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?

With people desperate for cash these days, identity theft is a growing concern. I had it happen to me just last week.

According to the article:
High-tech crooks have begun stealing account numbers and PINs from drivers who pay at automated gas pumps. It’s part of a national crime trend that probably originated on the West Coast this year and recently appeared locally.

But new matchbox-size versions of the gadgets fit onto gas pump card readers without being noticeable and copy the numbers without compromising the transaction. New skimmers sometimes even contain tiny cameras that record drivers entering personal identification numbers.

I don’t really use my cash card much except to get money and an occasional gas fill up. Luckily I caught it early and was able to get my card canceled. It’s good to take precautions, especially as crooks are finding new and creative ways of getting your information. Also, in times like these you really don’t want people messing with your money.

People do get smart when their desperate.

I’ve been reading in the news as of late that the current number of suicides have risen with the failing of the global economy, bankruptcies, and joblessness. Unfortunately for many people, this is a serious reality. For those feeling the pressure and needing to talk, hot-lines and counseling are highly recommended.

For a list of hot-lines by state, check out: www.suicide.org

According to one article:
Financial stress builds up to the point the person feels they can’t go on, and the person believes their family is better off dead than left without a financial support,” said Kristen Rand, legislative director of the Washington D.C.-based Violence Policy Center.

It’s not yet clear there is a statistical link between suicides and the financial downturn since there is generally a two-year lag in national suicide figures. But historically, suicides increase in times of economic hardship. And the current financial crisis is already being called the worst since the Great Depression.

According to an article from Yahoo News, GM and Chrystler are in talks over a possible merger of the two companies. Cerberus Capital Management LP, which owns 80.1 percent of Chrystler and 51 percent of GMAC Financial Services has made in roads in recent months to acquire all of Crystlers assets from the German based Daimler Benz AG which it could then turn over to GM for the remaining 49 percent of its stake in GMAC. Essencially merging the two automakers in what could potencially be a cost saving measure on the parts of the two ailing car manufacturers, but more importantly, it would solidify GM’s claim to the top spot in global sales, a position currently held by Toyota.

While GMAC has generally been a cash cow for GM in good times, at a time when GM is just trying to keep their business afloat, spinning off the company removes a lot of the risks involved in dealing with home and auto loans. It also allows all three companies to consolidate their businesses, which should be good for their respective bottom lines.

With Chrystler being 81% privately held, it’s somewhat difficult to gague, especially without a prospectus, what kind of baggage it may come with. Still, while the merger is far from a sure thing at this point, it is an interesting turn of events, and is something worth keeping an eye on.

Chrysler, GM discuss merger, acquisition

GM Plus Chrysler Equals Survival?

I’ve been following the American Express Members Projects on my blog over the last few weeks, and it’s been quite the race. It’s kind of fun to watch and see what people are voting for, but now it’s down to the last 5 and there are only 6 days left to vote. Unfortunately if you aren’t an American Express member, you can’t vote in the last round. Still, I encourage you to take a look and cheer them on in your hearts and minds.

I was sent an email last night from one of the finalist, and I just thought I’d pass it on.

Because you’ve written about another organization nominated for the American Express Members Projects on your blog, Henry Phish, I would like to ask for your help. My organization, International Medical Corps focuses on feeding hungry children around the world, and we are very excited to have made the final 5 nominated projects out of 1,190 worthwhile projects. “Saving the Lives of Malnourished Children” is now eligible to receive up to $1.5 million to help feed hungry and malnourished children and we would be thrilled if you would help us. I’ve put together this blogger friendly news release explaining everything.

http://internationalmedicalcorps.smnr.us/

A friend sent this to me and I thought you might find it interesting:

If you had purchased $1000 of shares in Delta Airlines one year ago, you will have $49 today.

If you had purchased $1000 of shares in AIG one year ago, you will have $33 today.

If you had purchased $1000 of shares in Lehman Brothers one year ago, you will have $0 today.

But, if you had purchased $1000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling refund, you will have received $214. Based on the above, the best current investment plan is to drink heavily & recycle. It is called the 401-Keg.

A recent study found that the average American walks about 900 miles a year.

Another study found that Americans drink, on average, 22 gallons of alcohol a year. That means that, on average, Americans get about 41 miles to the gallon!

Makes you proud to be an American.

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

Just a couple of notes:

GM announced today that it was issuing 16 million shares of stock in exchange for debt, therein lowering their interest rate. A good move for a company with some liquidity problems. A company with it’s credentials has some leeway in how it manages its assets. In this case it sold part of its own stake to lower its interest rates and gain liquidity. I’m told that GM owns a rather large stake in their company, but I haven’t been able to track down the percentages from a trusted source. I’ll post it when I do. Also, GM has stated it is open to other such deals with creditors as well.

With this move they are banking on their future success, and truth be told, it looks fairly decent. I’ve noticed a few Malibus on the streets this past weekend. The car’s have been getting good reviews, and should build up some steam competing against the Accord and Camry in the next year or so; if it weren’t for the recession they would be doing a lot better. The Cruz debuts next year in Europe and 2010 in America as a 2011 model; the Volt goes into full production in 2011, so they are starting to look pretty good on paper.

A lot of their money is being put into the foreign market right now. With the current strength of the dollar on the rise, it looks good for overseas investment, and a lot of production facilities are going up overseas. Percentage wise, GM is expected to shift a majority of it’s business to foreign markets, which probably makes some amount of sense, at least in the short term. However, it’s another one of those stats that I wouldn’t mind checking my sources on.

Also, GM on Tuesday is set to relaunch it’s GMNext site, which should answer quite a few questions about it’s operations going forward. They’ve been fairly forward thinking in their communications with the media…honestly it’s a little desperate, but they need the transparency in order to maintain trust with creditors and the public alike. Thus far I’ve liked how there management has handled the situation. Check out GMNext.com

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