Banks as Takeover Targets in Both 2010, 2011 [View article]
Good observations. There should also be quite a number of smaller, publicly traded community banks that will need to consider merging with another entity. They may have relatively healthy loan portfolios and decent capitalization, but with the additional regulatory expenses and capital requirements, can't do much more than tread water. There are numerous larger community banks that could benefit from these potential acquisitions -- not just the largest banks, as we've seen in the past couple years.
Carbon Cap and Trade's Possible Winners [View article]
From what I can deduce, it has been a long and challenging road for Evergreen to make its coal "cleaning" process work. But from what I can gather, it's less about "clean" coal (which is kind of a bogus misnomer) than it is about a process that stabilizes coal and makes it less susceptible to eroding and absorbing moisture and such in transit. So it makes for a cleaner burning product for the end user, without paying for coal dust and waste. This seems to be reasonable economic sense.
As to the carbon credits, Hazel, you make a great point. Sustainability makes all the sense in the world, but taxation of carbon usage without some kind of trading or credit incentive seems like the stick without a carrot. What consumer is willing to pay 2x their current electricity bill because their utilities have no viable way to offset their carbon footprint taxation. Simply put, it's bad business.
What corporation is going to be incentivized by more taxation without some way to balance their losses? That mentality just runs contrary to good business sense, as nobody is dumb enough to be in net-positive polluting businesses, and get taxed for it, without some light at the end of the tunnel. That's why I think the carbon credit and trade makes sense. What do you guys think?
Great and (mostly) insightful comments on everyone's part. Remember,though, that CNBC and Stewart are all infotainment. They respond to the moment, they missed the long term trouble with over-extension on consumer credit and Wall Street monkey business that has been brewing since the late 1980s, etc. This is nothing but an extension of a faulty business and consumer mentality that has been percolating for two decades. They're fun and entertaining, but offer no long term solutions and never have. Americans live in the moment, and if people and businesses would just make some longer term plans, we would have some short-term pain but long-term strength. I might even do an SA blog on this.
Don't forget the NYSE also absorbed the American Stock Exchange, which traditionally had many more micro cap and lightly traded stocks. Even in good times, a number of these companies wouldn't meet standard NYSE price or market cap requirements. Obviously, in today's market, small cap, illiquid stocks become moreso and even light selling pounds the price. It would be pretty stupid for the NYSE to not have suspended its traditional guidelines, which would have meant kissing goodbye to a lot of good Amex companies it just added.
Has a 2008 Stock Market Crash Begun? [View article]
Dan, I was surfing around and came across this. You sure hit the nail on the head right across the board. If you shorted financials in 2008 in any big way, as you said was your plan, you are now independently wealthy and running your blogs out of Aruba or your warm tropical spot of choice.
Nine Reasons This Recession Is Welcome [View article]
Good observations. We have been living over our heads for several decades and a reality check, while painful, is absolutely necessary. I commented on this in one of my SA postings a couple months ago. You detailed the specifics, which was very interesting.
Wall Street Breakfast: Must-Know News [View article]
"Banks face mixed messages" is quite an understatement. The Treasury appears to be in a state of confusion about TARP, now the Capital Purchase Program. It started as a bailout, then morphed into capital infusion for well-run banks. In the past two weeks the Treasury has started making funding recipients that were promised capital weeks ago jump through additional and borderline random hoops. Some banks are being asked to come up with matching capital to qualify for funding (wasn't the logic behind TARP to provide liquidity and capital in the face of illiquid markets and scarce capital??), or are being given unclear or no direction about what further assurances or information they need to provide to meet the Treasury's constantly changing target. What was good enough assurance two weeks ago is no longer so today. Sadly, it's many of the well-run community banks that seem to be bearing the brunt of this political fire drill. The big boys got their handout, no questions asked.
Why Our Society Needs Real Journalists [View article]
I'll agree that there is probably no room for printed newspapers in the future. I enjoy them, but also realize it's simply not practical. My point is that whatever the actual tools are for disseminating information, we would benefit from having true news organizations. Even today's newspaper reporters have to produce Internet material, and most are pressured to meet hour-by-hour deadlines that leave little room for in depth reporting or careful article development or editing. Certainly little room for investigative journalism.
Obamamania vs. Reality Bites: Tensions Establish Historic Short Window [View article]
Certainly Rakesh makes some interesting points. Much is uncertain, as we've never faced something quite like this. In this economic situation, I see few parallels to the Great Depression except for the fact that, like the depression, it was nurtured by a incompetent, do-nothing Republican administration filled with yes-men and yes-women who legislated where they shouldn't (Sarbanes Oxley) and failed to oversee what they should have been (corporate financiers, runaway derivatives, etc.). The comments surprise me, especially on this site. Wouldn't it be more productive to focus on what we can do no rather than complain and say "wait until 2012?"
A Radical Solution for U.S. Automakers [View article]
On Nov 12 07:12 AM IXLR8 wrote:
> I kept waiting for the punch line, and it never came. > > Truly a "Kumbaya" article. > > Maybe, the author could write another one about how to end child > abuse or how to end world hunger. No details, just good feelings....
Good point, but it would require a 500 page business plan to lay out the entire game plan. And that would also require access to they key executives at the Big Three. If you could arrange that, I would be willing to tackle it for a relatively modest consulting fee. What specifics would you be looking for? World hunger and child abuse are challenging issues. However, a business plan for auto makers based on ROIC is much easier. If a company can offer a cost-effective alternative fuel vehicle that you can take on a 1,000 mile road trip, or fuel up at your local gas station, it will sell bigtime. It has to be convenient and cost-effective. Americans would get behind that, I am quite sure. We are all capitalists. A fraction of the population would support higher cost alternative energy transportation, but if people were offered a cost-comparable alternative, I believe they would jump on it.
A Radical Solution for U.S. Automakers [View article]
Perhaps we could all do with a few choruses of Kumbaya. Better than the wet blanket dirges I'm sick to death of hearing. What good does this "realistic" thinking do for these companies or our economy? I absolutely agree with Repper's comment that Detroit has turned out many quality, good looking products. Which is exactly my point. Whatever value remains in the plant, property and equipment, the intelligence and design capabilities, the people and skilled workforce, etc. can and should be focused on creating something new and world class. Over the years, I've consulted with so many companies at such crossroads, and the best way to throw bad money after good is to continue funding and pursuing a flawed business model that offers no hope of being competitive. In any case, the outcome is uncertain. But as I noted, for your consideration, applying established capabilities to a new business model (and who wouldn't want to produce an attractively styled, well-built vehicle that doesn't use fossil fuel) certainly offers more opportunity than the alternative. The Big Three don't need to entirely cease producing fossil fuel vehicles. But rather than firing talented, energetic people and closing down facilities (which will happen as it always does in cost-cutting mode), why not consolidate dinosaur vehicle production in certain key facilities and dedicate the facilities and people that would otherwise be shut and fired to producing desirable alternative vehicles? This would be the best use of working capital. If the long-term ROIC can't be justified in any way, then any government bailout would be a terrible idea because there would be no quantifable return on investment. Better to let the whole thing collapse and let the PBGC cover the legacy commitments (yet another bailout). A viable strategy and a realistic business plan is necessary. Whether current Big Three management is up to the task, or it requires better and more creative minds to develop this, I haven't a clue. Capital turns, asset utilization and so forth will be very ugly in the beginning. But since they're already ugly now, what harm is there in developing a model that might offer attractive long-term returns and a plan that's better than simply propping up a losing proposition?
On Nov 12 09:44 AM Repper wrote:
> Nationalizing the industry is a radical idea, but the idea about > a bailout being designed to bridge the US automakers into developing > alternative fuel vehicles is the reality. They are already heading > in that direction. No, the infrastructure is not there yet for dropping > the traditional combustion engine completely, but things are going > in that direction. > The problem has been the American consumers' collective misconception > that these are poorly run companies with shoddy products. They have > made a huge turnaround in the last decade+ in quality, productivity, > and management, but the American consumers and so many people writing > article love to keep punishing them for past sins. > Before blindly bashing, please give a real look at the products that > are being produced today and educate yourself with the facts. Try > visiting gmfactsandfiction.com/.../ . Yes, it is compiled > by GM, but all the facts included are from third-party sources to > which links are provided. Dispel your misinformed misconceptions > about GM and the other domestic auto makers. > > Maybe you're right in saying that American companies won't be able > to compete in the traditional market, but that's not because they > can't produce quality, stylish, economic vehicles; it'll be because > consumers will continue to ignore the facts about those products > and continue the trend toward buying more foriegn vehicles. > Yes, legacy costs, and past labor agreements have hurt the financial > situation of the Big 3, but recent renegotiations were a big strp > in the right direction toward bringing operating costs down for the > future.
Great Depression? Nah, Great Reality Check [View article]
I'm certainly not feeling pie-in-the-sky optimistic by any means, but I continue to meet and work with many business people who are not going to give up because the "markets" are volatile or reflect the greed and poor decision making of a small number of individuals and corporations. However, the points above are well-made -- the real difference will be if Americans come to their senses and once again exercise discipline in their lifestyles. When I was a kid, if a family only had the cash for one television, that's all you had in the house. You didn't borrow for a second or third. And only "rich" people drove expensive foreign and US cars because people stayed within their means on financing. And therein lies my hope that things are rough enough for enough people that we might re-learn some more positive values. After all, we've enjoyed this incredible materially high level of lifestyle, and frankly, people seem angrier, more stressed out, less relaxed and more miserable than ever in my lifetime. Obviously, the illusion of a luxurious lifestyle doesn't equate to real satifaction with life.
Banks as Takeover Targets in Both 2010, 2011 [View article]
Carbon Cap and Trade's Possible Winners [View article]
As to the carbon credits, Hazel, you make a great point. Sustainability makes all the sense in the world, but taxation of carbon usage without some kind of trading or credit incentive seems like the stick without a carrot. What consumer is willing to pay 2x their current electricity bill because their utilities have no viable way to offset their carbon footprint taxation. Simply put, it's bad business.
What corporation is going to be incentivized by more taxation without some way to balance their losses? That mentality just runs contrary to good business sense, as nobody is dumb enough to be in net-positive polluting businesses, and get taxed for it, without some light at the end of the tunnel. That's why I think the carbon credit and trade makes sense. What do you guys think?
Stewart vs. Cramer: A Cheap Shot [View article]
NYSE Suspends $1 Stock Price Minimum [View article]
Has a 2008 Stock Market Crash Begun? [View article]
Nine Reasons This Recession Is Welcome [View article]
Wall Street Breakfast: Must-Know News [View article]
Why Our Society Needs Real Journalists [View article]
Obamamania vs. Reality Bites: Tensions Establish Historic Short Window [View article]
A Radical Solution for U.S. Automakers [View article]
On Nov 12 07:12 AM IXLR8 wrote:
> I kept waiting for the punch line, and it never came.
>
> Truly a "Kumbaya" article.
>
> Maybe, the author could write another one about how to end child
> abuse or how to end world hunger. No details, just good feelings....
Good point, but it would require a 500 page business plan to lay out the entire game plan. And that would also require access to they key executives at the Big Three. If you could arrange that, I would be willing to tackle it for a relatively modest consulting fee. What specifics would you be looking for? World hunger and child abuse are challenging issues. However, a business plan for auto makers based on ROIC is much easier. If a company can offer a cost-effective alternative fuel vehicle that you can take on a 1,000 mile road trip, or fuel up at your local gas station, it will sell bigtime. It has to be convenient and cost-effective. Americans would get behind that, I am quite sure. We are all capitalists. A fraction of the population would support higher cost alternative energy transportation, but if people were offered a cost-comparable alternative, I believe they would jump on it.
A Radical Solution for U.S. Automakers [View article]
On Nov 12 09:44 AM Repper wrote:
> Nationalizing the industry is a radical idea, but the idea about
> a bailout being designed to bridge the US automakers into developing
> alternative fuel vehicles is the reality. They are already heading
> in that direction. No, the infrastructure is not there yet for dropping
> the traditional combustion engine completely, but things are going
> in that direction.
> The problem has been the American consumers' collective misconception
> that these are poorly run companies with shoddy products. They have
> made a huge turnaround in the last decade+ in quality, productivity,
> and management, but the American consumers and so many people writing
> article love to keep punishing them for past sins.
> Before blindly bashing, please give a real look at the products that
> are being produced today and educate yourself with the facts. Try
> visiting gmfactsandfiction.com/.../ . Yes, it is compiled
> by GM, but all the facts included are from third-party sources to
> which links are provided. Dispel your misinformed misconceptions
> about GM and the other domestic auto makers.
>
> Maybe you're right in saying that American companies won't be able
> to compete in the traditional market, but that's not because they
> can't produce quality, stylish, economic vehicles; it'll be because
> consumers will continue to ignore the facts about those products
> and continue the trend toward buying more foriegn vehicles.
> Yes, legacy costs, and past labor agreements have hurt the financial
> situation of the Big 3, but recent renegotiations were a big strp
> in the right direction toward bringing operating costs down for the
> future.
Great Depression? Nah, Great Reality Check [View article]