Last Build Date: Fri, 13 Jun 2008 11:20:25 -0500Copyright: Copyright 2008
Fri, 13 Jun 2008 11:20:25 -0500
Wed, 04 Jun 2008 15:24:18 -0500
June 4, 2008
SUV Sales Run Out of Gas
Demand for the huge autos drops in May
U.S. sales results released Tuesday showed cars outselling gas-guzzling trucks and SUVs by almost 200,000 in May -- the biggest margin since 1996.
GM in May saw a 37% decline in light truck and SUV sales and its share of the overall US market dropped below 20%, a new low for the automotive giant. General Motors posted a sales drop of about 27% from a year earlier and said it would close four truck plants, prepare its Hummer brand for a possible sale and focus on making smaller cars. Chrysler's 25.4% sales decline put it behind Honda in monthly sales for the first time.
And, after 17 years, Ford's F-Series trucks were dethroned from the top sales position, falling to No. 5 behind the Honda Civic, Toyota Corolla, Toyota Camry and Honda Accord.
"I think it's a watershed moment," said Jim Farley, head of marketing at Ford.
For the month, overall vehicle sales in the U.S. were 1.4 million, down 8.4% from a year earlier, according to Autodata Corp. Based on the May sales rate, the industry is on pace to sell just 14.3 million vehicles this year in the U.S. In 2007, total sales were 16.1 million.
For nearly a decade, Americans bought more light trucks -- a segment that includes pickups, SUVs and minivans -- than cars. But starting in March, cars edged ahead. The gap widened in April, and in May, 193,559 more cars than light trucks were sold.
Los Angeles Times
Tue, 03 Jun 2008 16:05:08 -0500
June 3, 2008
Mr. Bill Returns to Pitch a Debit Card
MasterCard executives have found a new poster boy for the angst-ridden economy: Mr. Bill. The small clay figure that appeared in “Saturday Night Live” short films three decades ago — being dismembered, pulverized and humiliated to his falsetto cries of “Oh, nooooo!” — will be the latest star of MasterCard’s “Priceless” campaign.
He is being revived as a debit-card holder who gets roughed up but keeps on going. The 30-second spot, to start airing next Monday, casts Mr. Bill as an urban professional on his daily routine: Mr. Hands pours hot coffee on him (“coffee: $2”), a personal trainer launches him off a treadmill (“gym: $59/mo.”), and an opened briefcase flips him onto the windshield of a city bus (“briefcase: $120”).
Mr. Bill, rolling with endless punches, just enjoys the ride home: “Making it through the day: priceless.” A voice-over adds, “For whatever comes your way, there’s debit MasterCard.”The spot is meant to tap into the current “unsureness about what’s going to happen next,” said [the] executive vice president and chief creative officer at McCann-Erickson. “We wanted to make him a character who can handle things beyond his control and stay optimistic.”
McCann-Erickson said that Mr. Bill tested well with viewers of all ages. Mr. Bill made his debut on “Saturday Night Live” on NBC in 1976 ”I think it’s the times, like how Charlie Chaplin flourished in the Depression,” said creator Walter Williams .
The New York Times
Fri, 09 May 2008 15:06:24 -0500
May 9, 2008
Deal to Build at Railyards on West Side Collapses
Six weeks after the Metropolitan Transportation Authority selected Tishman Speyer Properties to build a vast complex of office towers, apartment buildings and parks over the railyards on the West Side of Manhattan, the deal has fallen apart.
Gary Dellaverson, the authority’s chief financial officer, said the negotiations foundered Thursday afternoon after Tishman Speyer insisted on changing the terms of the $1 billion development, which both parties had agreed to on March 26.
The change would have substantially slowed the flow of millions of dollars in annual rent and fees to the authority and introduced a note of uncertainty about the pace of construction at the 26-acre site, which straddles 11th Avenue between 30th and 33rd Streets, he said.
Tishman Speyer had developed a plan calling for four or five major office towers and seven apartment buildings with a total of 3,053 apartments, as well as 13 acres of open space, a school and a cultural institution. But shortly before the transportation authority selected Tishman Speyer, it lost its financial partner and its anchor tenant, Morgan Stanley.
The developer also jettisoned its designs by the architect Helmut Jahn of Chicago, the executives said.
The New York Times
Wed, 02 Apr 2008 13:47:09 -0500
March 31, 2008
Private Equity: Nothing More Than Clumsy Trick
So now we know. The boom in private equity, which was promoted as the superior business model, based on patient capital, superior management and an alignment of interests, was nothing more than a trick of financial engineering – and a clumsy one at that. The magic of leverage works both ways, as we are discovering.
As investors are increasingly bruised by the recognition that reality has once again triumphed over hope, the private equity barons are having to confess that the benefits of superior management, alignment of interest and, of course, the superior reward structure counted for very little.
Many of the private equity deals look no different from Yell and other highly leveraged public companies. Sometimes a simple observation can prove an important point. In November 2006 Citibank published a research report that highlighted how private equity returns could be achieved by just leveraging basic stock market indices. It is a seminal note. “How do they do that?” asked the report, and then went on to provide the answer.
By leveraging the basic stock market indices by three to one, Citibank pointed out, returns could exceed even the best historical private equity returns. Never mind that as they were spellchecking the final version of the note, leverage on that season’s deals was reaching four to one and even five or six to one.
As Citibank pointed out, the private equity barons would always emphasise alpha over beta – their ability to outperform a market rather than merely ride the market wave – but it showed clearly that leveraged beta was where the returns were being generated.
Private equity as we have come to know it is all about debt – lock, stock and sinking barrel. There may have been better management and better incentive structures in the deals of recent years. But they really contribute nothing to the overall return when compared with the impact of the leverage in the capital structure.
Mon, 31 Mar 2008 17:00:23 -0500
March 31, 2008
Paulson Plan Begins Battle Over How to Police Market
Amid Crisis, a Bid To Shuffle Powers
In a sweeping proposal circulated over the weekend, Treasury Secretary Henry Paulson slaughtered a number of Washington's sacred cows, proposing to merge or eliminate institutions of long standing including the Securities and Exchange Commission, and to create a controversial new role of supercop for the Federal Reserve.
In an interview, Mr. Paulson said the regulatory system is broken, a growing sentiment in recent months in Washington as each of the nation's financial watchdogs failed in a different way to prevent the foreclosure crisis and credit-market turmoil from spreading. "We need regulation, but if we have it, it should be just structured in a way that it has some way of being more effective," he said. "Everywhere I look, I see the plumbing hasn't changed to meet the realities."
Big crises, from the Panic of 1907 to the Great Depression to the 1987 stock-market crash, tend to give impetus to perennial efforts to reform U.S. financial oversight. The current system has developed over more than a century, and critics have long complained that too many agencies have overlapping jurisdictions and leave too many areas exposed.
Even if only parts of the Treasury plan see the light of day, they could reshape how the government interacts with Wall Street banks, Main Street banks, insurance companies, hedge funds and other institutions that grease the wheels of the nation's economy. While the Fed would gain power, the Securities and Exchange Commission could lose some or even all of its authority. Regulators at the federal level would significantly increase their clout at the expense of state regulators.
The Wall Street Journal
Wed, 12 Mar 2008 15:18:47 -0500
Diamond Defender Engagement Ring
This design by Tobias Wong is called “Killer Engagement Ring.” It is a sturdy diamond ring whose point faces out, turning it into a potentially lethal weapon. The diamond sharp edge will cut skin down to the bone with a minimum of 1 karat stone - but the larger the stone the deeper the cut.
It can come in handy in serious situations like attempted rape or kidnapping. It can also be useful in scratching the hell out of your boyfriend's car if he ever cheats on you!
Mon, 10 Mar 2008 15:22:38 -0500
March 7, 2008
Carlyle Capital Suspended; Lenders Force Asset Sales
Carlyle Group's mortgage-bond fund was suspended in Amsterdam trading after creditors forced the sale of some holdings, jeopardizing shareholders' capital.
Lenders who issued default notices have liquidated some residential mortgage-backed securities held by the fund and may sell more as talks continue, Carlyle Capital Corp. said in a statement today. The fund had “substantial” margin calls and additional default notices from lenders yesterday, it said.
Carlyle Capital said yesterday it had failed to meet margin calls, prompting creditors to seek immediate repayment. Started by David Rubenstein in 1987, Carlyle increased its mortgage holdings last year, selling $300 million of shares in Carlyle Capital. The fund used leverage to buy about $22 billion of AAA rated mortgage debt issued by Fannie Mae and Freddie Mac.
“This marks a further savage step in the ongoing credit implosion of recent months,” Keith Baird, an analyst at Bear Stears Cos. in London, wrote in a note to clients today. ``The liquidation of the fund cannot be excluded nor the potential loss of capital, rendering the shares worthless.”
Fri, 07 Mar 2008 13:34:51 -0500
March 7, 2008
Mozilo, O'Neal and Prince Defend Pay
High-profile ex-banking CEOs
Two high-profile former Wall Street CEOs and the head of the nation's largest home lender defended their oversized pay packages to Congressional lawmakers Friday, arguing that recent reports grossly exaggerated their compensation in some instances.
In testimony prepared for the House Committee on Government and Oversight Reform, Countrywide Financial's founder and CEO Angelo Mozilo, former Merrill Lynch Chairman and CEO Stanley O'Neal and ex-Citigroup chief Charles Prince argued that their pay was determined through an independent assessment process, and was tied directly to the performance of the company.
Mozilo reportedly stood to collect a windfall of $115 million after his firm agreed in January to a yet-to-be completed $4 billion sale to Bank of America. After facing heavy criticism from lawmakers, Mozilo forfeited $37.5 million in payments tied to the deal.
Stanley O'Neal, who relinquished his title as chairman and CEO of Merrill Lynch & Co. in October after the company reported an $8 billion loss on subprime related investments, argued that his compensation was in line with the broader financial services industry and that his pay was determined as "the board saw fit."
Citigroup's Prince stepped down as CEO in November, not long after world's largest bank reported a 57% drop in quarterly earnings and lost nearly a quarter of its market value. Upon his departure from Citigroup in November, Prince left with approximately $68 million.
Calls for accountability have grown louder as the housing market continues to deteriorate and homeowners across the country face foreclosure.
In his opening remarks, Henry Waxman, the Democratic Congressman who chairs the committee, said the purpose of Friday's hearing is to determine whether lofty compensation is justified when companies fail to perform. "The obvious question is how can a few execs do so well when their companies are doing so poorly?" asked Waxman.
Fri, 29 Feb 2008 15:20:02 -0500
February 22, 2008
Oscar Contenders in Moral Gray Zone
Heroes are old hat. Villains are too easy. It's time to honor the dishonorable.
Take the monster that stalks No Country for Old Men. Javier Bardem as Anton Chigurh is like the Terminator Goes West, accessorized with a man-bob hair-don't and an alarming cattle gun as he efficiently mows down whoever stands between him and a stash of stolen drug money.
One might think the hulking brute has no redeeming values. Yet, he does provide a few of his targets with a chance to decide their own fate. He tosses a quarter, and their call of heads or tails determines what happens next. This twisted moral code, plus the fact he is extremely qualified for his job, shines a little light into his black soul.
Rather than being a one-note villain, he is an anti-hero, a character so fascinating and so single-minded that his horrific actions often come off as darkly humorous. Many moviegoers are as likely to root for him as they are to be repulsed.
Bardem understands the attraction to such psychopaths. "They're a mirror of our own fears, and it's easier for us, as viewers, to put those fears out of ourselves. 'I'm not that. I can never be that.' But, at the same time, you are attracted to that because you know you have that in yourself."
As for Chigurh's coin-toss morality, "In a funny way, you understand those codes in the subconscious. In the end, he's about, 'I'm your fate. I'm your violent accident. I'm here, and you have to face that.' "
Chigurh is not the only anti-hero lurking in cinemas this past year. Almost two-thirds of the Oscar-nominated roles in the four acting categories fall into this classification to varying degrees, from Johnny Depp's throat-slashing barber in Sweeney Todd to Saoirse Ronan's misguided pubescent in Atonement. Odds are likely at least one or two will be rewarded for their warts-and-all efforts.
Mon, 04 Feb 2008 15:29:54 -0500
February 1, 2008
Fitch Places $139 Billion of Subprime on Negative Watch, Cites ‘Walk Aways’
Fitch Ratings said late Friday that it had placed $139 billion of subprime RMBS on Watch Negative, the result of increased loss expecations. The rating agency said it now expected cumulative losses for the 2006 and early 2007 subprime vintages to range from 21 to 26 percent.
In Fitch’s opinion the contraction in the mortgage markets has contributed to an acceleration and deepening of home price declines, and has eliminated the option to sell or refinance a home to avoid foreclosure for many borrowers.
It’s worth noting some of the language in Fitch’s press statement — because it’s the first time any of the rating agencies have lended credence to the idea that borrowers are walking away from their homes:
"Additionally, the apparent willingness of borrowers to ‘walk away’ from mortgage debt has contributed to extraordinarily high levels of early default, which is particularly noticeable in the 2007 vintage mortgages. As Fitch has described in recent research reports, this behavior appears to be largely attributable to the use of high risk mortgage products such as ‘piggy-back’ second liens and stated-income documentation programs, which in many instances were poorly underwritten and susceptible to borrower/broker fraud."
Thu, 17 Jan 2008 15:59:25 -0500
January 16, 2008
Hunkering Down For The Recession
A self-reinforcing downturn has begun. The decline in December holiday sales will pull down production, adversely affecting employment, which, in turn, will reduce incomes. And lower incomes will pull down sales this winter.
We are at a significant inflection point. You may have noticed that everyone running for the White House has taken note and suddenly come up with not-so-daring stimulus programs.
Other signs of an impending recession include a 2.75% yield on two-year Treasury notes and the level of the Russell 2000 index, which isn't far from an official bear market, again according to Merrill Lynch.
What we are clearly embarking upon is a month-by-month recession watch, which will be testing for "a significant decline in economic activity, spread across the economy, lasting more than a few months"--the definition of recession at the Web site of the National Bureau of Economic Research. A unit of this bureau is the one body with the power to officially declare that we are in a recession and when we entered it.
Above all, don't be convinced that any potential recession will be short-lived, despite all the talk of the Fed jumping in or a big stimulus package barreling through Congress. The economy is like a roller coaster: It's cyclical, but it has to hit some kind of bottom before it starts to turn back up--no matter who's pushing (and how hard) at the back end.
"At the Financo dinner [Tuesday] night, CEOs from the top retailers, J.C. Penney, Neiman-Marcus, Bloomingdale's, Saks, Warnaco, Bergdorf, Levi's, Retail Ventures [Filene's] said that the fourth quarter was generally shockingly bad in different degrees to almost everyone," said Bud Konheim, CEO of Nicole Miller, the women's clothing company. "The forecast was continued pressure because of deteriorating customer confidence--oil prices, the housing market, mortgage mess, stock market."
Mon, 07 Jan 2008 15:07:47 -0500
January 6, 2008
The 'C' Word
Change is suddenly all the rage here in New Hampshire. All the candidates for the presidency have evidently decided that Barack Obama won in Iowa because he has captured the word "change". Now they all want a piece of it.
The presidential debates - which have just finished - featured an increasingly silly battle over this magical word. John Edwards, running third among the Democrats in the New Hampshire polls, proclaimed that he and Obama are both "agents of change". Hillary Clinton announced that "I embody change." And Bill Richardson, the fourth Democrat on stage, gushed that "I love change." Still, he obviously has some trouble keeping up with a changing world since he announced that one of his first acts as president would be to open negotiations with the Soviet Union.
The Republicans were also banging on about change. Mitt Romney, second in Iowa and running neck-and-neck with John McCain here in NH, made a particularly spirited effort to claim the magic "c" word. McCain got a laugh by saying "You certainly are the candidate of change", a catty reference to Romney's reputation for policy flip-flops.
The Financial Times
Fri, 07 Dec 2007 14:18:19 -0500
December 7, 2007
Black Humor Pervades as Subprime Losses Extend to Arctic
A subprime-linked investment has cost four Norwegian towns as much as 451 million kroner ($82.1 million) and left them wondering how they'll pay workers this Christmas. The rest of the country is cracking jokes.
``Just imagine how many lottery tickets they could have got for 400 million kroner,'' Jon Almaas, the host of ``News on News,'' Norway's most-watched television program, joked on a recent episode. ``Or, for fear of appearing old-fashioned, they could have spent it on health and education.''
The losses on securities tied to the U.S. housing market are providing plenty of fodder for Norwegian comics, who compare the towns of Rana, Hemnes, Narvik and Hattfjelldal to naive country bumpkins taken in by big city hucksters. It has also inspired amateur comedians who are sending their own attempts at humor to the Web site of national broadcaster NRK.
``We have had loads of material which has crisscrossed the country by e-mail,'' said Ulrik Rongved Amundsen, project leader for NRK's comedy sites.
Last weekend, more than 10,000 people took a multiple choice quiz on NRK's Web site to determine whether they were a ``Naive Northerner or a Slippery Salesman?''
``Where do you keep your money?'' was one question, with the possible answers being ``Certainly not in a hedge fund; I leave that to the local government,'' or ``A nice man with aftershave takes care of it for me.''
The scandal ``fits well with an old narrative that we all know: the scheming salesman and the dumb farmer,'' says Ivar Froenes, a sociologist at the University of Oslo. ``By just twisting it slightly it fits perfectly with this situation.''
Wed, 05 Dec 2007 16:25:20 -0500
November 24, 2007
Australia PM Defeated After Four Terms
Prime Minister John Howard of Australia suffered a comprehensive defeat today, with a coalition led by his Liberal Party losing its majority in parliament.
After four terms in office, he will be replaced by Kevin Rudd, a Labor Party leader and former diplomat. Mr. Rudd, 50, campaigned on a platform of new leadership looking for new answers for new challenges.
The attempts by Mr. Howard’s coalition to stress their economic record failed to impress voters. The Australian economy has had 17 years of continuous growth and he had warned voters that a Labor victory would endanger the country’s future prosperity.
Early estimates had the Labor party gaining some 20 seats, to gain a14-seat majority in the 150-seat lower house. Television prediction seven had John Howard suffering the indignity of losing his own seat in the Sydney suburb of Bennelong in parliament to a former television anchor and rookie politician, Maxine McKew. He would be the first sitting Prime Minister to lose his seat since 1929.
The New York Times