The Latest in Government Propaganda

Other than a little more than two years ago when events in the stock market and the financial markets worldwide took over center stage of the attention of everyone in the free (and not-free) world, I have tried hard not to make this spot into a stock market blog. There's a lot of reasons for that, but basically it comes down to the fact that I've already been there and done that. I've mentioned this a couple of times before here on the blog, but a long time ago, back when the internet was truly in its infancy, I stated a stock market website that essentially met the exact definition of a "blog" even though nobody was using that word back then. This was the mid 1990s, when other than maybe by a couple of freaky guys wearing black nail polish and spiky hair while living in their mommy's basement hacking away on the newly-discovered internet (thank you, Al Gore), today's "blogs" were simply referred to as "websites", or maybe just "URLs" by the dorks of the world. But that's what I had -- a stock marker blog. I kept it going, updating daily, for several years. I even turned it into a nice little side business, selling some regular financial information and predictions for a monthly subscription. I had a credit card machine, a merchant account with a local bank in southern New Jersey, the whole kit and caboodle.

But that all ran its course. After maybe 6 or 7 years of regular updating and provision of financial information, the grind eventually took its toll. Sometime in 2004, I stopped updating that site, and I don't foresee myself reopening that part of my life anytime soon. Don't get me wrong -- I still love the stock market, I still follow it like a hawk every single day of my life, and I'm sure I always will just like I always have since I was a kid. But having to follow things closely every single day, having to make picks and predictions for paying customers day in and day out, and just generally being subject to accusations of being wrong, being an idiot, having my head up my ass, etc., it really turned into a serious drag after a while. Given that investing directly impacts people's money, I found after several years, after weathering the dot-com bust of the early 2000s, and everything else in between, that I just didn't want to subject myself to that kind of public scrutiny anymore, so I stopped it. And as I said, I haven't looked back on that decision at all, despite those couple of months in late 2008 when all I could think about was the market, the financial sector, and the Wall Street engine that completely and totally makes the city where I live go. And to this day, even though I have a lot to say in my personal life about the stock market almost all the time, I try generally to keep that out of what I write about here, preferring to limit my opportunities for public embarrassment for my predictions to areas like football games, baseball over-unders, things like that.

All that said, this story has really got me chuckling today. GM's new IPO has been expanded by 31%, huh? Due to extensive investor demand, you say? Oh, and this move just happens to decrease the U.S. Treasury's stake in the new GM from 61% to 26%, as most of the additional shares being offered will come straight out of the government's stake. That is just so convenient, isn't it?

One thing people don't know is that the first step to being a smart, successful investor is always going to be using your common sense. I'm not saying that any untrained, inexperienced person can use their god-given brains and become a millionaire by speculating in metals, coffee beans and index futures -- far from it, of course -- but at the same time, I've always counseled anyone who has asked me that, if you don't understand what a company or an individual investment really is, how it makes its money, and certainly if you haven't even got a basic understanding of the financials and the relative valuation of a stock, then you have no business investing in it. This isn't the kind of thing that you need some kind of a finance degree to do either -- but I always have to chuckle when people complain about losing money in, say, some biotechnology stock, which they bought at $40 a share and now it's at $3 a share, when the company never had any earnings (or any real prospects for earnings) at any point during the time they've owned the stock. Only a fool puts his money into a company without having at least a basic knowledge of what the company does, how they make their money, and what level of sales the company has generally in comparison to its valuation in the market. I mean, if you invest in a company with $10 million a year in revenues, when that company is currently valued at $5 billion in the marketplace, without some very clear reason why you think the gap between those two numbers will narrow significantly in the near term, then you're just asking to be separated from your money.

So about GM. Remember, this is the company that lost market share for its cars basically every year from 1959 through their bankruptcy in 2009. Every. Single. Year. As a general statement, the company hasn't been responsive to the needs and desires of American car buyers -- for generations now, mind you -- and they still have the most bloated, overextended distribution network in the modern car-selling world. In the end they didn't close nearly as many of their dealerships as was originally reported they were going to have to close, and as such the new company will still have something like three times as many dealerships in their distribution, sales and service network as their profitable foreign competitors in the U.S. They were able to renegotiate some of their ridiculously over-fluffy benefits for current and past employees with the UAW, but again not nearly as much as was agreed they needed to renegotiate back when the bankruptcy was imminent a year ago. And most of all, what changes has the company made as far as the cars they are going to produce, both in terms of selection and quality? Have you heard of any substantive changes on this point? Me either.

The new company is basically a slightly-better-but-still-generally-all-the-same-problems General Motors. I couldn't help but break a smile when I even saw they were emerging from bankruptcy and heading for such a large IPO, and frankly I can't help but laugh every time I read anybody talking about what a good buy the new GM stock will be. As the company prepares for potentially the largest IPO in human history, the government now wants investors to believe that this thing is just so oversubscribed, that there is just so incredibly much demand for shares in the new General Motors, that they are having to increase the number of shares offered by a whopping 31%, something I'm not sure I can recall happening in any IPO in my memory. And this huge increase in shares will just happen to bail out the government to a significant degree of the absolutely, unprecedentedly massive share it recently took in the company in bailing them out a year ago?

Come on. You don't have to be trained or experienced in finance in order to see what is going on here. If you simply refuse to put your money into something whenever you do not have a clear sense of the value, of where the impetus is going to come from for a company to grow and a stock to move higher over time, you'll find yourself consistently not on the losing side of trades that never had a chance to make it in the first place.

Satellite Radio FTW

I am going to go out on a limb here and just say it: Anyone who regularly listens to the radio in the car and yet who does not yet have satellite radio simply has no idea what they are missing. I got a 3-month trial to the pre-installed XM Radio with my car back in 2004, and within a week or so I was hooked. At this point, I literally cannot imagine driving for any sustained period of time with just plain old terrestrial radio to pass the time.

There are several factors making SiriusXM Radio the far preferable choice. For starters, the selection of offerings absolutely blows away anything available on regular old radio. Even living in a major media market like New York, I have a choice between just two sports talk radio stations if I listen to the old-fashioned car radio -- ESPNRadio or WFAN. That's it if I wanna listen to sports talk. But if I am one of the more than 20 million subscribers to satellite radio in America today, suddenly I have about six different choices to choose from, just in the sports talk genre. I get ESPNRadio, ESPNNews, MadDog Radio, Sporting News Radio, FoxSports and I think one other general sports talk station, and this doesn't even count all the baseball, football, NCAA and NASCAR stations and shows running basically 24-7 all through the satellite dial. The same is true for stock market news -- in New York, it's basically Bloomberg Radio and that's it, but on the satellite it's Bloomberg, Bloomberg Asia, CNBC and others. I've got 8 or 9 different traffic stations. Two weather stations. Probably 20 or 30 other content-specific talk stations, as compared to far fewer on the regular dial. Basically, when it comes to selection, it's not even close; SiriusXM blows terrestrial radio clear out of the water.

But the improved selection is not limited to just talk radio. The music choices are equally vastly superior on the satellite as compared to the terrestrial radio. Again, even living and driving in New York City every day, there are really only what, a couple of top-40 stations, a few dance music options, one classic rock station and a few R&B or other specific genre options. On the XM, however, there is not only greater selection by far, but the granularity of the choices is far greater. For example, my #1 preset on my XM is Channel 8 "the 80's on 8". It's all 80s music, all the time. Next is Channel 9 "the 90s on 9". They also have a 70s station, 60s, 50s and even a station that just plays music from the 1940s. I guess that would be Big Band n shit -- I don't know because I've never listened -- but my aging father in law with the worst taste in music of all time loves dem 40s tunes.

And it's more than just broken down by time periods too. One of my absolute favorite listens on the satellite is "Hair Nation", which plays 100% 80's hair band music, all the time, 24/7. There really is nothing like turning on the radio and knowing there is a decent chance of hearing Faster Pussycat's "House of Pain", "Never Let You Go" by Steelheart, or last night's commuting favorite for me, "Long Way to Love" by Britney Fox. Sure, you might hear one of those songs once a year if you listen all the time to z100 or whatever it is that old fashioned radio users listen to these days (I wouldn't know), but those are all songs I have heard just during my commute home from work over the past couple of weeks. In addition, there are at least 4 "alternative rock" stations on the satellite, there is a station devoted just to acoustic music, three classical music stations, two college music stations, at least three classic rock stations all cranking it out, 24 hours a day, 7 days a week. Oh, and did I forget to mention that most of these stations are commercial-free as well? That's right, in addition to buying you this incredible selection of varied music, most of the proprietary satellite music stations are commercial-free, other than short promos run by the satellite company to advertise other shows available on the SiriusXM network.

And all of the above talk about the incredible selection available on satellite radio these days hasn't even mentioned yet all of the awesome "extras" (as I call them) you get for being a SiriusXM subscriber. Every major league baseball game is broadcast every single day and night on XMRadio. Sirius, now merged with XM, has broadcast rights to every single NFL game as well. Every NASCAR event is on the satellite, along with most major college football conferences' basketball and football games. And while we're talking about sports, I mentioned Mad Dog Radio up above, but this is a new station created by and for Chris "Mad Dog" Russo, who recently left his many-year gig on the "Mike and the Mad Dog show" on WFAN in New York to literally create his own station on Sirius. And you know what? It's pretty good. Mad Dog's show "Mad Dog Unleashed" runs from 2-7pm every weekday, and then after that "The Dog House" rounds up the day's Mad Dog Unleashed episode by bringing back some of Chris's best rants of the day as well as some of the afternoon's best callers to further expound on the points they made earlier with Chris. The morning and nighttime hosts include former ESPNer Bill Pidto, John Gresh and several other notable personalities.

This ability for a new medium like satellite radio to essentially create entire channels around individual media personalities is not limited to the Mad Dog of course. Martha Stewart has her own channel on Sirius as well, as does Oprah Winfrey. Now don't get me wrong, I don't dig on overly political super-rich talk show hosts, and I certainly don't dig on insider-trading snobby rich bitch divas, but a lot of people do, and these stars get to not only host their own shows every day, but they can hand-pick the other contributors on their networks to best match the interests of their listening audience. It's a pretty amazing concept, actually, and something that's not even remotely available anywhere on normal, loser radio. Take Howard Stern for example -- I've listened off and on to Howard ever since college, but since his move to Sirius some years ago I have barely caught a whiff of what he has been up to. But now that I have access to his one only one but two networks on Sirius, I have to say that the Howard Stern show is back and better than ever. Not only are the bits as funny as ever, but adding Artie Lange has proven to be one of the best moves Howard has ever made, as Lange is funny as hell and is the perfect complement to Howard's style and that of Robin Quivers and the rest of the Stern clan. It's definitely worth checking out whether you were previously a fan or even for the first time, and this is someone talking who's never really been a big Howard Stern fan overall.

There are several other aspects of the technology involved in satellite radio and its nature of being beamed via satellite instead of regular radio waves that really enhance the user experience as well. For starters, let's think about the reception. Now, I'm not going to bullshit you -- on occasion, my satellite signal will occasionally go out -- never for more than a few seconds at a time -- when for whatever reason my receiver loses the signal due to a blockage, technical problems, whatever. There are a couple of streetcorners in Manhattan, for example, that I notice I basically always lose my reception while I am located there. But that said, otherwise the reception on the satellite is more or less perfect. The sound is crystal clear and the quality of the music is at least as good as regular radio. And you never -- and I mean never -- get that annoying static you're always hearing in the background on the regular radio, especially as you get a little ways away from the major cities. Given that there are redundant satellites broadcasting the entire SiriusXM band from space, there is basically no such thing as being "out of range" of any satellite radio station. For example, when I've gone to the beach with the Hammer Family over the past few years, I have been able to drive all the way from Boston halfway down to Florida on the East Coast while listening to Your World Champion Philadelphia Phillies win another game with some late-inning fireworks. The entire way. Without losing the signal or having to listen to even a single crackle of static. The whole notion of having to be "in range" of a particular station no longer exists once you make the move to SiriusXM -- as long as you're in the United States, you are always "in range".

The fact that SiriusXM broadcasts via satellite is another big advantage over traditional radio, in that the satellite providers are not regulated by the FCC.
This of course was cited as the big reason behind Howard Stern's move, and the end result of it is basically a completely censorship-free spectrum of stations. This means Howard can drop the f-bomb in normal conversations whenever he wants to, and the Mad Dog's callers can call the Mets "shitcocks" and "asshats" until the cows come home and nobody's ever going to bleep them except the host himself if he so chooses. Although this can be a bit jarring to hear at first when you're not expecting it, pretty soon you get used to it and in a lot of ways it can be hard to go back to regular terrestrial radio, which in comparison seems overly tame and just generally "boxed in" versus their satellite broadcasting counterparts. Certainly a show like Howard Stern's is 100 times better when listened to in its real, unadulterated form, and it also allows for things like the Playboy Channel on XM, and even a great uncensored comedy station that I have as one of my presets, because you never know when you're going to hear one of those great old clips from Richard Pryor, Louis CK or, of course, the "community titty" bit from Chris Rock.

The last technological advantage I will mention to satellite radio is the great "push" technology they have working where you can basically find out at any time exactly who sings the song you're listening to, what it's called, and what year and album it is from. I can't tell you how many times this comes in handy, especially when listening to all of the 80s, 90s and other stations playing mainly older music that you might not quite remember all the details of. In my older car with the earlier satellite receiver, the title and artist for all music, comedy bits, movies, etc. are pushed right to the output screen at the beginning of every song or bit played on the station. In Hammer Wife's new car with a brand spanking new updated receiver, SiriusXM not only pushes the same information to the LED display at the beginning of every item it broadcasts, but with the click of one button you can find out the same information at any time during the playback of a particular song or bit. It's a very handy kind of information that you never really knew you wanted until you finally have it with SiriusXM, and then you get stuck listening to regular old shitty radio and suddenly want to know what album this old Who song is from, or who it is who did this great stand-up bit about clowns or whatever.

As the last great factor in favor of satellite radio, I should mention the price. Now, perhaps this is part of the problem that forced XM and Sirius to merge, and still had the combined company teetering on the edge of a bankruptcy filing just a month or two ago, but the price is IMO incredibly cheap. Depending on exactly which payment plan you opt for -- and I would not suggest committing and paying in advance for more than a year or so given the current situation at the company -- you can basically get full SiriusXM service for around $12 a month. And that's not to say that $12 a month is nothing -- every little bit counts, especially these days for sure -- but when you compare that cost to other costs associated with your car, it really is like drops in a bucket. I mean, if you have an "average" car in this country, it probably still cost somewhere in the neighborhood of what, 20 grand? More? If you lease a similar quality of vehicle, again you're probably looking at a good $300-400 a month just to have the car. And if you have even a normal-sized commute, you probably put in what, $20 a week of gas at least? With repairs, regular maintenance and other extras, I guess I just don't think another $12 a month for such a clearly superior product to the crap we all used to be satisfied with because we didn't know any better is a really good deal.

I mean, if I offered to make your experience driving your car significantly better from what you've grown up with and gotten accustomed to, with no real drawbacks whatsoever, wouldn't you pay $150 a year for that? And wouldn't you want to help others to experience the great deal that satellite radio is for the user as well as the passengers in any car in which it is installed? Or would you rather keep dropping $70 a pop on the full tilt super turbo 750k sats and then claim they are like having your own mint? Exactly.

Ford FTW!

Just a week after rival automaker Chrysler filed for bankruptcy protection from its creditors, and with industry titan General Motors teetering this week on the edge of its own similar filing, I found this little tidbit coming out of #2 American car company Ford to be seriously refreshing, so much so that I have been looking forward to mentioning it here.

Take a look at the stats on that Ford Fusion Hybrid, Ford's newly-redesigned 2010 midsize sedan model.

The Fusion Hybrid uses a combination of gasoline engine and electric battery-driven motor, switching quickly to batter power whenever gasoline is not required to power the vehicle, including when coasting and in between pumping the gas while driving on the highway. Although the base model Fusion gets a much more ordinary mileage, the hybrid version costs just $3,200 more and gets nearly 50% better fuel economy: 41 mpg highway/36 mpg city. Take a look at those numbers up there again. 41 miles per gallon on the highway. Truth be told, that is probably just about twice as much as most of you out there are getting out of a gallon of gas, and for some of you like Hammer Wife who drives a larger crossover SUV, it's a lot more than twice as fuel-efficient. Even other similar hybrid vehicles nowadays generally come in closer to 25 mpg than the 36 that the new Fusion is said to get even during the start-and-stop of city driving.

The 2010 Hybrid Fusion operates up to 67 mph in electric mode, and is expected to have a driving range of 700 miles on a 17.6-gallon tank of gas. I know that my Accord gets under 300 miles to a tank, and it's not like I'm driving some kind of truck over here. 700 miles on one tank of gas. It's so significant that you can start to do the math of how much you would save in gas almost right from the getgo -- figure I would need to get gas in my car somewhere around 45% as often as with my current car, and figure for sake of argument I am putting in $40 of gas each week in driving a normal commute to and from the office Monday through Friday. That would equate to savings of about $22 a week, or somewhere around $1000 a year. So choosing the hybrid option would pay for itself over just a few years of owning and driving the car with any regularity, and that's at current gasoline prices which are much lower than a year ago, not to mention the pleasure and the convenience of not needing to head to the Mobil or the Citgo every week like I end up having to do, either at night when all I want to do is get home, or in the morning when I'm trying to beat the traffic into the office.

My point is, I am really proud of Ford for creating a car like this, one that clearly stands out compared to the competition in an aspect that the American car companies as a rule have been woefully behind in -- fuel efficiency. It still very much remains to be seen whether or not Americans are really ready and willing to embrace fuel-efficient, hybrid-type of cars en masse, but with more and more options like the 2010 Ford Fusion hitting the market, demand for such types of vehicles is sure to continue to increase. Selling at around $30,000, the midsize Fusion is already a hit: Ford sold 18,321 during the month of April, a record for the company for any type of vehicle, all-time. Even without President Obama doing what I believe he should have done and requiring these companies to produce a majority of fuel-efficient and hybrid-technology vehicles within a few years as a condition to the provision of federal aid, it is refreshing to see one of our own taking aim at the Japanese and trying to claim back a slice of the cost-conscious, green-conscious American consumer out there. Here's hoping there is more news to come in the near future like word of the new Fusion coming out of Ford Motor Company.

The Automakers Back at the Trough

Well, back in December the Big Three U.S. automakers -- mostly just GM and Chrysler -- told the Congress that they needed billions of dollars to be able to survive the current economic crisis, and the Congress didn't buy it. After much fierce debate, Republican Senators managed to defeat the bill to provide these struggling companies with billions of emergency aid without any real plan for becoming viable, profitable businesses. But never fear, our then-president George W. Bush stepped in and provided GM and Chrysler upwards of $15 billion in emergency funds out of the government's TARP package approved last fall. Right when it happened I mentioned here that all this really was, was Bush deciding that he did not want his legacy to include the bankruptcy of America's auto industry and whatever fallout that would entail, so he decided to blink in his showdown with Congress and just come up with enough money to hold these companies over until Bush was back home in Texas, until a day he knew with 100% certitude would come soon but when this would no longer be his problem to deal with.

Folks, that day is today.

On Tuesday evening, GM and Chrysler filed their restructuring plans with the Obama administration, as required by the conditions of the emergency loans provided to these companies by President Bush just two months ago. And guess what? All the money we gave GM and Chrysler back in mid-December -- $15.4 billion, mind you -- is now gone, burnt through in just a few months of run rate at two companies that are losing money billion by billion just running their business in this economy.

And guess what else? Apparently, things have worsened in the beleaguered auto industry just since the last round of free billions in December. I know -- shocker, huh? Now, Chrysler says it will need more than another $5 billion to survive, over 40% more than expected based on the December plans, and troubled GM has determined that it requires another $16 billion to make it! That was some use we got out of that $15 billion in December, huh? Things are so bad with GM, the nation's largest automaker, and it is so lost in terms of figuring out a way to be profitable, that CEO Rick Wagoner (somebody please tell me how the funk this guy is still in charge at GM?!) said the company would run out of money by March without $2 billion in new funds, and that it needs another $2.6 billion to fund April's operations. So we're supposed to just keep coming up with more than $3 billion a month for these companies to lose?

Is anybody really surprised by any of this? I mean, what's the end game here, guys? Someone makes a product that is universally adjudged to be inferior to those of its competitors, they lose $3 billion a month running a huge operation to manufacture and distribute these inferior goods, and the government is just supposed to keep paying for it? Why? Until when?

I just don't get it. It must be me.

Woe is the Automakers

Lordy lordy lordy have GM and Chrysler ever funked up again.

It's hard to believe. But it's true. The latest culprits for the two most beleaguered automakers in the U.S.? Their own fucking finance arms.

That's right. Back in 2007 when buyout firm Cerberus Capital made the ominous decision to buy Chrysler from Germany's Daimler, Cerberus had the brilliant idea to split off Chrysler Financial, which had long been a part of Chrysler proper, to try to turn more profits from Chrysler Financial itself. This, after Chrysler Financial had spent years with its primary objective not to make a profit but rather to help Chrysler to make sales of its autos.

The result? Now the two separate companies have vastly divergent goals, and as a result they are now working against each other and hurting both companies as a direct result. No longer is Chrysler Financial working to help its former parent sell vehicles, but now instead the finance company is looking instead to straighten out its own bottom line, even if it means making things a heck of a lot harder for consumers to purchase Chrysler cars and trucks.

First, in the summer of 2008, Chrysler Financial stopped providing leases on Chrysler cars outright, eliminating a previously very popular method of individuals and companies obtaining Chrysler cars in response to the then growing credit crisis in the U.S. When that proved not to be enough to fend off ever-increasing credit woes, Chrysler Financial then moved from auto leases to auto loans, tightening its belt by significantly cutting back on the number of financings it allowed for purchases to buy Chrysler vehicles. In addition, Chrysler Financial has also been increasing the charges it levies on Chrysler dealers for vehicles that are remaining on the dealers' lots, making things even worse for dealers who are already struggling mightily amidst the worst recession for automakers in more than a generation, possibly many generations. Sickly, the story is the same for GM's longtime captive finance arm GMAC, which Cerberus also bought a controlling stake in back in April 2006, and who now also is making life difficult by severely restricting the number of auto loans it is providing to potential GM customers.

How bad have Chrysler Financial's and GMAC's actions hurt Chrysler's and GM's ability to move their cars and trucks in the U.S.? Check out these numbers: The largest chain of auto dealers in the U.S., AutoNation Inc., in December reported that it was able to secure only 22 auto loans for car buyers from Chrysler Financial, compared to December 2007, when AutoNation secured 823 auto loans from Chrysler Financial. The figures for GM are even worse, with AutoNation got all of 9 auto loans from GMAC in December 2008, compared to 1,527 loans in December 2007. So, one more time, the largest chain of auto dealers in America saw 2350 auto loans from Chrysler Financial and GMAC in December 2007, but just one year later, that number had dropped to a whopping 31. Now, surely some of that huge dropoff is as a result of falling demand for the two companies' cars as opposed to the unavailability of loans, but come on. We're in the midst of the worst recession since the Great Depression in this country, and the automakers in particular are just a hair away from bankruptcy declarations, and recently needed to take more than $13 billion in taxpayer money just to stay afloat through Q1 of 2009, and the finance arms of the two companies, which previously used to make as many loans as possible available to car buyers without regard to their own profitability, are now providing just 1.5% of the number of auto loans that they did just one year ago. What a joke.

Interestingly, Ford once again shows itself on this issue to be ahead of its two rivals, as that company made the strategic decision to keep control of its finance arm, Ford Motor Credit, and that decision has worked out well for Ford even as it too is faced with tightening credit standards across the board. AutoNation secured 1,235 loans from Ford Motor Credit in December 2008, down from 1,624 in December 2007, but not down anywhere near the magnitude seen with Chrysler and GM, both of whom no longer control their former finance companies.

Last December, after the Congress refused to extend the TARP bailout to the automakers, then president George W. Bush blinked in the standoff and personally fought to extend $13.4 billion to struggling GM and Chrysler, in a move widely understood to be just enough of a lifeline to keep the companies afloat for a few months. Many, myself included, criticized the president for essentially deciding simply to buy a few months until the two companies would surely need more public funds, but at a time when it would no longer be Bush's problem but rather incoming U.S. president Barack Obama's. And here we are. Hopefully the new administration will take a holistic view of the problems facing GM and Chrysler, including seeing all the decisions made (or not made) by these companies over the recent past that have now severely hurt their chances of successfully becoming profitable enterprises, rather than simply throwing more billions of dollars at them in the hopes that it will somehow change them overnight into viable long-term entities.