Archive for December, 2008

I guess it comes as no surprise that once we dipped our toes in the pool, that the Canadians would do the same thing.

Canada will follow the United States by providing C$4 billion ($3.3 billion) in emergency loans to the Canadian arms of Detroit’s ailing automakers to keep them operating while they restructure their businesses, Prime Minister Stephen Harper said on Saturday.

The package, announced by Harper and Ontario Premier Dalton McGuinty, comes a day after the White House unveiled a $17.4 billion package to shore up Detroit’s auto industry.

For once, I wish they weren’t following our lead.

Wow. GM sure was quick to jump up and say something, weren’t they?

General Motors Corp has not reopened merger talks with Chrysler LLC, a GM spokesman said on Thursday, denying a report in The Wall Street Journal that talks had been revived.

“We have had no talks with them since we announced during our third-quarter earnings call that the talks had been suspended,” GM spokesman Tony Cervone said.

If I remember correctly, Yahoo did the same thing when Microsoft came calling.

Wow. Instead of two big bailouts, we may be able to pool our money into one giant bailout FAIL.

General Motors Corp. and Chrysler LLC have reopened merger talks, as Chrysler owner Cerberus Capital Management LP has signaled its willingness to give away part of its ownership in the auto maker, say people familiar with the discussions.

With cash running low at both companies, Cerberus took the initiative to restart discussions that sputtered just weeks ago. At that time, both GM and Chrysler viewed a business combination as impractical and as a distraction from their mounting liquidity problems.

These companies say they need our money to make it to 2009, yet they are talking about merging? Exactly where do they get money for that? Are we going into the merger business too?

Maybe the government isn’t worried so much about the automakers as much as they are worried about the bondholders who stand to lose everything?

General Motors is likely to file for bankruptcy protection with government backing, giving bondholders a recovery of more than 25 cents on the dollar, according to Moody’s Investors Service.

There is a 70 percent probability that the restructuring plan for U.S. automakers will consist of a prepackaged bankruptcy financed by government loans to get GM and Chrysler through to 2009, Moody’s said in a report dated Dec. 15. Under that scenario, bondholders would be likely to lose less than 75 percent of their investment, Moody’s said.

I still don’t see why the American taxpayer should be burdened with any of this, isn’t there too much water in the bucket already?

See what happens when the government gets involved in something?

Customers of New York City-based Citibank have lost access to much of their account information because of a computer outage.

Many of the troubled bank’s clients haven’t been able to retrieve account details online or by telephone since Tuesday afternoon. Others can access only parts of their account profiles.

Citibank telephone representatives say they don’t know what caused the outage but technicians are working to fix it. They’ve been telling customers to call back after Wednesday morning.

I’m sure they’ll launch an official in-depth investigation including Senate hearings to get to the bottom of it.

Best Buy did better than expected in the third quarter, their profits dropped 77%, they announced a plan to offer employee buyouts, and investors are happy. Read these two accounts of the same story.

Reuters:

Best Buy Co (BBY.N) reported better-than-expected quarterly results on Tuesday and plans to offer employee buyouts and trim back store openings as consumers cut spending, sending shares up 17 percent.

Associated Press:

Best Buy Co. Inc. , the nation’s biggest consumer electronics retailer, said Tuesday that its third-quarter profit sank 77 percent as it faced dramatic changes in consumer spending.

Isn’t the difference amazing? Why does the AP always start their articles so negatively?

It’s a shame so many people are losing money on their homes.

With 2008 on track to be the worst year in decades for the housing market, a new report shows that American homeowners collectively will lose more than $2 trillion in home value this year. And much of that loss is in Northern California.

The real estate Web site Zillow.com calculated that home values have dropped 8.4 percent year-over-year during the first three quarters of 2008, compared with the same period last year. On top of that, some 11.7 million Americans are “underwater,” owing more on their mortgage balances than their homes are worth.

Part of the problem is the panic. People see they owe more than the house is worth and try to get out as quick as possible. Why not buckle up and enjoy the ride? Sure, it’s not worth as much as it was right now, but you have no idea what’s going to happen in 1, 5, or 10 years.

How long do you think it will be, until BofA comes knocking on the Treasury Secretary’s door?

Bank of America Corp said on Thursday it plans to eliminate 30,000 to 35,000 jobs over three years after it completes its purchase of Merrill Lynch & Co.

The cuts could affect about 11 percent of the combined companies’ roughly 308,000-person workforce. Bank of America employs about 247,000 people and Merrill about 61,000.

Bank of America said the expected cuts reflect the pending merger, as well as “the weak economic environment, which is affecting the level of business activity.”

I knew I should have invested in that tin cup business a while back.

Uh oh. Does this mean in addition to investment firms, insurance companies, banks, homes, and cars, we all might own a piece of California oceanfront real estate too?

California faces a $41.8 billion shortfall for its combined current and next fiscal years, up from a prior $28 billion estimate as its economy weakens and revenues decline, the director of the state’s Department of Finance, said on Thursday.

Michael Genest, also Gov. Arnold Schwarzenegger’s state budget architect, told reporters at a briefing in the state capital of Sacramento the revised shortfall estimate includes provisions for a $2 billion reserve.

If so, I want my parcel to be just north of Malibu, or near San Pedro. Thanks!

Twice in four years? Wasn’t the first bankruptcy sign enough that their business model sucked?

In another sign of the grim holiday season, KB Toys filed for bankruptcy protection for the second time in four years on Thursday and plans to begin going-out-of business sales at its stores immediately.

The 86-year-old company said in a filing that its debt is “directly attributable to a sudden and sharp decline in consumer sales” because of the poor economy.

I guess they had to learn the hard way.