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  • GMAC Bailout Flaws: No Appreciation of History [View article]
    First, what is Ford going to do? With the government funding GM, Ford will be at a huge competitive disadvantage. This will probably force them into bankruptcy which is a shame since they are a better run company.

    Secondly, in the long run, none of this will really make much difference. All of the American companies are still stuck with the UAW. Without the spectre of bankruptcy, the UAW has no incentive to negotiate away any of their excessive benefits, so I think the big3 will be back asking for more money in about 18 months. Except, of course,
    Ford because they will need money to compete against GM now.
    Dec 31, 2008. 08:40 AM | 2 Likes Like |Link to Comment
  • Social Security: A Ponzi Scheme? [View article]
    Here is what has happened and what will happen. First, half of social security will become taxable if you had retirment income above some threshold (done under Bill Clinton). Secondly, all of it will eventually become taxable. Third, the threshold of income necessary to trigger taxes will become, in relative terms, lower and lower. Fourth, at some point if a person has sufficient retirment income it will be decided that he benefited from the system and he will be "means" tested out of any social security at all. Fifthly, the sufficient retirement income will become lower and lower.

    So, is it a ponzi scheme? Maybe not according to your definition, but damn close. All of the above is inevitable given the trillion dollar committments the government is now doing. Party on with tomorrow's dollars.
    Dec 30, 2008. 12:20 PM | 1 Like Like |Link to Comment
  • The Arduous, Sometimes Impossible Task of Closing Down Car Dealerships [View article]
    I have a dumb question. Why care about the dealers? If the business goes down so does their unit/dealer. Why doesn't the marketplace cut down the dealers for you?
    Dec 30, 2008. 08:30 AM | Likes Like |Link to Comment
  • Why We Need Higher Gas Prices [View article]
    Why is it that the lefties just do not trust the market? Look at those charts! Oil hit $147/bbl and consumption dropped off the edge. Now, oil is cheap and it goes back up. Why is this surprizing? Note: it did not go up to last year's level. Why? Not because of the price, but because of the RISK. The average consumer would probably buy the big SUVs if they did not perceive that there exists a RISK that oil prices will go up again and they will get shafted. This is a very reasonable response.

    So, consumers will buy more fuel efficient cars. They won't do it so dramatically as they would if oil was $147/bbl. And, you can see this at the new car dealerships. Fuel efficent cars still sell better then the big SUVs. Note that big SUVs have $5000 rebates on them to move them. You can bet your last dollar that the car manufacturers will cut back on those vehicles because they obviously are not making money on them.

    Dec 29, 2008. 08:54 AM | 2 Likes Like |Link to Comment
  • GM Proves There Is an Alternative to Bailouts [View article]
    A couple of comments. When the UAW says that all stakeholders must sacrifice I wonder just what they think has happened? The stockholders are, essentially, wiped out. The debt holders will be very lucky to get 30% and the suppliers are taking hits, too. The UAW hits are: MAYBE the job bank is going away? New employees (of which there are very few since this is a declining industry) make reduced wages to pay for the older worker's retirement benefits (which the new employees will never get). Seems to me that the stakholder making the least sacrifice is the UAW.

    As far as the comment that neither GM or the UAW can change retiree retirment benefits, the gentleman is right. Only a bankruptcy judge could do that.

    As far as the comment that big3 cars were made cheaper so that they could pay UAW benefits. Duh, pretty obvious actually.
    Dec 23, 2008. 01:46 PM | 3 Likes Like |Link to Comment
  • Hedge Fund Redemptions May Crash Q1 Markets [View article]
    First, is this late or what? I mean, hedge funds have been having withdrawals for quite some time. If this article had come out in December, 2007 it would have been prescient. Now, it is merely flatulant.

    Secondly, for tax reasons if for nothing else, I would have already done my hedge fund withdrawal.

    thirdly, there are a lot of stocks that have extremely low pe ratios and pay good dividends. What is your alternative? 0% T-Bills? I think that selective stocks look pretty good in this environment.
    Dec 22, 2008. 08:29 AM | 7 Likes Like |Link to Comment
  • Plentiful Coal - Not Peak Oil - Is Greatest Global Warming Threat [View article]
    First, is there global warming? I have looked extensively at the data and the best answer I get is maybe. Maybe because the data we have of changes in temperature over the last century are suspect. The data of temperature change beyond that we know only in vague terms. For example, we do now that there was a medieval warming period from roughly 900 to 1300 AD. We also know that there was a "little ice age" from 1500 to about 1900.

    Secondly, does man have anything to do with global warming? There was no a significant contribution to global warming from man during the medieval warming period, yet it did get warmer. The same can be said for the "little ice age." So, does man have anything to do with it, or is man's contribution significant?

    The carbon dioxide theory is simple, straightforward, and suggestive. But, it really doesn't fit the data. So, the best answer I have is this: we do not know. Are we really willing to contort the world economy causing massive upheavals for a maybe? I wouldn't.
    Dec 18, 2008. 03:51 PM | 9 Likes Like |Link to Comment
  • GM Puts Brakes on Volt Plant Until Bailout Occurs [View article]
    The Bush administration is using the phrase "orderly bankruptcy." I think this is very smart. What they administration is saying, I think, that they will proved debor in posession financing for a chapter 11 bankruptcy. In this way, the government and the court can guarantee the validity of car warranties. They can also get the power of the bankruptcy judge to terminate and rewrite existing supplier, dealer, and union contracts. They can force a haircut of the bondholders and stockholders. They can also force a haircut for the VEBA.

    The UAW will get what it says it wants, all the stakeholders to make sacrifices. This will redo the debt structure of GM and make it longerm viable. If the federal government gives money to the big3 in any other manner, they loos e the power of bankruptcy to do what it has to do.
    Dec 18, 2008. 01:28 PM | Likes Like |Link to Comment
  • Falling Prices Stimulate Michigan Home Sales [View article]
    I was born and raised in Michigan. I worked there in the 70s and 80s. Anyone who thinks that the current economic problems are due to recent events is woefully mistaken. I watched the state government run dozens of chemical and food processors out of the state because they were "dirty" polluters. I watched companies bypass Michigan because of its difficult regulatory environment. Michigan made itself a one industry state. It put all its eggs into the auto/UAW basket.
    Dec 15, 2008. 08:31 AM | 1 Like Like |Link to Comment
  • Will the Price of Oil Sink Much Lower? [View article]
    Pretty much true. If oil doesn't go up, the tar sand projects will end. So will a lot of offshore oil projects. However, I am pretty confident that oil is not staying in the 40s.
    Dec 10, 2008. 11:08 AM | 1 Like Like |Link to Comment
  • King Coal or King Saud? [View article]
    First, what falling prices? I have been looking at the spot price of coal and it is still about twice what it was last year. Can't say the same about oil, can we? At best, spot prices are down about 10% the last few months.

    Secondly, there are some excellent coal companies out there. My favorite is ARLP and AHGP. These pay you a solid 10%+ dividend as they go up in value. Yeee Haaaah.

    As far as clean coal, if you mean coal sequestration, sure it be. and, by the way, I have some excellent swamp land to sell you in Arizona.
    Dec 8, 2008. 04:35 PM | Likes Like |Link to Comment
  • GM: In the Ballpark, But Not in the Game [View article]
    Where was the UAW sacrifice? the jobs bank program? thats it? No cut in pay, benefits, retirement programs (e.g. 30 and out)?
    Dec 3, 2008. 10:17 AM | 1 Like Like |Link to Comment
  • A Modest Proposal For The U.S. Auto Industry: Stop Building Cars [View article]
    This outsourcing of manufacturing is a typical B-school idea. And, it works, for a time. For example, RCA (which invented TV) outsourced the manufacturing of components to Japanese firms in the 50s. Eventually, the outsourced the manufacture of the entire TV set. Of course, RCA does not even exist in this business anymore. I could mention dozens of other industries. Outsourcing is the last stage of a company that cannot compete and it does it just before it goes out of business.

    Trust me, at some point, Dell will be gone, too.
    Nov 30, 2008. 10:59 PM | 1 Like Like |Link to Comment
  • Has General Motors Earned a Bailout? [View article]
    Whether GM has earned a bailout or not is largely irrelevant. What really matters is that if we give GM $25 or $50 billion are we going to be in the same position a year or two down the road? In other words, is giving money to GM the equivalent of throwing money into a rathole?

    Given GM's current cost structure, it is hard to see a viable path forward. GM is basically paying $30/hr for labor more then the transplants when fully amortized (including legacy costs). This is a significant cost advantage which will simply, at some point, push GM back to bankruptcy's door again. So, the only finanical sense to make of this is that GM has to lower its cost structure to that of the transplants. Otherwise, giving them money just puts off the inevitable.
    Nov 26, 2008. 11:00 AM | 1 Like Like |Link to Comment
  • The Insurance Industry's Invisible Meltdown [View article]
    Well, what can I say, I bought at $6 and wrote the covered call at $7.5. LNC is now almost $9. So, people who buy this low are going to make serious money. LNC does not need a bailout. It just needs people to see the bargain it is.

    Damn, sure wish I hadn't wrote that covered call at $7.5
    Nov 25, 2008. 02:01 PM | Likes Like |Link to Comment