Walt17

Remodeling the Auto Industry - Barron's

If GM is forced to go through bankruptcy, they will discontinue the weak brands and keep the strong ones. Debt and union contracts will be restructured. This should allow them to focus on making the strong brands more competitive. That doesn't seem like a situation where the Asian companies would gain market share. Losing the weak brands is not likely to hurt, since they don't have a significant market share now.

There has been a lot of discussion about whether or not buyers will return to GM if they go into backruptcy. But removing the uncertainty surrounding the company could be a benefit. I have thought for some time that the survival of the auto industry was important to the economy. It now seems as if that survival can be best accomplished through bankruptcy. A reorginized GM may be exactly what the American car buyer needs to instill the confidence needed to buy.

President Obama’s stunning decision to demand Rick Wagoner's (GM) resignation "was based on the wrong set of premises and raises the prospect that the administration will intervene too deeply in the automaker, seriously jeopardizing a transformation effort that has come a long way in the right direction." - William J. Holstein, author of Why G.M. Matters

I can't help but wonder if ousting Wagoner was a message to CEOs of other companies. Other companies have suggested they want government money. President Obama could have been simply sending a message: there will be a steep price to pay for a bailout. Even if that was not his intention, I think it may deter future beggars.

Who's Winning the Cable Service Provider Wars?

I expect the trend in customer satisfaction will continue to favor the non-cable providers. HDTV reveals the weakness of decades old cable lines. Which means cable companies will ultimately have to replace a lot of cable. An expensive option to retain customers. And certain to impact their profit margins.

Cell Phone Companies: Will ARPU, Multiples Fall as Users Cut Back?

Prepaid wireless plans are likely to have an impact on ARPU. Especially if a lot more people start looking at the prepaid cell phones like the ones Wal-mart carries. Unless you use the cell a lot, this variety is significantly cheaper than anything that AT&T or Verizon provides.

While Treasury officials have suggested that the Fed failed to alert them about AIG's (AIG) planned $165M bonuses until March 5 (revised from March 10), Fed officials say that they not only alerted the Treasury staff weeks earlier, but discussed the issue with them via e-mail.

This is another demonstration that those trying to solve the problems can't keep up. They are reacting to news instead of providing proactive solutions. Perhaps they should all slow down and focus more on getting it done right than getting it done quick. Then they might know what the other players in the game are doing.

Not News: CD Buyers Disappearing Daily. Might Be News: Music Buyers Disappearing, Too

Another source of free music is your local library. Many libraries are expanding their selection of music CDs and movies on DVD. This is probably not good for the artists. But for consumers looking to save money, the library is a great resource. My music collection is small, but it gets refreshed every other week. All without spending a penny. (Other than my taxes.)

Note: making copies of library CDs is illegal.

The government's stress tests for banks are 'asinine,' says Wells Fargo (WFC) Chairman Richard Kovacevich, as are retroactive conditions applied to TARP recipients.

If Wells Fargo didn't want or need TARP funds why don't they return them as other banks are doing? Instead of blaming TARP rules for WFC problems, perhaps Richard Kovacevichhe should accept some of the blame himself.

The week-long feud between Jon Stewart and Jim Cramer climaxes as the pair goes head-to-head on The Daily Show (uncensored video). So was Stewart too hard on Cramer - or did he treat him with kid gloves?

What Jon Stewart said was true. CNBC and Cramer deserve the negative critiques.

BUT... Jon Stewart is simply a comedian using 20-20 hindsight to go on the attack and boost his ratings. That's what comedians and talk show hosts do!

When Stewart is applauded for having the same hindsight that most investors have now become painfully aware of, that demonstrates how gullible we have become. Human nature believes the good news. We need to become more critical of the financial "news" on a continual basis. When we need a comedian to bring their failures to light future deception is inevitable.

Citigroup downgrades Wal-Mart (WMT) to Hold from Buy over concerns about the expected introduction of legislation that simplifies union formation and imposes several restrictions on the bargaining process.

Since even some Democrats are no longer backing the card-check legislation, it seems doubtful that will pass this year. A number of legislators in both parties believe this is not the right time for that divisive battle.

Home-improvement sales are headed for a 6.4% drop in 2009 - the biggest in 32 years. Home Improvement Research Institute, whose members include Home Depot (HD), Lowe's (LOW) and Black & Decker (BDK), calls the federal stimulus package "too small and too slow."

With the housing market the way it is, the incentive for owners to make home improvements is greatly diminished.

A lot of improvements are made in preparation to sell a home. An owner who either can't sell, or is facing the prospect of selling at a greatly reduced price, is less likely to improve their home. Owners who are facing foreclosure are likewise not going to improve their home.

HD, LOW, and other such companies will not see a business rebound until the housing market rebounds. On the plus side, the rebound might be significant when it does come. People who want to sell, but can't sell now, will want their homes to be the best of what's available. Which means improvements.

In This Devil of a Market, Could 666 Be the Bottom?

I think you read something into the article Alan did not intend. If making a reference to a biblical concept or passage is mocking God, then every Christian I know is guilty.


On Mar 09 08:24 AM Cliff-1954 wrote:

> You know You Mock God, it's not good. Did you ever think that all
> that's going on right now with our economy just might be a Judgement
> from God. Read the Bible how God took out nations because of their
> sins.

Tim Geithner needs to bid farewell to Capitol Hill, where he seems to be testifying every other day, and work on his plans to fortify U.S. banks. "Keep Tim at his desk, and tell him he can't go up to the Hill to play until he completes what may be the most important assignment any Treasury secretary has faced." (NY Times)

I completely agree with the suggestion. It is hard for Geithner (or anyone else) to do their job when management (in this case congress) doesn't leave them alone long enough that they can do it.

However, Congress has a problem. They have to look like they are doing something. Which means, holding hearings and asking questions, even when they know there is no point to it. This is a subtle form of finger pointing. But their alternative is to come up with responsible legislation.

It's 9:00EDT, did you set your clock ahead?

The government believes that DST saves energy. A comparative study by an economist says it doesn't. The government makes the rules. Who are they going to believe? The author may hope the silly time changes will go away. I'm resigned that they will continue.

With Wells Fargo's (WFC) Friday dividend cut, 2009's total vaporized dividend income for S&P 500 firms ($40.8B) has already surpassed all of 2008 ($40.6B). "Dividend cuts make investors that much poorer, compounding the decline in their stocks' value and adding to the 'reverse wealth effect' in the economy," Tom Petruno writes.

Those who suffer the most from these dividend cuts will be the elderly who have invested for years in income stocks and funds. The income they had depended on for retirement is now gone. Where will they go for help? The government. I wonder if our government has considered that when they force banks to cut the dividends.

I'm also inclined to think there will be a shift in the way some (perhaps many) investors view dividends. Dividend growth was once important to income oriented investors. But after seeing how unreliable dividends are, why would anyone engage in a long term strategy that emphasized income?

If my assumption is correct, companies that maintained their dividend, should benefit from it. But the others may find investors indifferent to the "promise" of a dividend.

Taking Bair's credit-increase request seriously, Sen. Chris Dodd plans to introduce a measure raising the FDIC's credit limit to $100B permanently and to $500B through Dec. 31, 2010.

Much of the FDICs problem is a result of raising the insurance from $100k to $250k. The government can not bail out every company and every citizen.