Hodgepodge

This article by Jim Jubak, investing guru at MSN Money, explains his take on the real plan by the Treasury dept. on how to fix the banking industry.

If his analysis is correct, it may just stabilize the banking industry. Of course, these things change with the political wind but it is interesting reading.

As I read this article I kept thinking of the line from Blazing Saddles when the new Sheriff escapes the angry crowd -

"I am sooo goood, and they are soooo dumb."



Regulators probed Madoff eight times over 16 years: report
| Reuters

Like many of you I have been watching the scenario with the US automakers and their desire to get a piece of the $700 Billion boondoggle bailout. The fear factor as always is the major talking point, and I agree that if one of the big 3 in Detroit goes under it will be a major blow to the economy and the workforce. I think the impact won't be as bad as they say since X numbers of cars are sold by these three each year and if one goes under the other two will gain the majority of those sales and thus will need to increase labor and buy more OEM parts so a great deal of shifting will occur.

What I find most interesting though is how this is NOT a new phenomenon. For at least three years, the automakers have been losing billions every quarter, it's just that they are starting to run out of the pile of cash they accumulated when business was good for decades. What is unfortunate is that all the while they have been bleeding red ink they have done little to change. Oh sure, they have closed some plants, dropped some models (GM even dropped the Olds line completely) but they still have not learned to move quickly or compete with the Asian mfgs.

There are some factors would explain it; A very powerful union that makes it very difficult to automate or cut jobs or wages, Corporate leadership who cling to the old business models, and a lack of standardization in engineering that would cut costs - such as one component that is used across all models like power window motors, door lock assemblies and other items that are not visual.

These problems have existed for years in the US auto industry and the signs are that it won't change soon - unless one of the three topple, then maybe the other two and the UAW will see the light and start to figure out how to keep the other two going or soon the auto industry in America will go the way of electronics - when is the last time you bought a TV made in the US?

Thanks to daddy_guido for the link to this article. A nice summary.

If anyone is still unclear on how much the price of oil impacts the U.S, economy, this article will correct that.

While the price of gasoline is not the only item here, many things like plastics etc, are directly tied to oil and even the housing slump is in a small way tied to the jump in oil prices.

And don't get complacent about the lower price of oil the last few weeks. I will go up again and probably soon and when it does, it will go much higher than the last spike before coming back down to a higher price than it is now.