astounded by the quality of roasting at home, as suggested above. I buy green coffee beans shipped from Sweet Marias in Ca, keep for up to a year, roast in a stainless steel dog-bowl with a heat gun (from Lowe's for stripping paint.)
Fresh grind, roasting to perfection and cheap; any coffee growing area of the world you want to experience.
And brewing our own beer. Wouldn't want to forget that.
michi_doc | 03.19.08 - 8:53 pm | #

franz writes:
It is amazing how brillant the CEOs say they are when the economy is booming. however, when the crap starts to hit the fan, the CEOs say that it is totally unexpected and no one has ever seen this happen. Did he not go through the 1970 oil shocks and other significant turn downs? Who could of know?

By the way, I do buy my beans from Starbucks as you get 16 ozs instead of 12 ozs at the groceries stories and also a coffee (either a tall or grande depending on the staff). Just don't see the reason to buy a fancy $4 drink.
franz | 03.19.08 - 9:19 pm | #

Darren writes:
Elvis, you DIDN'T just compare the swill they serve at Mickey Ds to my beloved Bux, did you? Did you?

They are NOT identical products. Just because your taste buds are shot doesn't mean everyone else's are. Please. I'll spend an extra 50 cents on Starbucks every day of the week, because good coffee is one of the things that "the good life" is about.

And ditto on the $4 coffee meme that's getting overused here. 90% of us are going for the C1.75 tall bold. Somebody computed the daily expense of THREE $4 coffees per day and used that as an excuse to wag the finger. Puh-leeze!

I don't have a problem with the big chain. I know full well I'm going to get an excellent cup of coffee. I don't have a problem with that.

Hats off to the people who are grinding their own. When I was working and commuting 60hrs per week, I just didn't have time for that.
Darren | 03.19.08 - 9:21 pm | #

Darren writes:
And before you ask, yes, I tried the lower price coffee "equivalents" (in Toronto). Some of them offered far worse taste/price ratios than Starbucks did. (ie same price, worse taste)

There's a reason there's a Starbucks on every corner, and they're usually full.
Darren | 03.19.08 - 9:32 pm | #

Nova writes:
I grind up the free mulch the county gives. Its dark, with a sharp odor, and goes down well. My filters are made from TP from the mens room at work. I figure it costs me 2 cents a year.
Nova | 03.19.08 - 9:32 pm | #

FFDIC writes:
How do you have an "experience" at a Starbucks drive-thru in your car? I need that thrill in my ho hum little life.
FFDIC | 03.19.08 - 9:47 pm | #

ipodius writes:
Exactly my point FFDIC, once you go that route, you're just another coffee vendor. That's why they're not doing as well. The whole model used to be to get people to stay in the store. And the smell, the banter of the barristas, the hand-made drinks, the bins of coffee beans got you to buy more than just a 1.75 cup of coffee.

And now they just cheapened their brand. Ask Burberry what happened to their earnings when all the chavs started wearing their plaid.
ipodius | 03.19.08 - 9:54 pm | #

Kicker writes:
And ditto on the $4 coffee meme that's getting overused here. 90% of us are going for the C1.75 tall bold. Somebody computed the daily expense of THREE $4 coffees per day and used that as an excuse to wag the finger. Puh-leeze!

The overused meme is that all American consumers will need to do to fix the household balance sheet is to cut back a bit on the trips to Starbucks.

Ain't going to fix it folks.

The biggest percentages of American's paychecks are going to housing, transportion, child care, taxes and health care (Middle class on the precipice)

Fixed costs take up about 75% of a typical two income household income. Consumer debt, takes another 4-5%.

That leaves the typical two income household about $1K a month for everything else. Food, clothing, appliances, entertainment, all of it.

Your credit card balance have the habit of bumping up $1000 dollars a year then getting that in line will cut 10% of household spending money.

Want to pay down that $10,000 dollars in credit card debt in 10 years? That will take another 10% cut in spending.

What about that once a year family vacation ($2,000)? American as apple pie, but too spendy at 20% of spending.

Eating out as a family once a month? Too spendy.

People will be shocked when the realize that they never could afford their "normal" lifestyle.

Eventually, they will recover but until then everything the world has been relying on the American consumer to do for the last 20 years is on the table.
Kicker | 03.19.08 - 10:06 pm | #

Anonymous writes:
Kicker,

Ditto, ditto, ditto, so true.

I'd be all in favor of middle class tax cuts if middle class people would stop pimping themselves out for Starbucks coffee and weekly nail treatments.

They don't spend it on health care or paying down their mortgages or saving for a rainy day.
Anonymous | 03.19.08 - 10:25 pm | #

Anonymous writes:
Working class guy dropped up his $35K truck today at Walmart for service.

Working class wife picked him up in the 35K SUV.

Typical. Unsustainable.
Anonymous | 03.19.08 - 10:27 pm | #

Francois writes:
As far as coffee is concerned, substitution is a no-brainer to me. I buy a bag of French Roast Starbucks at BJ, along with a Colombian Medium of their house brands, grind and mix equal parts, and expresso it in a $25 coffee maker from ACE.

Mix in a tad of 2% milk "et un nuage de crème merci!" and voila! A badass cup o'Joe that'll shift my brain in quasi-overdrive for a fraction of the cost.

Sluuuurp! Aaaaaah!

Life is good!
Francois | 03.19.08 - 11:13 pm | #

waitinginPNW writes:
OMG Nova, thanks for that...Laughed 'til it hurts and still laughing.

Somebody notify Nova's neighbors to never ever accept an offer of a cup of "coffee".
waitinginPNW | 03.19.08 - 11:42 pm | #

mock turtle writes:
FFDIC

thanks, once again for pointing us towards great articles that inform.

you are a valued resource to this blog.

the Dr. Ann Lee paper was like a bucket of cold water in the face especially after reading the several rejection letters she received when attempting to publish.

the varied and contradictory advice from the "experts" was breathtaking and Larry Lindsey comes off as a horses hat.
mock turtle | 03.20.08 - 12:17 am | #

Sing Expat writes:
While it is true that most Americans have larger financial concerns than a daily Starbucks coffee, the point of this discussion is that Starbucks coffee symbolizes the underlying condition of the American consumer (as an aside, is no one else annoyed that you are no longer citizens or plain, old Americans?). Starbucks came to symbolize wealth and status.

Unfortunately, the chain should be called Starcredit instead of Starbucks. Americans have stopped saving money, pretending instead that they are all fabulously wealthy because of their "equity" in housing. Home equity doesn't pay for coffee, SUV's, fancy clothes, and vacations. Those were paid for with debt.

After the bubble comes the harsh reality that it was an illusion. Someone stole your future. Americans have not saved real money in years; in fact, the savings rate has been negative. We all know this. So what does this have to do with Starbucks.

Well, fads and external displays of wealth suffer when the economy turns south. Well, we're so far south already that there's nothing but ice and penguins ahead. People stop buying 4$ cups of coffee because they realize they can't really afford them.
Sing Expat | 03.20.08 - 1:01 am | #

Ziggurat writes:
>they lost that coffe-house, hang out feel<

I like a double espresso, straight up with a New York Times (someone has to support the msm). A traditional coffee house will keep papers, but Starbucks tosses them asap. I wonder how much of their circulation is sold in Starbucks.

There are always a few ppl. But the local does 4/5 of its business in drive through.

They are all the same, but all of them take on the a bit of the character of the area.

The ones without drive throughs are always better.

I would prefer better, but in the suburbs, it is about as good a 'third place' as you are going to find. http://en.wikipedia.org/wiki/Third_Place .

BTW, I loved the onion article.
Ziggurat | 03.20.08 - 1:08 am | #

Rainbolt writes:
So Sorry Howard-Baby

Look-you and the rest of the CEO's in America built your dream, and then went on vacation for 3-4 years and expect everything to be rosy. What kind of work ethic is that??? Corporate Work-eithic?

Go Figure!!!!!
Rainbolt | 03.20.08 - 1:21 am | #

Fair Economist writes:
I go to Starbucks a couple times a week. It's definitely about the experience. I work at home and value the escape. Smelling the coffee, looking at the bagged coffee, people watching, listening to some music I haven't heard before - that's what I pay 5 bucks for, not the latte and slice of coffeecake.

I don't grok drive-thru Starbucks. There are many cheaper and faster ways to get a caffeine fix and the coffee isn't *that* good.
Fair Economist | 03.20.08 - 3:18 am | #

ashkan writes:
Imagine Sherlock Holmes arrives on the scene. Or maybe Colombo. The economy is dead. America is dying.
Who are the usual suspects? REALTORS. Stock brokers. Joe Six Pack. They killed it.
Well was there anyone BIGGER than that responsible. No. No. The Fed is doing all they can. We have to win in Iraq. Mistakes were made.
But what about the laws, the regulations, the ratings agencies?
Maybe the economy was poisoned by easy credit and freakish debt derivative creations. Joe Six pack did that. Yes he did.
That's not believable. When did the poisoning with funny money begin?
Uh...after 911.
ashkan | 03.20.08 - 4:37 am | #

Middyfeek writes:
Ipodius,

I enjoy your comments very much but Starbucks and "drama" is a little over the top.
Middyfeek | 03.20.08 - 7:56 am | #

Lee writes:
Just occurred to me that Starbucks grew during the Tech and RE Bubbles, and thinks that is 'normal'.
Lee | Homepage | 03.20.08 - 8:55 am | #

las writes:
Starbucks may lose sales from people who can't afford it as a source of coffee. However, they remain an affordable luxury, experience or mini-vacation, transitioning people into a better state of mind. This customer will think Starbucks remains a great value compared to dinner and the theater.
las | 03.20.08 - 9:50 am | #