Friday, January 30, 2009

Bush to Obama

Bush to Obama in 5 steps. I'm not sure what point the person was making but it's interesting anyway. Thanks to

Wednesday, January 28, 2009

Union Membership up for 2nd Year in a Row

According to the US Department of Labor, union membership went up for the second year in a row in 2008, up from 12.1% of the workforce in 2007 to 12.4% of the workforce in 2008. Government workers were 5 times more likely to belong to a union than private workers.

Fulltime workers not represented by a union aveaged $691 in weekly compensation. Unionized workers averaged $886 per week.

Source: Reuters

Tuesday, January 27, 2009

Fiat CEO Tours Chrysler Headquarters

Fiat S.p.A. CEO Sergio Marchionne toured Chrysler headquarters in Auburn Hills Michigan. Marchionne took pains to reassure American staff that Fiat wasn't looking to take from Chrysler, that theirs was a giving relationship. I have exclusive video of the tour.

White Collar Workers' Defense against Termination -
USB Missile Launchers

Desk Jockeys, don't just sit there waiting for the axe to fall. Put up a defense. today only has a set of two USB-powered missile launchers for $34.99. The government pays billions of dollars for computer-controlled missile launchers. You can get two for under $35.00. Go ahead, make my day.

Monday, January 26, 2009

President Obama and the UFOs
Privy to the "Book of Secrets", Will he tell us the story of Area 51?

The Presidential Book of Secrets is a fictional creation for the movie National Treasure 2: Book of Secrets. In the movie, it's a book passed down from President to President with all of the nation's most important secrets, including who killed JFK and what really happened in Roswell, New Mexico and at Area 51.

Book of Secrets or no, presumably, President Obama has been or soon will be briefed on the secrets of Area 51. This raises the question of whether President Obama, who has so far emphasized public disclosure in his administration, will tell the public about the inside story of Area 51. Will he or won't he? Here's what he's had to say about the issue so far.

Presumably the aliens could teach him a thing or two about making a joke.

From the Misery Loves Company File:
Toyota is Cash-Crunched Too

Not long after Toyota announced its first ever full year loss, comes news that Toyota is suffering a cash crunch. Per auto industry analyst John McElroy, Toyota is down to its last $18.5 billion in cash. That's roughly where GM was a year ago. Toyota is taking steps to preserve its cash, but it's clear that in the auto industry in 2009 "financially secure" is a relative term.

Did you See Me at the Inauguration?

No? That's because I wasn't there. For the millions of people that were there, there's a chance to document your place in history by getting a closeup picture of yourself in the huge crowd. The site has a high resolution photograph set that lets you pan the crowd and zoom in on individual faces. The composite image by David Bergman is made of 242 individual frames for a total of 1,472 megapixels. It's pretty neat. Check it out at this link.

Thanks to Jeff D. for the link.
Does Blagojevich Read my Blog?

Today the news is that Illinois Governor (for now), Rod Blagojevich, considered Oprah Winfrey for Barack Obama's senate seat. I mentioned Oprah as a possibility in this blog way back in July 2008. Oprah in the senate was half of my "Linda Richmond Scenario", with the other half being Barbra Streisand filling Hillary Clinton's New York Seat. Great minds think alike? Never mind.

Sunday, January 25, 2009

Chrysler Offers "Employee Pricing Plus Plus"
Your chance at a Dodge Viper?

Starting tomorrow, Chrysler will unroll a big promotion, "Employee Pricing Plus Plus". Traditionally, employee pricing - usually 7.5 to 10% below MSRP - is a pretty good deal. Zero percent financing, that's also a good deal. Rebates up to $6,000? again, a pretty good deal. Put them all together, and at first blush, you have a fire sale. That's what Employee Pricing Plus Plus is, employee pricing plus thousands of dollars cash back, plus 0% financing. This is even sweeter on paper than a Ford promotion that ended earlier this month which offered employee prices plus rebates, but generally did not offer 0% financing.

At second glance, it's not as much of a big deal as at first it appears. The first thing to remember is that demand has been so slow lately, that sales prices were pretty close to employee prices before the promotion, and that's with several thousand dollars worth of rebates thrown in to sweeten the deal. I couldn't even find any information regarding what model actually qualifies for the $6,000 rebate. Information on the Kicking Tires blog suggests that most models will only have a grand or two in cash back.) On the other hand, 0% is something that Chrysler had not been able to offer for some time. In fact, it appears it was made possible by a $1.5 billion loan that Chrysler financial received from the US Treasury at the same time Chrysler received it's $4 Billion lifeline. I expect every customer who receives the 0% loan to write a thank you note to every taxpayer. The key on the financing offer is what kind of credit score it will take to qualify for the free money. On expensive cars the 0% financing can end up being the biggest difference maker. For example, if you finance $40,000 at 6% interest, you'll pay $2,400 in finance charges the first year alone. At 0% interest you pay (anyone? Bueller?) zero.

If you are a UAW-LSP attorney looking for a car to drive to work, this could be your chance to get a Dodge Viper. You can tell your spouse that you just have to buy one, because the 0% financing will save you $12,000. (Don't believe me. Check out Consumer Reports' auto financing comparison calculator.) If you try this pitch, let me know how it works.

Wednesday, January 21, 2009

Steve Martin's Tax Advice to Tim Geitner

Today's headline: Obama's Treasury Nominee Apologizes for Tax Mistakes. Gee, I wonder where Tim Geitner could have come up with this strategy. Perhaps he watched Saturday Night Live in January 21, 1978, and received these excellent tips on tax savings from Steve Martin.

YOU can be a MILLIONAIRE and never pay taxes! You can be a millionaire.. and never pay taxes!
You say.. "Steve.. how can I be a millionaire.. and never pay taxes?"
First.. get a million dollars.
Now.. you say, "Steve.. what do I say to the tax man when he comes to my door and says, 'You.. have never paid taxes'?"
Two simple words. Two simple words in the English language: "I forgot!" How many times do we let ourselves get into terrible situations because we don't say "I forgot"? Let's say you're on trial for armed robbery. You say to the judge, "I forgot armed robbery was illegal." Let's suppose he says back to you, "You have committed a foul crime. you have stolen hundreds and thousands of dollars from people at random, and you say, 'I forgot'?"

Two simple words: Excuuuuuse me!!"

Source: Snl transcripts
Fiat/Chrysler Deal would Cost Taxpayers at least $3 Billion More
Fiat Stock Tanks

Even though there are some cheerleader stories in the mainstream media touting yesterday's announced Fiat/Chrysler deal. There are signs that for the stakeholders on both sides of the transaction and for the taxpayers at large, this deal is coyote-ugly. Let's put it this way, it was no accident that this deal was announced on the day of President Obama's inauguration.

To me, the overarching theme of this deal is desperation. Chrysler couldn't give itself away to Nissan or Volkswagen, two companies with which it has existing alliances and business deals. Nissan, which with its partner Renault has been an automotive success story for the past few years, has been hit hard by the auto industry meltdown, and is in no position to make acquisitions. Volkswagen has come out of the current unpleasantness relatively well. In a large part, that's because Volkswagen has avoided stupid deals, so no point in changing course now.

That leaves Fiat. Fiat has come a long way since 2005, when GM paid $2 billion for the privilege of not buying the Italian company. Fiat has been successful in selling its 500 and Punto series small cars. Nevertheless, I wonder how fundamentally strong the company really is. Apparently the stock market wonders. Fiat stock is trading at about 1/4 of its value in May 2008, and is still trending sharply downward. In other words, Fiat may be no more stable than Chrysler. So if Congress didn't already have its hands full looking into Chrysler's and Cerberus's finances, to evaluate this deal, it will have to examine Fiat's books as well.

According to Today's Wall Street Journal, an additional $3 billion in US Government money to Chrysler is a prerequisite to the Chrysler/Fiat merger. I looked for confirmation of this online, and didn't see it. Whether or not it is a term of the deal, there is no way for Chrysler to survive without continuing infusions of cash to pay for continuing overhead as well as for the tooling of the plants necessary to build the Fiat designs. Under ordinary conditions, it takes a couple years to bring a rebadged existing car to the United States as an import if it meets US safety and emission rules. Under normal conditions, it usually takes longer than two years to retool an assembly plant to produce an unrelated model. This might have been a viable plan if they had started in earnest two years ago. Now it is too little, too late.

Tuesday, January 20, 2009

Is this the Future of Chrysler?
The Fiat 500
Breaking News - Fiat to Acquire 35% Stake In Chrysler
Terms: No money Down - No Money Ever

How much would you pay for Chrysler, LLC? Well, that's what Fiat is paying for a 35% stake. In a joint announcement of a "strategic partnership" Fiat will be buying a 35% stake in Chrysler, and as far as I can tell, the only thing Fiat is paying for it is the promise to share its products and technology. There's no promise of cash contribution to Chrysler now or ever.

While it's good that Chrysler dealers would have something to sell. It's not so good that for the foreseeable future, all of the new product would be imported. Yes, Fiat could sell Chrysler products overseas, but how popular do you expect the Dodge Durango to be overseas?

I predict a taxpayer revolt if Chrysler goes back to Uncle Sugar for more money.
Happy Inauguration Day!

Or as I like to call it, Don't Let the Door Hit You on the Way Out, George W. Bush Day. Good luck and Godspeed, President Barack Obama.

Saturday, January 17, 2009

Meet the New Autoweek - Same as the Old Autoweek

If you've seen this weeks's issue of Autoweek magazine on the newsstand, you might think it looks a lot like last week's issue, the one with the Euro-chic picture of Henrik Fisker on the cover. There's a good explanation: despite it's name, Autoweek is now a bi-weekly publication. With crash of the auto industry combined with the growth of web journalism, traditional print publications have had a hard time getting advertising dollars. Detroit doesn't have a major daily newspaper anymore, at least not in a print version. The Detroit Free Press and Detroit Daily News have shifted to a four-day-per-week publishing schedule. Now they effectively publish around their advertising supplements.

I've subscribed to Autoweek since the early 90's. For auto enthusiasts, is and has been a cheap drug to fuel our addiction. "52 issues for $10.00, where do I sign?" But now, with issues coming out only half as often, for 26 weeks per year, a lot of car buffs won't know what to do when they go to the bathroom.

Truth be told, the current issue of Autoweek survives the biweekly format well, and contains enough content to fill up two weeks' worth of "pitstops". The featured article is an in-depth look at Henrik Fisker and his company Fiskar Automotive. Fiskar Automotive showed off the (near) production version of its first complete car, the Karma hybrid sedan, at Detroit Auto Show this week.

The Karma is interesting because it combines a lithium ion electric drivetrain with General Motors 2.0, 260 horsepower, turbocharged, direct-injected gasoline engine. The car is long but low-slung. At 196 inches it is about as long as a Toyota Highlander, and at $4650 lbs., it's heavier. With its powerful, combined gas-electric powertrain, the Karma can go 0-60 MPH in 5.8 seconds, can hit 148 mph in a brief spurt, yet the company claims that, in pure electric mode, the car will average the equivalent to 100 miles per gallon. The cost: $87,000. That's steep, but there are quite a few less interesting cars that cost more.

Embedded below is a Autoweek's summary of the Detroit Show.

Friday, January 16, 2009

Boy George Sentenced to 15 Months in Jail

Here's Boy George on his way to the sentencing hearing.

It won't be all bad. The time in the slammer will give him the chance to work on his Uncle Fester impression.

Thursday, January 15, 2009

What's Next for Hank Paulson?

Next week, with the coming of the new administration, Treasury Secretary Henry "Hank" Paulson will be out of a job. What will he do next?

I have the exclusive information. He will return to his previous life as a first call session and concert percussionist, working under the name "Ray Cooper".

Methane Plumes Discovered on Mars

In science news, giant plumes of methane gas have been discovered on Mars, leading some scientists to believe that life exists on the red planet.

And to think some people thought it was a waste of money to install the "pull my finger" device on the Mars Rover.

Now we discover the real reason martians have been visiting our planet. It's not to make circles in our fields or anally probe our rural residents. They've been making slider runs.

They're Bad, They're Countrywide

"Puffery," that's what Countrywide Home Loans, Inc. calls its advertisement claiming that they want to assist their customers in modifying their unaffordable mortgages. Most people are probably more familiar with puffery's synonym that begins with "bull" and ends with "shit".

Per this article at, Countrywide used the defense of puffery to a lawsuit by couple lost their house despite being strung along for months by Countrywide as they went through the loan modification process. The couple claimed Countrywide's advertisement was a promise to negotiate a modification in good faith. By claiming the puffery defense, Countrywide is in essence saying, "Yeah, I know we said it, but we were just kidding. We didn't think anybody would take us seriously."

Just yesterday, I blogged on the subject that loan modifications are not nearly as available as the lenders claim, and when they are available, they rarely make sense for the borrowers.

As a service to my 2 or 3 readers, I am embedding a link to a video to help you recognize puffery when you see it. Go buy the dvd so the Krofft people don't sick Witcheepoo on me.

RIP Ricardo Montalban

Will the Turbo Encabulator Save the US Auto Industry?

This top secret dealership video discloses the technical details of the Turbo Encabulator. As you can see from this video, good times are just around the corner.

Wednesday, January 14, 2009

Mortgage Modifications Aren't Working

Professor Alan White of Valparaiso University is publishing a new study in the Connecticut Law Review analyzing a cross section of voluntary mortgage modifications arising from the recent and current mortgage crisis. This study is amazingly current, with at least some of the modifications being originated in November 2008. His conclusion is that the type of modifications being tendered by lenders at present are woefully inadequate to stem foreclosures, and they are counterproductive to the lenders' interest in reducing foreclosure-related losses. Some of his conclusions:

1. Modifications are not reducing principal debt, they are increasing it. Almost no modifications include significant cancellation of either past due interest or principal, and many modifications involve capitalizing unpaid interest and fees and reamortizing the loan. This occurred in 68% of loan modifications. The average capitalized amount added to loans was $10,800, on average mortgage debt of about $210,000. Some principal was canceled, and reported as a partial loss, for about 10% of modifications. However, two servicers (out of 43), Litton Loan Servicing and Ocwen Loan Servicing, accounted for nearly all of these principal reductions. Only 8% of loans reflected some write-off of unpaid interest.

2. Servicers are incurring huge losses for investors by foreclosing. The average foreclosure loss on a first mortgage in November 2008 was $145,000 or about 55% of the average amount due. Loss severities increased steadily throughout 2007 and 2008 and are expected to worsen in 2009. In these circumstances, rational investors should accept mortgage principal reductions corresponding to home value declines of 20% or so, were it not for the various obstacles to servicers' restructuring of mortgage loans.

3. Voluntary mortgage modifications are not consistently reducing monthly payment burdens. Only 35% of modifications in the November 2008 report reduced monthly payments below the initial payment, while 20% left the payment the same and 45% increased the monthly payment.

What I am seeing in my practice with UAW workers is that most of them aren't being offered mortgage modifications. People are begging for short sell authorization and not getting it. On the other hand, many others are living in their homes for months after giving up paying the mortgage. I'm seeing some signs that servicers may be hiding problem loans from investors. Clearly there's still a lot of dysfunction remaining in the mortgage markets. The chief culprit appears to be securitization.

Tuesday, January 13, 2009

Battle of the Cutaway Electric Cars and the State of the LiON Battery Business

I have had a lot of ideas for blog posts in the past week, mostly relating to the Detroit Auto Show. Unfortunately, I haven't had much time. has a neat gallery of photos showing the various cutaway car models at the auto show. I wanted to post small versions of the pictures contrasting the Tesla electric car with the Chevrolet Volt, but I haven't figured out how to imbed low-res versions of the Autoblog gallery picture, so you'll just have to go to the original source. If you do, you'll see that the battery module in the Chevrolet is much more compact and low to the ground.

Speaking of the Chevrolet Volt's batteries. Chevrolet announced this week that it was going to build a factory in Michigan to build battery assemblies for the Volt using cells supplied by LG Chem, a Korean conglomerate that until just a few years ago was best known for selling cutrate microwave ovens and portable televisions. LG beat out (among others) an American company, A123, which many expected to get at least a share of the business, especialy because A123 announced that it was applying to the United States Department of Energy for a large loan through the Advanced Technology Vehicles Manufacturing Incentive Program for purposes of building a battery factory in Michigan. (A123 currently makes its litium batteries in China. Most notably for DeWalt power tools.) A123 is privately held, but has gone through (some say) hundreds of millions of dollars in financing from its venture investors which include General Electric and Qualcomm. It looks like A123 is going to need a lot more money from its parents before it can move out of the house.

The entire lithium ion battery industry in the United States is in an awkward chicken and egg stage right now. Several firms have invested hundreds of millions of dollars in technology development, and to a large degree they have been successful in producing batteries that are light in weight, generate good power, have broad temperature tolerance and product life cycles. Finally, they have come a long way in making automotive lithium batteries safer than the lithium batteries in laptops. Besides A123, another promising American company (actually an international joint venture), Enerdel, is also seeking DOE funds to expand its existing plant in Indianapolis that makes lithium ion batteries. The battery makers need to ramp up production and hope they can find the customers to take the capacity as it is added. If a company is slow to build large numbers of batteries, that company will likely lose out in the cost benefits inherent in the technology curve, or learning curve, an amazingly consistent property of manufacturing economics which states that costs drop as accumulated units produced goes up.

Monday, January 05, 2009

UAW's New Slogan: We're Bad, We're Nationwide

Auto News While I Was Out

I took a blogging holiday over Christmas & New Year. What happened while I was indisposed? General Motors and Chrysler recieved $4 billion each, just enough to tide them over until President Obama takes over. The big soap opera involved GMAC. GM wanted to be a bank. The government said that to be a bank, 75% of GM's debt had to be restructured. GM couldn't do that, but the government said, in essence, that they weren't really serious about that whole 75% thing, and let GMAC join the bank club anyway. Gas prices fell to about $1.39 per gallon, but are now up to $1.79. Still, that's less than half of last summer's $4.00 peak.