By Lara Crigger

As you're filling up your tank this weekend, it'll be hard not to think about the cost. Back when gas was $4/gallon, many of us made seemingly radical changes to our lifestyle, cutting back how much we went out to eat, riding the subway more, even moving closer to work.

It may take awhile to convince car buyers, but General Motors (GMGMQ.PK) has emerged from bankruptcy with better prospects for a profitable future than virtually any of the automaker's critics predicted a few months ago. Here's why:

It exited bankruptcy in record time. Chrysler surprised nearly everybody by emerging from bankruptcy in 40 days. GM, a far bigger and more complex company, beat that by a couple of days. That gives the "new GM" a fighting chance to escape the cloud of failure that has hung over the company for much of the last year. "It helps them get the idea that 'GM equals bankruptcy' out of consumers' minds," says Michael Robinet of forecasting firm CSM Worldwide.

By Simon Johnson

The G8 summit was obviously disappointing, even for those with low expectations. Usually, the substance is lacking but the public relations are well managed. This year even the messaging was messed up - they said some new things on climate change but not what we were told they could say, the food aid/development package was lamer than advertized, etc. So the whole thing looks like an expensive flop.

By Rob Weigand

As we all know, there are many problems facing the economy and financial markets right now. One of the longest-lived and most pernicious problems is one of the least discussed — or even recognized. For example, this problem is responsible for many Americans' longstanding (and misguided) obsession with cutting taxes, which is the primary reason the federal debt has been allowed to explode out of control (and California is on the brink of bankruptcy). This problem fueled the market’s overvaluation in the 1990s, culminating in the infamous tech bubble. It lent a significant tailwind to the crazy lending standards and housing bubble that propped up the bull-market-that-wasn’t from 2003-2007, and the problem is still with us today, preventing us from clearly evaluating conditions in the economy and financial markets — particularly how we arrived at our current state of affairs.

Imagine President Obama addressing the nation on prime-time television and saying, "The government has done enough to bail out the economy. You're all on your own now."

He very well could. The total federal commitment to fiscal stimulus, corporate rescues, homeowner relief, and various other bailouts is nearly $10 trillion (that's $10,000,000,000,000) over who knows how many years. You'd think that might be enough. But the economy is still lousy, unemployment is soaring, and Vice President Joe Biden now says the Obamanauts "misread how bad the economy was" when planning their recovery package earlier this year.

The second quarter was a good one for commodity and China ETFs. Almost everything risk related advanced in the past three months, with PowerShares Financial Preferred (PGF) sporting a 57 percent return, the fifth best among funds in our newsletter. Other strong performers include the India ETFs and ETNs, which popped more than 20 percent in one day following the country’s election results in May. Aside from the reduced risk aversion, these funds advanced on isolated factors. Commodity and China ETFs, however, were pushed by common threads, most important among them the growth in Chinese loans.

As early as February, Chinese economists were “ballparking” that as much as one-third of the country’s loans could be headed into stocks and real estate. The percentage may still be in that neighborhood, with roughly 20 percent heading into stocks, according to a Bloomberg story, which cites Wei Jianing, a deputy director at the macro-economics department of the Development and Research Center under China’s State Council.

On Wednesday, the Congressional Budget Office released its latest snapshot on the federal budget. The headlines:

• The budget deficit was $1.1 trillion during the first nine months of the fiscal year (through June). That’s up from $286 billion at this point last year.

• Spending has risen 21% over last year, while tax revenues have fallen 18%.

• For the first time in more than ten years, the government ran a deficit in June. June is a big tax-paying month, so it usually records a surplus.

Longtime readers know that I am not a fan of modern portfolio theory. It is a failure for many reasons:

• It assumes there is one type of risk, the occurence of which is random.
• It assumes that this risk can be approximated by volatility (variance of returns), rather than probability of loss, and the likely severity thereof.
• Mean return estimates, volatility estimates, and correlation coefficient estimates aren’t stable.
• In crises, correlations head to 1 or -1. Assets divide into safe and “not safe.”
• Problem: some assets always fall into the “not safe” bucket, but what falls into the safe bucket can vary. Long Treasuries and commodities could be examples of assets that vary during a crisis, depending on the type of crisis.
• It does not recognize multiple time horizons easily. Bonds held to maturity have a different risk profile than a constantly rebalanced portfolio.
• Risk is the same for all people, and their decision-making time horizons are the same as well.
• And more…

I’m still playing around with the elements of what would make up a new asset allocation model, but a new model has to disaggregate risk into risks, and ask some basic questions:

By Murray Coleman

It has been four years since two big banks—Wells Fargo (WFC) and Bank of America (BAC)—first announced commission-free trading for ETF investors. Of course, a lot of strings were attached. Some of those have since changed, but Wells Fargo appears to still be the most flexible. (See related column here.)

One of my current projects is to learn about the venture capital industry. Specifically, I want to answer this question: Can venture capital investing be practiced in accordance with value investing principles as I define them?

Marc Andreessen is a very successful entrepreneur who has recently "moved to the dark side" and raised a venture capital fund. In this Tech Ticker interview he speaks candidly about how the industry actually works. Novice student that I am, I tried to take good notes:

By Julian Murdoch

It's all over the headlines: T. Boone Pickens' huge wind farm has been scrapped - or at least postponed. After warning last year that he was having difficulty securing financing for the project, and was terminating land leases in March, this week's announcement isn't a huge shock, but it does bring up some things to think about, and for Pickens' detractors, an opportunity for schadenfreude. After all, Pickens reportedly spent nearly $60 million last fall just advertising how awesome his plan was.

By Dave Nadig

Yesterday we got news that the CFTC is paying attention to the ETF industry. I suppose we should be flattered, but I'm much more concerned than titillated.

The WSJ reports that Vornado Realty Trust (VNO) is seeking to raise a $1bn distressed real estate fund to use as its "exclusive vehicle for real-estate and real-estate-related investments."

The article wonders why a publicly-traded REIT like Vornado would choose to raise money from private investors rather than in the public market. To do the former, the article argues, "risks dismaying shareholders who hoped Vornado would use its investing expertise to do deals on its own balance sheet," and quotes Mike Kirby of Green Street Advisors as follows:

The U.S. dollar doesn't have a lot of fans. In fact, outside of short-term traders, it's nearly impossible to find an analyst with a positive thing to say about the greenback.

The negative prognosis is not without good reason. When the world's economic output is expanding, currencies of other nations have strengthened against the U.S. dollar. And when the world's economies are sputtering, leaders have questioned the dollar's status as a viable reserve currency.

Wal-Mart (WMT) made headlines last week by endorsing proposals in Washington that mandate employer-provided health insurance. Fox News anchor Elizabeth MacDonald does a good job analyzing the retail giant’s motives in her blog post and identifies competitive advantages that Wal-Mart would enjoy if this coverage were legally required. In essence, because Wal-Mart already covers many employees and has the pricing power of an enormous company, new universal mandates are more crippling to its competitors. MacDonald also argues that, by stepping forward now, Wal-Mart ensures a seat at the political table in shaping the legislation, ensuring that the law will be relatively beneficial to the company.

Wal-Mart’s actions are a good example of the way that large companies, with their deep pockets and legions of lobbyists, can influence new regulations and legislation to their advantage at the expense of smaller competitors. The more regulation created, the more the potential for this type of mischief. This is not to pass judgment on the merits of the issue, but only to observe how large corporations can influence legislation in their favor better than smaller companies, and the more regulation, the greater the potential advantage.

Pump and Dump