Svedish car maker Saab (owned by GM) has sought protection from creditors. GM had previously intended to sell Saab, but apparently has decided to jettison it.
Archive for February, 2009
Bankruptcy Watch – Saab
Friday, February 20th, 2009Feb 20th 2009 – the bloodbath continues
Friday, February 20th, 2009Each day, expect some comment here about the state of the world markets. In a prior life, I did computer work for several of the venues where stocks and futures are traded. I’m not a trader. Think of me as the guy at the casino quietly walking around emptying the trash cans, but marveling at the power of the human emotion of greed.
Asia is finishing up down around 2.5% Europe’s futures indicate they will open down about 3% (London is 5 hours ahead of New York). US futures are also into -2 to -3% range. It’s not going to be a pleasant day.
The FDIC normally seizes and shuts down banks on Fridays in order to switch ownership of the accounts over the weekend. Bank stocks were hammered very hard yesterday. Might another of the “Too big to fail” banks fall over today?
*** Noon Update ***
Here is who is facing the fire hose of selling today:
Wells Fargo, GE, Goldman Sachs, JP Morgan/Chase, Bank of America, Citigroup
The cost of zero interest
Thursday, February 19th, 2009The Federal Reserve has pushed interest rates as close to zero as is possible. While on the surface, you might think “Wow, free money!”, this policy has many unintended consequences.
One that is likely to hit you personally in the near future involves Money Market funds. These are the funds sold by mutual fund families, that are typically used to “park” investment money while people are deciding what to do.
With short term treasury bills offering essentially no interest (the rates have gone negative a few days), money market funds have a serious problem. If they invest their money in short term “safe” investments (like lending it to Lehman Brothers), they risk finding out their $1/share product is not worth $1 (“breaking the buck”), and they have very little cushion to “absorb” unexpected losses.
If they invest 100% in short term US Treasury bills, they have no risk – but also no income. The meager income would be less than what they have to charge to manage the fund, and people are unlikely to park money in a fund where they are guaranteed to lose money.
If they invest their funds in slightly longer treasury securities to get better yields, they risk being unable to deal with a surge of withdrawals without realizing losses by dumping the T-Bills/notes before maturity.
Look for money market funds to begin to shut down or stop accepting new money if this interest rate environment continues for much longer. This isn’t because they are “insolvent”, it is because there is no way to make money doing this. Unless you’re the government, you can’t afford to throw away money doing things for no purpose.
The Obama Birth Certificate “thing”
Wednesday, February 18th, 2009Most of the “polls” on this web site have outcomes that are not very surprising, but the one about what people believe about President Obama’s birth certificate surprised me. While this site is mostly people of the Conservative persuasion (just look at the program popularity stats), my impression was this issue was pretty much over.
A very large percentage of people voting in the poll believe Barack Obama was born in Kenya and something needs to be done about that.
One thing I would like to point out – having spent a summer of my youth shuffling forms as a summer intern at a Social Security office. Many people are misunderstanding what that green “birth certificate” presented by the Obama campaign is. Most people now understand it is not his actual birth certificate, but rather a document issued by the State of Hawaii saying that his birth was registered there.
What is setting some people off in the wrong direction is they don’t realize this was a document printed recently. It isn’t one he has been carrying around in his wallet for 40 years. How do I know that? Government forms always have a date down at the bottom that is the “revision” date of when the blank form was designed. The office person who keeps track of forms looks at that date to decide which are obsolete forms that need to be destroyed.
In the lower left corner, it says OHSM 1.1 (Rev 11/01) LASER
This indicates this form was created by the Office of Health Status Monitoring version 1.1, that has been in use since November 2001. So the ideas of “they didn’t have laser printers in 1961”, etc… are misguided. This is very different than the Rathergate document which purported to be an actual document created in the 1960s on a typewriter.
One of the unpublished “suggsted answers” to the poll was “Yeah, but what about McCain?”
There are some important differences between Obama and McCain:
- Both of McCain’s parents were US Citizens all of their lives
- McCain was not “born in Panama”, he was born on a US Military base in the Panama Canal Zone, which was US territory at the time
- John McCain’s did not go to live with a stepfather in another country and change his name
I’m personally more troubled that his elementary school education occured in Indonesia, and his view of the United States and knowledge of U.S. history was learned in a country that has historically not looked favorably on the United States. His mistakes about US history and basic civics (that Presidents don’t make laws, and can’t delete items from appropriations bills) are things that could hurt the country over the next 4 years.
Strength of the Dollar
Wednesday, February 18th, 2009Contrary to what many people seem to think, and especially promoted by the companies trying to scare people into buying gold – the US dollar has been getting stronger, not “falling”.
Back before this global panic started, it took about $1.28 to buy one Euro (the most important benchmark currency). When the panic started breaking out, the US dollar got up to about $1.45 to buy one Euro, but it didn’t stay there very long. As of today, the dollar is back to $1.25 for a Euro. While the dollar may decline in the future, for now the world continues to believe that the US is the safest place to weather this storm.