We hope you had a happy holiday.

We’re on our way back to our home in Buenos Aires tonight. We’re looking forward to getting back, but not to the nine-hour flight with our nine-month-old son… It’s likely to be grueling.

But at least we’re not in the retail business…

They are likely to be disappointed by the holiday season. According to the Commerce Department, consumer spending fell 0.6% in November, the fifth monthly decline in a row.

The Wall Street Journal reports that 10% to 26% of U.S. retailers are now in danger of filing for Chapter 11 in 2009 or 2010.

That’s up from 4% to 6% of retailers in trouble in the last two years.

It’s no surprise, really.

More Americans are out of work now than at any time since 1982. The number of American’s filing for unemployment for the first time leapt to 586,000

Dear Value Seeker,

Christmas is almost upon us.

Business activity is winding down. In some cases, it’s stopping altogether.

According to the Financial Times, some of the biggest tech names in Silicon Valley will be shutting up shop over the holidays to cut costs.

Meanwhile, the bosses at Toyota have signaled that the automaker could post its first yearly operating loss.

Contrarian blogger Mish Shedlock warns that corporate losses may be the least of our worries. That’s because a new, highly-contagious fiscal virus is taking hold of the world economy.

“The primary symptom of FIV [Fiscal Insanity Virus] is irrational, often delusional fear of deflation. The virus has an uncanny ability to seek victims in positions of authority. Those afflicted with the virus start taking (or promoting) fiscally reckless actions guaranteed to damage the host country.”

Dear Value Seeker,

U.S interest rates are now near zero.

Just like doomed Japan during the country’s “lost decade” in the 1990s.

Yesterday, the Fed cut interest rates to a record low range of 0 to 0.25 percent.

America’s central bank says the weak economy will “warrant exceptionally low levels of the federal funds rate for some time.”

[Translation: After sinking the US economy in a sea of credit, the Fed wants to ‘fix’ the problem with even more of the stuff.]

And it left the door open for more “extraordinary” measures to fight the economic enemy du jour: deflation.

Or in Fed speak… “The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.”

At this point, there are no real limitations on what “Helicopter Ben” might do in his crusade to fix the wounded economy.

He

Dear Value Seeker,

Sometimes words speak louder than actions.

Especially when it’s the Fed’s words.

Today, market watchers are on the lookout for clues about how the Fed is going to tackle deflation.

A rate cut of at least 0.5% is already in the can as far the pundits are concerned.

But with consumer prices plunging, investors expect the Fed to signal more emphasis on more unorthodox ways of ‘stimulating’ the economy.

According to MarketWatch, “The bottom line on Fed policy is supply of money. The Fed typically targets the price of money but, with the price so low, it will focus on increasing the quantity of money through its balance sheet.”

Not that the Fed hasn’t tried this already.

It has doubled the size of its balance sheet to over $2 trillion since September.

As Bud Conrad at Casey Research notes, “Mostly under the covers, [the Fed]

Dear Value Seeker,

Welcome to the 100th edition of Hidden Value.

The financial world was a far more tranquil place when we started this daily newsletter on July 25. But we knew a storm was brewing…

“Automakers bailout falls apart in Senate” reads a Marketwatch headline today.

Republican Senators blocked the passage of a $14 billion loan to Detroit ‘bad boys’ GM and Chrysler. A refusal of the United Auto Workers, headed by Ron Gettelfinger, to agree to lower wages and benefits by a certain point in 2009 was reportedly the key sticking point.

“Bankruptcy is the best possible result. I am sick and tired of taxpayer money funding corporate ineptitude,” says Mike Shedlock on his Global Economic Analysis blog. “Nonetheless I am fearful that [President] Bush and [House Speaker Nancy] Pelosi will try one more time to revive the dead.”

Dear Value Seeker,

Welcome to the Frankenstein Fed.

Today, the WSJ reports that the wonks at the central bank are now “weighing up” having the Fed issue its own debt.

It seems the poor central planners have gotten themselves into a bit of a twist while trying to mend America’s Humpty Dumpty economy.

It seems the Fed is pumping so much money into the system that it is running dangerously low on its stockpile of Treasury bonds, which it draws on to finance its funding programs.

And the Treasury isn’t too keen anymore to raise any more debt on behalf of the Fed.

Hank Paulson and his buddies have been issuing debt and leaving the proceeds on deposit with the Fed. But in November, the Treasury said in November it was “scaling back” on this.

You see, the Treasury is undertaking its own massive borrowing

Dear Value Seeker,

USA Inc today announced another 30,000 job cuts…

Telecoms giant AT&T led the cull. It said 12,000 of its workers would now be joining the ranks of the unemployed.

The Labor Department says the total number of Americans receiving unemployment benefits as of November 22 rose to 4.09 million.

It’s the highest number since December 1982.

And more jobs could go in the retail sector, judging by today’s sales reports.

Analysts will no doubt agonize over the individual results. But we think David Gaffen from the WSJ MarketBeat blog sums it up perfectly with his headline “Wal-Mart Wins. Everyone else loses.”

Things are happening just as they should in a balance-sheet recession, says my dad, Bill Bonner, in today’s Daily Reckoning.

“People are getting fired for a very good reason: businesses need to correct their balance sheets…and redress their business models. They have to

Dear Value Seeker,

Yesterday, the “Big Three” automakers came to Washington with a plan: ask for even more money.

GM wants $18 billion, with $4 billion for December’s bills.

Chrysler says it needs $7 billion in the next few months.

Ford is after $9 billion…but only as a precaution. It feels pretty confident it can make it without help.

After all, Ford’s sales fell only 31% year-over-year in November. GM and Chrysler both saw sales for the same period tumble by over 40%.

In exchange for $34 billion in taxpayer money, the automakers promised major restructuring, reduced labor costs (that’s right, it’s promising to fire employees in return for taxpayer backing) and the sale of some product lines.

The CEOs even said they would even work for $1. (Never mind that their salaries only make up about 10% of their overall pay packages.)

But decades of waste and mismanagement aren’t forgotten

Dear Value Seeker,

The good news is there is only one month left before the end of the year.

But that’s still plenty of time for the crisis that began in the subprime mortgage market to wreak more havoc in 2008.

Especially if today’s carnage is anything to go by.

The Dow has plunged over 400 points at the time of writing. The S&P 500 and the Nasdaq have also been taken to the woodshed.

Oil is back below $50 a barrel. Gold has given up $50 to reach $770 an ounce.

Last week’s bailout-fueled optimism has given way to economic reality.

Today, the US manufacturing index slumped to its lowest level since 1982.

Retailers did manage to tempt bargain hunters out on Black Friday. But once the mega-discounted products had gone, so did much of the shoppers’ enthusiasm.

We’re reminded that the America’s recession is now a year old. The wonks

Dear Value Seeker,

“This parrot is no more! It has ceased to be! It’s expired and gone to meet its maker! It’s a stiff! Bereft of life, it rests in peace! If you hadn’t nailed it to its perch it’d be pushing up the daisies!”

At this stage in the game, we turn to the collective wisdom of Monty Python’s Flying Circus.

Of course, they were talking about dead parrots. But they may as well have been talking about the US financial system.

Yesterday, the feds unveiled an $800 billion plan to bailout indebted consumers and mortgage holders.

Now, $800 billion sound like a big number to us. But the feds may just be “spitting in the wind” with this size of war chest, according economist Michael Darda.

Speaking to Bloomberg, Darda said, “Banks won’t be throwing a lot of loans out there when they fear