Dr. DeBakey made a difference. It is said that most of us are only functioning at a fraction of what we can do. DeBakey appears to be a person who functioned at near 100%. He pioneered surgeries that are now routine. I saw him interviewed on a 60 minutes type show. In his nineties he still went to work every day. Rail thin, he ate only salads and said his wife was pretty creative at making them.  Spending time up close and personal with blood vessels and hearts,he was certainly aware of the danger of all kinds of trans fats. click and read the story of a remarkable fellow, who not only lived to 99, but lived well. Man was made to work hard he said.

Toyota  will  cancel production of the Tundra till spring of 2009 in San Antonio.  Gee what a strategic error!  Toyota is looking  a bit like GM from that standpoint. And they are gong to expand Prius production in Mississppi.  This points up the need to have a back up plan and monitor the original plan. The fine presentation in ACCT 3270 Thursday on Templeton reminded us to monitor investments.

San Antonio went all out to attract the Toyota plant. Now with ATT moving to Dallas and the future of the Tundra looking uncertain, the best laid plans in San Antone are coming unraveled a bit.

John Templeton died at age 95 in the Bahamas.  Templeton pioneered investing globally.  He emphasized the idea that one should buy good stocks at their most distressed point. An example would be his purchase of Union Carbide after the Bhopal disaster. Franklin Templeton funds proudly bears his name. Franklin was primarily a purveyor of bond funds. To broaden their offerings they purchased the Templeton Family. Click on the link to take a look.

Luis Ruykeyser had Templeton on his show the Friday following the October 1987 crash. I recall him being calm and sanguine. Luis there are bull and bear markets, it goes up and down he remarked.  Templeton and Buffet truly have the long term view.

www.stockcharts.com

www.bloomberg.com

finance.yahoo.com

www.marketwatch.com

www.bloomberg.com

THe FASB is considering new rules that would pull off balance sheet items onto the financial statements. This would reaquire Fannie Mae FNM and Freddie Mac FRE to raise billions of capital.

Now class questionas

Why would FRE and FNM be required to raise billions of new capital?

What does the article mean when it says that the longer it is put off the more dilutive it will be?

It sounds easy, just cut some divisions. But wait, not so simple.  Read about the conundrum GM has with its divisions.   Alfred Sloan’s ori9ginal idea was to offer consumers an upward ladder of higher priced cars as their purchasing power grew.  Now critics say GM has too many.  Yet as we will study in ACCT 3270, cutting divisions may actually raise fixed costs for the remaining divisions. And litigation with dealers is very costly.
So, what to do?

MBIA and ABK.N insure the principal payments of bonds. With so many bonds in apparent danger the stock prices of these two have dropped, 98% in the case of AMBAC. This in turn has further pressured bond prices as there may not be anyone to pay off in the event of their default.

Meanwhile, Fannie Mae and Freddie Mac finally melted down as Jim Rogers has been predicting for years. FNM at 15 and FRE at 12, geez. These are public companies that buy mortgages and re package them to re sell to all sorts of buyers. It is literally these firms that make the mortgage market liquid. Without this function mortgage money would not have any liquidity and the real estate market would really shut down. Before FRE and FNM there was no way to re sell mortgages. The originating bank had to just sit there and hold them. Allowing the bank to re sell the mortgage, and then re lend again with the money from the mortgage sale truly got things going in real estate since the creation of FNM and FRE.

This is a bear market of huge proportions.

DMN columnist Cheryl Hall has a great column on Barney Adams. Barney designed a special golf club for duffers. He was trying to sell it as a golf club. He finally realized he was not in the business of selling golf clubs. He was really selling better ball flight. Here is the link to the Amazon review on The Wow Factor.

The Wow Factor is not a system, it is an attitude, one you have to ingrain throughout your organization. And it keeps you from playing the thinnest margins game. Wow supersedes price, absolutely.

Elam take-he got that right. Here are some examples

Apple has created a WOW factor, there were people lined up overnight for the intro of the latest Apple i Phone. Meanwhile DELL is selling their product on the thin margin strategy at Wal Mart.

Toyota’s Prius is  a runaway hit, they cannot make them fast enough. But Honda just canceled the Accord Hybrid, why?  Because the Accord Hybrid looks like a regular Accord with a different small nameplate. The Prius is instantly recognizable, it has no regular engine counterpart, so everyone KNOWS you are green by driving it.  This is why it is the car d’jour
 to arrive at the Academy Awards.

Mark McCormack describes an incident when lunching with the head of Rolex Europe. Someone came over and asked how the watch business was. The Rolex guy replied, I don’t know I am not in the watch business!

Okay great answer, now, what business is he in?

One of your assignments will be to describe what your organization does in Thirty Seconds. I post this article to get your thinking about your real product. Last year a couple of million electric drills were sold in America. But no one wanted a drill, they all wanted a hole…..

I urge students to subscribe to Business Week. Here is a sampling from the July 14-21 issue of why you should do that.

I have stated that Chrysler is about where American Motors was in 1970. Cars needed to be re designed to be smaller and more efficient, American Motors did not have the money to do a ground up front wheel drive like everyone else. There attempt at muscle cars failed. They had not pickup. Chrysler bought them for Jeep and AM was toast. Note this was ten years after VW made it clear Americans would buy well designed thrifty cars with the Beetle, even then a thirty year old design from pre war Germany. Now amid another fuel crisis, Chrysler has killed the Neon, their only sub compact with any economy claim. They literally have not economy car to sell.  I doubt they will be in business in eighteen months.  Perhaps Navistar aka International would be interested in the RAM and Jeep. After all International invented the 4 wd SUV with the Scout and Travelall back in the 1960s.  Then amidst the energy crisis of the 1970s they dropped them.

Lehman 52 week range, 75-20, yech, go back in our archives to Jan-March and see my comments about Lehman. I was quite skeptical when Maria interviewed Lehman’s CFO then. Since then that CFO was re assigned for failing to convince skeptics things were AOK, so much for accounting integrity.

For the Olympics factories that consume a total of 13 gigawatt’s of electricity may be taken off line, China is trying to reduce air pollution during the Olympics. This is nearly half of Mexico’s total industrial electric capacity.  So why should you care?

Glad you asked.
The Shanghais Stock Exchange has collapsed 55% in less than a year.
The high cost of fuel means that companies are coming back here rather than ship across the Pacific. In addition costs are rising in China.
Shutting down electricity production means that factories will shut down which means Americans will have to do without some goods, this will be just another reason to bring production back home.
All of which means I do not think,  that the Dallas Logistics Hub may not  attain its goals nearly as fast as they thought. This is a project conceived of years ago and in the meantime the energy picture has changed the original assumptions.

Cheating at the GMAT on line ScoreTop Site, gee I am shocked. Needless to say the Chinese proprietor of this site is back home in China safely out of US authorities reach. Hmm, yet another reason not to deal with these guys.

Meanwhile in that other conventional wisdom fountain of ‘everyone is going there’ the Bombay Stock Exchange is down 40% this past year. Whoops, as Jim Rogers said in Adventure Capitalist, too much red tape.

The interview between Maria Bartiromo and Jerry Levin caught my attention. Levin fathered the disaster that had Time Warner taking over AOL leading to the biggest write down in corporate history.  These days he is offering meditation sessions, really. What caught my attention was his comment that most mission statements do not address issues of the public or humanism or just plain caring about people that you employ, which is what I think he meant. Click and read the article, one of the assignments in EDAD 5610 will be your Vision Mission Outcome for your School.