Robert Samuelson offers some perspective on recessions.   If the average recession lasts 10 months, well if we started last summer say August, we are about tne months in now.

Here is an interesting site, www.minyanville.com.  Definitely a different point of view, and clearly they subscribe to the socionomic perspective that I frequently discuss.

In Intermed II class Tuesday I wondered if the FED would have bailed out Mannie and I if we got in financial difficulty by excess specualtion.  Mannie doubted we would be resuced and I agreed. Here is an article pointing out the implications of the FED action. Apparently the FED balance sheet is about $900 B, why comit $200 B of that to one investment bank and not the major player at that?

Gee a few months back the whole country and Congress was upset that Dubai Ports might assume maangement of our Ports in the USA. No way responded Congress and talk show hosts. Gee, where is the revulsion over Mid East Money or Chinese Money coming to the rescue of CITI or Merrill or all the other firms in trouble. Apparently what works on Wall Street is not OK down the street at the Port Authority. Hmm, whose ox is being gored here?

Pop Photography says these are the top ten Wedding Photographers.  I don’t see many outside the US, don’t people in Europe and Asia get married? Anyway, here is a  service business that is about as recession proof as anything gets. How would you use cost volume profit and budgets to make this work for you?

Thornburg Mortgage TMA has proposed a new re capitalization scheme.   Well I guess I am prejudicing my point of view with the noun, scheme. Please read the article and consult the current balance sheet of TMA, it is on financy.yahoo.com. Now

What will common stockholders get

What will existing preferred holders get (read those first two paragraphs again…)

What is meant by the dilution will make the exisitng stock worthless, whoops, that was a big hint to the first question.

Would you buy this deal?

Should the FED give TMA the same deal they gave BSC?

We will discuss this in class Thursday.

Thinking outside the box, TAT Motors has investedin a car driven by compressed air.    A fill up consists of airing up a compressed air tank. The compressed air is then released to move the pistons in an engine configured for this purpose.  Now why didn’t GM or Ford or Chrysler think of that?
No doubt our safety requirements will keep this off the streets of America. But as I have urged, we should allow lighter weight low polluting vehicles like the Kaw Mule on urban streets.  And think of the safety factor, air does not burn!

It is hard to see how J P Morgan can lose on this deal.   They put up a fraction of the financing, the FED guarantees the deal, and Blackrock does the work.  As Jim Rogers observed, the Bear partners keep their bonuses and their Maseratis, we get their losses.  Now you and I own the Bear Stearns portfolio. But where is my Maserati?

My point is that the FED has given the OK to such brazen risk taking by rescuing the bad paper.  But the partners at Bear keep their bonuses paid in January for getting us into this mess. A bankruptcy by Bear would have required Parters to put that money back in the pot so to speak.  As it is, they got the gold we taxpayers got the shaft, to paraphrase Jerry Reed.

One might think riding the energy bull is the key to easy profit success, apparently not. Today VLO anounced lower earnings. It seems higher costs at refineries, including equipment, have cut earnings forecasts. My guess is that the weak dollar, causing higher not lower equipment costs with any foreign content, think steel for example, is part of the story.  Now consider that VLO is now using oil purchased a few weeks ago, but today prices are lower, ouch, now they re selling the refined product for less but paid more for the crude oil, result, lower profit, lucky they are avoiding losses. Now if oil retreats to say 90, will VLO be paying more for oil and selling it for less as the price ratchets down? Check out a chart of VLO.

I urge you to read outside the USA to get a different perspective.  Magaret Thatcher was wary of the EU agreements. She believed it would shift the financial capital of Europe from London to continental Europe.  Today the Treaty of Lisbon might do just that.   Recently per capita British GDP surpassed that of the USA. This of course is not the case on the continent where protectionist sentiment brought near double digit unemployment. Will England go the way of the Netherlands?  The Dutch ruled the world in the 1600s, or did you forget that?

I have noted that Britain has already lost ownership of its auto industry.  Now as discussed here, TATA will apparently buy Jag and Land Rover. What does Britain control I wonder, other than its stock exchange?

When you let someone set their own standards, those standards can be pretty low.   REad this article for an interesting take on how states define their own graduation rates. For example if we take the number of enrolled in the 12th grade in Sept and compare to the number graduating the following May, it looks pretty good. It also handily ignores all the dropouts since the ninth grade!  And yes this is happening.

Statistics are important, being able to analyze how someone reached a conclusion is very important. I hope eveyrone is paying attention is Professor Friesen’s class.

Here is a top to bottom list of the highest state corporate tax levels in the USA.   Handily it also lists the corporate tax rates of other countries. How does the US stack up on this list?  The City of Philadelphia is a virtual shamble to judge by what the new mayor had to say about the job before him. Well, where does PA rank on the list?  At the bottom of the list are two of the healthiest economies in the USA, Texas and Nevada. Where is California, rememer the state that jettisoned its governor a few years back, apparently CA still does not get it despite the splashy TV ad featuring CA celebrities.

Lower taxes, business and people come, simple concept.

Another paper wonder if ‘saving’ Bear just encourages this kind of behavior.

Saving Long Term Capital Management LTCM in 1998 has perhaps only encouraged this type of highly leverage betting by ‘investment banks.’

The CFO of Lehman certainly takes  nice photo, but at age 42, her understanding of business history is a bit brief.  She states this is the worst it has been in 40 years.   Actually this is a repeat of what happened in 1972-74.  Capital shrunk along with trading profits as the Dow shrunk 50% from 1,000+ to 577 by December of 1974.  Along the way many brokerage firms were sold off or merged into others including White Weld which was acquired by Merrill and Goodbody, Dempsey Tegler, Underwood Neuhaus, Reynolds, duPont Walston, and many many others. I have proposed business history class here at UNT Dallas, perhaps Erin could start on the reading list.