Henry Phish

I found an interesting video on Yahoo that does a good job of summarizing the current state of the US auto industry. Like a lot of you I’ve been following GM pretty closely in the last few month and have seen a lot of positive and necessary change in their company and we’re beginning to see the turnaround in their product line that they’ve promised now for the last three years.

Still, in days like these, where the economic downturn has affected everyone throughout the automobile industry…as well as just about every other industry…it’s really tough to watch the company struggle. With the US car industry continuing to be one of the largest employers in the country and with so many pensions and retirement plans riding on their continued success, as well as the impact that a folding of the big three would have on consumers and supply chain companies in the industry, it’s a given that the car industry will and should receive some sort of aid, since most of the car makers current woes stem from a lack of proper credit due to bank freezes and the utter lack of consumer spending during a global financial crisis. And while I don’t as a rule recommend bailouts of any kind, I do see companies such as Ford and GM as being viable into the future.

As far as the taxpayer is concerned, if done correctly this aid could reap rewards, though as this financial crisis continues, small investors are looking more and more like victims, with nearly all aid solutions leading to significant losses by unsecured investors for short term investors, and possibly long term investors as well in a bankruptcy like solution. Hopefully in the next few months the government will be able to piece together some idea of what this might look like. As it sits, I’m just glad I’m a spectator and not Rick Wagoner.

Can US Cars Compete?

According to GM-Volt.com, along with the $700 Billion Wall Street bailout bill, several congressional riders were added which give tax credits to buyers of plug-in electric vehicles.

It provides a base of $2500 plus an additional $417 per kwh for batteries greater than 4 kwh. For the Chevy Volt, that works out to $7500 per car, a number GM had lobbied for.

As a lot of you may know, tax credits were issued when the Prius first came out, and they were very well received by consumers. The incentives on that package officially ran out last year, but the new rider should pick up where that one left off, seeing as both GM and Toyota are planning on releasing plug-in versions of their popular technology in the next few years.

Some interesting facts for comparison:

Volt: ($35,000 – $7,500 in tax credits)
Range / Efficiency – 8 kWh / 40 miles (before gasoline starts, going
to and from work this should be sufficient)
Cost – $0.08 / kWh
Yearly mileage you drive – 20,000 mi (Assume 4000 mi you have the
gasoline engine on @ 25 mpg)
Gasoline Consumption – 160 gallons
Gasoline Cost – $4 / gallon
Total yearly cost – $256 (Electricity) + $640 (Gasoline) = $896 / yr

A person will save $1456 / yr in fuel by driving a volt as opposed to
a toyota hybrid. Assume you keep the car for 100k mi / 5 yrs and your
savings have more than paid for the difference ($7280 in total
savings).

Granted, Toyota will have competing technology with their release of plug-in hybrids, but at $27,500, the Volt does look like a reasonable entry level vehicle for drivers desiring that extra green mile and should do quite well with consumers.

More importantly however, is the support that the government has put behind this technology, since early adoption is key to establishing these types of vehicles in the mainstream, programs such as the tax credit give consumers some incentives to buy. With the higher entry level price of this technology, it’s difficult to believe that just anyone will switch from the lower cost fuel efficient combustion models without some kind of incentives in place. With the government looking to have emmissions cut by 40% by the year 2020, the more early adopters, the better.

Along With Wall Street Bailout, Plug-in Car Tax Credit is Passed: Chevy Volt Now $7500 Less

I saw an article this morning about GM’s suspension of employee stock purchases in their 401k programs. It seems that with the recent dip in the stock price and the renewed excitement about the companies future, a higher number of employees than usual have been enrolling to buy stock from the plan and have bought up all the shares.

It’s really telling of how high expectations at this company are for the future of GM, and it’s also telling of their management. Your workforce generally knows before everyone else what the general disposition of the company is by how much they respect their managements decision making, and while it isn’t always always a good indicator of the overall success of the company, in this case, I think they have a lot to be excited about.

With changes to their product line such as upgrading the Malibu, the Chevy Volt, Cruze, and overseas investments, this company is starting to see signs of life that it hasn’t seen in years.

According to the article, management cannot buy or dispose of any GM equity securities that were acquired in connection with their employment. The Sarbanes-Oxley Act generally prohibits directors and officers from trading in their company’s stock when most participants in the company’s stock plans are not able to purchase or sell stock.

It looks like they’re in this for the long haul.

GM suspends stock purchases in employee plans

I caught a video on Yahoo! Finance that talks about our current financial crisis in relation to world trends over the past few years. They mention how a large percentage of the population has been making more money (in some cases billions of dollars), and they also talk a little bit about the stock drop a couple of days ago (Sept 29, 2008)…the one in which 499 of the 500 stocks in the S&P 500 fell except for Campbell Soup. They also break apart the economy a little bit and compare our current situation with historical events such as the great depression, an era in which the government was required to step in and mandate regulations on the economy…namely Franklin Roosevelt’s New Deal.

Some background on the great depression helps a little to get the full effect:
…the New Deal merely introduced types of social and economic reform familiar to many Europeans for more than a generation. Moreover, the New Deal represented the culmination of a long-range trend toward abandonment of “laissez-faire” capitalism, going back to the regulation of the railroads in the 1880s, and the flood of state and national reform legislation…

What was truly novel about the New Deal, however, was the speed with which it accomplished what previously had taken generations. In fact, many of the reforms were hastily drawn and weakly administered; some actually contradicted others. And during the entire New Deal era, public criticism and debate were never interrupted or suspended; in fact, the New Deal brought to the individual citizen a sharp revival of interest in government.

When Roosevelt took the presidential oath, the banking and credit system of the nation was in a state of paralysis. With astonishing rapidity the nation’s banks were first closed — and then reopened only if they were solvent. The administration adopted a policy of moderate currency inflation to start an upward movement in commodity prices and to afford some relief to debtors. New governmental agencies brought generous credit facilities to industry and agriculture. The Federal Deposit Insurance Corporation (FDIC) insured savings-bank deposits up to $5,000, and severe regulations were imposed upon the sale of securities on the stock exchange.

It’s interesting to note that Campbells soup is the only stock to go up on Monday, and it seems to indicate that people are moving their money to safer ground. Staple goods always tend to do well even in a bad economy, since everyone needs to eat.

Goodbye $1 Billion Salary, Hello Campbell Soup

Bailout, Take II: What the Feds Do Next

Government $25 billion dollar incentive loan for ailing car companies may be approved by Friday of this week. Detroit right now is holding their breath.

Congress to Consider Auto Loans in Spending Bill

Right now the news and media is jumping up and down a lot about the $700 billion dollar bailout of the U.S. banking system. For most people, it seems like a crazy amount of money. To put it in perspective, according to CNN, the U.S. government could give every man woman and child $2300 dollars a piece, 2000 McDonalds apple pies, or buy 6.6 billion barrels of crude oil.

700 billion dollars as seen on CNN

Where the whole thing gets complicated is that $700 billion may not even be enough to save the banking system. With the politicians arguing over whether to nationalize the banking system, it feels a little bit like we’re entering the twilight zone. Russia is supposed to have a nationalized banking system, not us. Which just goes to show how weighty this issue is in a real world context. These banks could litereally fail without continued government support.

As it is, these banks brought it on themselves by providing high risk loans and other services to a public that couldn’t hold up it’s end of the deal. As banks and lending institutions begin to take more risks, it seems like these sorts of problems continue to worsen. As important as banks are to the health of the nation, they need to make better decisions about their corporate lending policies…there just isn’t a better way to say it.

What if the bailout plan doesn’t work?

An interesting, albeit short, news piece about Googles ten year run to becoming the worlds leading search engine. The piece also covers growing issues such as monopoly concerns with their Yahoo deals, growing competition among rivals and the like.

Like I mentioned last week in The Search For Google Alternatives, with the release of Chrome web browser, as well as the Android mobile operating system, Google has positioned itself as the dominant brand on the internet, well ahead of past contenders such as Microsoft, Yahoo, AOL, etc. According to one statistic posted on a Microsoft blog, Google currently makes up 70% of all web searches on the web. With the addition of Yahoo to their advertising stable, this statistic grows considerably. So essencially what the news piece is saying is that Google has become a vertical advertising monopoly.

For more information about the suit check out:
FAQ: Antitrust eyes on Yahoo-Google ad deal

So what does that say about Google?

To be honest, Google doesn’t really control the internet. I can go to any site I want regardless of weather Google wants me there or not. I can pick any advertisers I want on my site including Amazon, Google, and currently Yahoo, and the only stipulation I have is that they provide relevant advertising and hopefully…and I said hopefully…some money. The thing that makes their advertising better than others is brand recognition, since people can advertise through any service they so choose. Technically it’s up to individual sites to choose whom they use as advertising, and if Firefox or Microsoft came up with a better system of advertising then I’d use that. If Cuil.com decides one day to make an advertising program based on onomatopoeia and fuzzy logic, then I’ll use them too. As far as Yahoo plastering their site with Google ads, so be it, they have the authority to do so. The case itself is kind of crazy, and the fact that everyone loves to hear about the Google success story, and the fact they do well enough at matching ads to content, are the only two reasons they don’t have much competition.

Just remember how it works though…if they ever do become evil, there will be ten companies trying to pick up the slack…and six of them will be run by former Google employees, two from Linux Redhat, one from Firefox, and one from some guy in a bar that wrote his idea on a napkin and someone gave him a bunch of money for it. Googles going to be screwed.

For more alternatives to Google AdSense, check out:
Advertising Alternatives for Blogs and Niche Sites

With the newest hurricane news coming in this morning, it sounds like the threat of Hurricane Gustav is finally over. Luckily it left New Orleans mostly well enough alone by comparison.

Of interest, is the damage to the U.S. oil infrastructure off the Gulf Coast, which prevents oil from entering the country, and for which Bush has proposed that congress allow more domestic oil production.

While I’m not knocking the logic of his argument, I think it’s kind of funny that most of Bush’s family money comes from oil and that an expansion in domestic production benefits him directly. While domestic oil production is pretty much a practical matter as far as Gustav is concerned, I would hope to see this same fervor coming out of Washington for more traditional energy resources such as solar, coal, wind, and nuclear as well…as these are going to be big topics going into the future…possibly more so than oil itself.

While I know government sponsorship of clean energy and energy programs has increased at a phenomenal rate over the last few years, it doesn’t take an idiot to point out that with things going the way they are in the automotive industry and the world in general, power consumption requirements are going to skyrocket within the next few years leading to all sorts of insane issues that people have never even though of before.

As it were, it’s something that needs to be considered.

As for Bush…I might have to buy some stock in his oil platform.

Bush: ‘We need more domestic energy’

With the recent release of data for the new Chevy Volt, GM’s marketing of fuel economic vehicles in general, and a quickly rising interest in hybrid technology across the industry, it’s no wonder articles for alternative energy resources have been appearing all over the internet. Among them are two new solar plants in California as well as an article on geothermal heating in the New York Times.

Being from Minnesota, reading these articles got me thinking about what sort of resources are available a bit closer to home. Of several topics I’ve written about before were Anderson Inc’s use of fibrous biomass to create ethanol in my article, Rumplestiltskin, but several other alternative energy types can also be found throughout the state, and continue to thrive with the aid of federal and state incentive programs and rebates.

Of special note are tax exemptions on real and personal property of wind systems, though taxes on production still apply. Other incentives include $1,000 to $20,000 rebate for grid connected solar electric systems. Both systems currently in wide use by farms and business throughout the state.

Companies in Minnesota supporting windpower include Xcel Energy Inc (XCJ), which is required by the state to produce nearly a third of its energy from renewable sources by 2020, and MidAmerica Energy (MDPWK). Solar companies include Innovative Power Systems which contracts solar energy systems and Cypress Semiconductor, which produces photovoltaic cells.

Among others are incentives for ethanol and biomass production as well as the federal hybrid vehicle tax credit.

I’m not entirely sure how Minnesota stacks up with the rest of the country, but it seems like a start in the right direction. With continued funding and research, these systems continue to grow in acceptance.

For more information on Minnesota Alternate Power Incentives, check out:

Minnesota Renewable and Efficiency Incentives

According to an article by Sally Buzbee from the Associated Press, Iraq has stepped up pressure on a timetable for the withdrawal of US troops. The withdrawal is specifically linked to Iraq resuming security responsibilities for all 18 of it’s provinces, with 9 provinces already under Iraqi control. After that, the countries security situation would be evaluated every 6 months for 3 to 5 years to decide when US troops would pull out completely. At this time, the handover of the final 9 provinces have no turnover date, which gives the US some flexibility in how it handles troop withdrawals.

This is a good step, as it indicates Iraq’s growing confidence in its ability to secure itself. The main issue with pulling out of Iraq has always been their lack of infrastructure. With warring factions a constant threat to people on the street, police and hospitals in short supply, utilities such as water and electricity nearly non existent in some areas, and an economic structure just scraping by, it’s difficult to imagine Iraq being self sufficient without a stable governing body in place.

With current violence levels having fallen to their lowest point in the last 4 years, and with the latest statement from the current parliament, it’s becoming clear that Iraq is beginning to see the light at the end of the tunnel. What their statement says about the Iraqi government is that we can and will police ourselves, and that’s a good thing to see after so many years of war.