G. Kahn

CVS Caremark Tumbles on Lost Business

I wondered what the politics here might be. The major contracts lost were NJ medicare (legendarily corrupt liberal gov), Ohio medicare (where the state authorities used their position to investigate Joe the Plumber) and Chrysler ... no mystery there.

I sold CVS a month or two ago simply because there is no way for me to know what the gov was going to do to the industry, or to individual players. Until Thursday it was looking like a bad sell, but the point isn't so much whether it's been up or down as that the fate of businesses lies increasingly in the hands of the grossly empowered political class, rather than in the hands of its management. Who wants to invest in that climate?

Remote Control Is a Failure for Railroads

What a dope. Yeah, the car count is down because of RCL -- nothing to do with customers moving less freight in a down economy? Dope has an axe to grind. Grind it at the water cooler, not in a financial blog.

The Latest Bad Idea: Government Sponsored Vouchers for Car Purchases

Author is nuts. A $5000 discount on a cheap car is more incentive than $5000 discount on an expensive car. Ask yourself how much an incentive it would be on a $5000 car. Duh.
Further, read The Millionaire Next Door. Most millionaires drive older cars, and would jump on an opportunity like this. That's how they got to be millionaires, by being smart with their money.
That said, I suspect most people who buy "domestic" don't have an 8+ year old car. Big-3 cars don't last as long, so it's Honda/Toyota buyers (which are also made domestically) who would be able to take advantage of this.
And yes, it's a bad idea just because we don't pay tax to buy each other the cars the gov tells us to buy, when the gov. says to buy them. It's outrageous.

Valero Energy: Bidders Vanish, Pulls Two Refineries from Market

Many analysts suspected that the posted sale of Aruba was not about trying to divest of a poor ROI asset, but about negotiating a new contract with the Aruban government. They announced the effort to sell the Aruba refinery as their special tax-advantage was approaching expiration. Up until they talked about that refinery as being particularly strategic, and often used a picture of it as a symbol of the efficiencies in their overall portfolio.

Valero poored a lot of money into that refinery. It's been very good for them and Aruba; they just want to renew the tax provision, so they threaten to sell it to someone who won't benefit the island as much as they have. That's the theory anyway.

I don't think raising the cash is a real issue. It seems likely that they'll be cutting back on cap-ex, and the raw materials have obviously plunged in price as well.

Cramer's Mad Money - Government Is Tough but Fair on Citi (12/1/08)

Tough on Citi?
Right... can I get them to be tough on me like that? There's one underlying pattern to who gets bailed out. Quite simply, it's the corporations with close personal ties to the ex-bankers in D.C.

Tough on you means you get a tax audit, or you business gets a federal regulatory inspection. Tough on Citi means they get billions.

Citigroup: The End Draws Near

Citibank is neither too big to manage, nor too big to fail.

It is, however, almost certainly too well connected to fail. The line separating private governance and public control of banks has blurred; Citi and Goldman Sachs are the primary points of crossover. Look at the players, and explain to me how Citi will be allowed to fail.

Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor?

Let the first one fail, and the UAW will not see fit to make the necessary concesions for survival. This is utter graft. A backwards segment of the auto industry held together by taking money from the government with political threats. This is exactly the kind of problem that plagues our nation and our politics.

Refiners Finally Increase Margins

For Valero, in addition to the crack spread, the heavy/sour discounts are also quite important, as is the differential between gas/distillate futures and pump prices.

Valero owns a very large number of retailers. This has not been a factor for years, as gas stations have made minimal profits on gas, and have sunk more and more cash into the holding tanks. Last Q and current Q will see real profits on these operations, however, and high cash flow.