mahony

Jawbone: Whither Foreclosures?

my jawbone hurts

Will We See the Gradual Nationalization of Government Contractors?

What makes anyone think that large defense contarctor employees aren't already controlled by the government? The processes, rules and utterly useless programs are dictated by the government customer. If you think that a civil servant is more expensive than a contractor, you must have missed the part about cost plus contracts and how they cover the contractor "overhead". The cost plus programs (especially the ones people don't know about) dictate every part of the contract including bonuses and awards. Calling it government ownership would be semantics and like the article says, largely invisible.

Prosecuting Those Who 'Caused' the Recession Could Have Unintended Consequences

I agree with DCB. Washington will essentially do nothing and the egregious offenders will get slapped. People will be brought before Congress (oh the horror) and chastised for a few days, BUT they will have no other ramifications (financially).

I would really love the chance to screw up, get a huge payout and then be forced to testify in front of Congress. The media makes it sound sooooo terrible, but even calling it a slap on the wrist is overkill. Congress is a joke.

Hingham Institution for Savings: America's Cheapest Bank Stock

Another reason to like it: The areas served by the bank are historically desirable areas. In the real estate bust of the early 90's these desirable towns saw price decreases that were significantly lower than the cities and "less desirable towns". When going to bank auctions at the time you could see the difference between zip code.

This banks portfolio probably represents a higher quality of portfolio in the sense that people are still trying to buy into those neigborhoods that offer peace, security (financial and otherwise) and nice living near the ocean and high-paying employers.

Hello Cloud Storage, Goodbye Consumer Hard Disk Drives

I'm a big believer in Cloud Theory; however, the doom of the local hard drive is not nigh (yet). There are several factors that will delay the cloudburst.

1) NAS hard drive type storage is still very cheap and paying a monthly bill like a cell phone to store 500GB of pictures is still a mental stretch for people

2) Most people's connections are still far too slow to work with gigabytes of data on a regular basis

3) Rapidly dropping prices of high-density storage media (sd cards, memory sticks etc.) and the ability to access them without internet connectivity makes them far more useful in the near term (I know this is similar to #1 above)

4) The Cloud effect was EMC's dream-come-true in 2000 (they didn't call it that, but it's what they preached) and yet even coroporations haven't moved into the cloud by 2009, so I think it will take consumers a fair bit of time before they will jump into cloud computing in a big way.

Bailed Out Executives Will Repeat Mistakes if We Keep Rewarding Their Failures

I think your incentive argument is spot on. The big negative of course is not that these people continue to run the business, but that they will take credit (and the large payouts of bonus) for any recovery in a few years (which probably occurred despite their leadership not because of it). Many will then parlay their success into stints running other companies into the ground.

Obama Insists Cars Improve Fuel Efficiency by 40%

35 MPG? That's a fleet average. Detroit will come out with nothing new; they'll just roll out more cars at 36 MPG to offset the other crap that still gets 28 MPG (same strategy it has had since the 70's).

Sure they'll add a few hybrid SUV's to boost the numbers there from 17MPG to 19 MPG, but that is not real change. Where are the cars that get 45+ (you know the ones they already sell in Europe)?

Taxes: So Complicated, Even the Folks in Charge Can't Get It Right

The tax laws will not be fixed. Congress is to screwed up to get anything done efficiently.

Rent vs. Buy: Buying Becomes More Attractive

I think the Long Islander meant that low rates will create "false" demand and thus support house prices, not that low rates are bad for building equity.

Nationalizing Detroit

Newell:

Sounds like Ivory Tower stuff. Talk about the law of unintended consequences! Car welfare! Who would insure this crap! what constitues "able to afford"? This has so much potential for fraud it's amazing.

Auto Industry Rescue Delays the Inevitable

Thanks for writing about the true problem. GM's turnaorund plan is based on the Volt, which they are going to have to sell well below cost...How exactly will that make them profitable? The loan and business as usual will mean that GM will just sink long before they can ever make money on the Volt...even if gas is $5 a gallon.

I find it hard to believe that a company that sells 150,000 cars per month at $20k a pop cannot turn a profit. A monkey with a typewriter could run GM better than it currently is. The proof is right on Lutz's lips when he says "it's not the CEO's fault...he's done a good job and the mean economy did all of this bad stuff". The Captain of the ship is responsible for the ship. And GM has been sinking for years, not just this year. Reference the Seeking Alpha Article (I can't remember the author) who said that after analyzing the Big 3 many years ago that they were technically bankrupt and that you should run screaming from their bonds (never mind there stock). The fact that Lutz feels as he does is proof positive that GM management does not get it.

Nationalization and a car czar is a joke....who is the drug czar again? Ask Russians how those state built cars are working out. If car sales are falling, nationalizing the industry isn't going to get Americans to buy more cars....it just props up a weak business model at the taxpayer expense. I feel for people who lose jobs, but those jobs are going away whether GM goes into bankruptcy or not (actually bankruptcy at least has the chance to save more jobs if GM can emerge with good management).

America's Tryptophan Hangover

You didn't come right out and say it, so I'll say it for you (because you are right).

People are MORONS

My Reconsideration: Why Share Buybacks Are Pointless

The tax implications of Dividends are supposed to make buybacks the preferred alternative. I buy the dividend stocks in tax deferred accounts and I generally prefer dividends because it prevents management from doing stupid things with your money. However, buybacks make sense when you can no longer create value in your industry. For example: How will Intel get even more market share? Should they diversify into car making, even if they have good ideas? I can buy a car maker if I want growth in the auto business, so why do I want my chip company doing this? Most likely Intel will waste my money investing in markets they are not positioned for, so they should return the profits to me via a dividend or buyback. Eventually (if done right) I am getting more earnings attached to my share so I benefit.

This whole article seems a bit naive. The buyback is abused (duh) just like every other technique to lift stock prices. Companies announce buybacks at outrageously high value (just plain dumb), buy with one hand while borrowing with the other, fail to follow through on announced buybacks, buy back and then issue new shares shortly thereafter, buy back to counter poor perception and the list goes on. Just because it is poorly executed in many cases, doesn't mean it's bad or doesn't work. In the long run people will prefer the company that increases the profits associated with it's doing business. Lower number of shares increases that profit to price ratio (or lowers P/E), which ultimately is the goal of any owner.

Value Portfolio Produces a Horrendous Report Card

A Beta of 1.1 means you should only have lost 17% (compared to 15%)!???That's like expecting someone with a 333% batting average to get a third of a hit. If that is how you invest, no wonder you are surprised that your portfolio dropped so much.

Calling your portfolio "value" is a bit of a stretch anyway. What P/E do you use as a cut 20 or 30? Forward PE's based on estimate from analysts (i.e. cheerleaders)??? You mean the estimates that have been dropping all year? Wow, I hope people aren't following your advice.

Dear Mr. President-Elect: Advice on Combating White-Collar Crime from a Convicted Felon

I like your perspective, but alas you are whistling in the wind. Boards of Directors are politicians...you learn this is business school. Lesson 1:Pick a Board that helps with connections (i.e. regulatory hurdles, access to finance, access to politicians, CEO of a major supplier etc.). The money trail will lead you to Lesson 1 every time.

We will pay some lip service to better financial management for the next few years and then it will be business as usual. We'll call CEO's and CFO before Congress and berate them mercilessly, and they will still go home with what they earned by ill-gotten gains. Hey, you still get to vote and I bet that you (or even more likely your family members) still have a comfortable nest egg.

The overall lesson is that crime can still pay with low risk and if you are able to pull it off without any criminal activity (pure foolishness ala some of the Wall Street firms) all the better. Shame is dead...