The Inquiring Manatee

Happy Days Are Here Again

   

At last, Wall Street is happy with the Obama administration's plans to goose bank lending and get the slumping economy back on track. The market is up today, by more than 300 points so far.
    It actually makes me a bit suspicious when Wall Street likes anything the administration does. Makes it sound like a giveaway with not enough regulation. In this case, the taxpayers will be paying for 93% of the hard-to-value toxic assets it will be taking off banks' balance sheets along with private partners, who in turn will be encouraged with low-interest Treasury loans to take a chance on the mortgage-based securities.
    Now you and I will be partners with hedge funds, who are suddenly supposed to be our friends as they join in this program. Hedge funds, with their wildly overcompensated executives, are largely responsible for the excesses that brought us all to this pass.
    It's a tight, mutually reinforcing little family, the world of "financials" and those, like Tim Geithner, who have allegedly regulated them. They know how to help each other.
    Yes, I'm skeptical about this plan, and I'm not planning to buy any of the toxic assets myself; I have enough of my own already. (They're called municipal bonds.) But let's hope it works.

Swiss Cheesiness: Secret Bank Accounts Under Threat

   

On a day of riding Switzerland's crack trains around that small country in 1989, I stopped off to tour a little-known city called Zug, which means "train." I was astounded to see a skyline of modern office towers, an unknown New York in the Alps. What was going on?
    The buildings were there because Swiss banks were overflowing with money in secret bank accounts set up under Swiss laws for tax-evading Americans, kleptomanic African strongmen and Mexican drug bosses. The banks, paying little or no interest on this ill-gotten money or even charging the depositors for the convenience of keeping their stashes hidden, had to do something with the inflows. So they lent it out for the benefit of the prospering Swiss economy, building those towers to house all the lawyers dealing with the rich and secretive.
     What brings all this back to mind is a lawsuit announced by the U.S. Internal Revenue Service seeking to force the United Bank of Switzerland (UBS), Switzerland's biggest bank, to disgorge the names of 300,000 Americans allegedly dodging American taxes by maintaining those famous, numbered accounts.
     UBS had offered some concessions, paying a multimillion-dollar fine and yielding 300 names of big tax cheats to the feds, but doing even that much has enraged Swiss politicians and in turn much of the yodeling citizenry. All the Swiss are nationalistically up in arms over this attack on the foundations of their prosperity: their chosen profession as money-launderers for the world. And in other offshore tax havens such as the Cayman Islands, there's a lot of trembling these days. If the IRS gets its way, bank secrecy will be a thing of the past. To me and to other U.S. taxpayers, that would be a good thing.
     Public radio's "The World" program on Wednesday ran a voice-doctored interview with an anonymous American millionaire who acknowledged having placed $900,000 in a Swiss account (later moving the money among several other countries) to escape U.S. taxes. The guy didn't say so, but his nest egg might well have been amassed in an illegal way -- in pimping or illegal bookmaking or even kidnapping.
     Without regard to how such a sum was amassed in the first place, earnings on the money wouldn't necessarily be taxed in the U.S. Americans can avoid federal and state taxes on the earnings on their money simply by investing in state and municipal bonds, particularly those issued in their own states. So there would be no reason to hide money abroad, particularly at no interest or low interest, unless the money originally had been piled up by evading due taxes on it as it was being earned. These are bad guys who have been cheating their government for years. Now the government is coming after them, and hard, needing its revenue more than ever.
     If the Swiss lose the cachet of the term "Swiss banker," supposedly standing for probity and canniness, I won't mourn. On a 1964 trip around Switzerland on a Vespa motorscooter, I found the Swiss to be cold, money-grasping and inhospitable. After a hard morning on the scooter I stopped off for lunch at an outdoor cafe in Lucerne, overlooking the beautiful Lake Lucerne. I guess that as a road-grimy American student tourist I didn't meet the place's dress code, because the waiters resolutely refused to approach my table for 45 minutes until I got the message and left. I've never forgotten the snobbish snub. So don't ask me to feel sorry for the Swiss if their corrupt economic foundation crumbles.
     Taking some of the jobs from people in those bizarre Zug edifices would mean more jobs in the office buildings of America. We need that these days. Sorry, Zug.
     
     

    

Save GM -- But Kill Buick

    

Tiger Woods can take his GM money, go home and screw off. Buicks suck through their portholes.
     It's well-known that the Chinese character for "crisis" is the same as the one for "opportunity." This crisis for GM is a heaven-sent opportunity for the world to send the Buick the way of the Oldsmobile, not to mention the LaSalle (though our old LaSalle ran great -- those were the days).
     Kill the Buick. Keep the Saturn.
     The Buick has always been a fat, sloppy car for old guys -- golfer types who are the perfect target for those Tiger Woods ads. Nobody with any taste or brains would buy one in the United States. GM is keeping the Buick on its survival list because the Chinese import them, perceiving them as prestigious. China is different because they don't know any better; I'll bet a two-ton Buick, as useless as it is, is better-built than the Chery. But the Chinese can switch to other GM brands.
     Buick hasn't done anything right for years. Remember the Reatta? What a pile of junk. I never even understood why critics said nice things about the Riviera. As for the Park Avenue and those ridiculous, ugly SUVs or crossovers, that's the very point I'm making.
     But I see where GM would rather kill the Pontiac (as they quite properly move to get rid of the Hummer). Bad move. Pontiac, with the Solstice and the imported, Holden-made G8 from Australia, was just beginning to seem hip. No Buick will ever be hip in a zillion years. And Saturn is full of possibility and promise.
     If we're going to restructure the overloaded GM product line, let's do it right. Bye-bye, Buick. And, Tiger, you'll hardly miss this sponsorship check when you have so many more.
     

What Does Warren Buffett Know?

     

Two words to Warren Buffett: Zip it.
   Amid the Great Panic of '08 a couple of weeks ago, the Oracle of Omaha wrote a New York Times op-ed piece urging everyone to buy stock, as he said he was doing.
   So I did. I had always wanted Google and had missed out on its boom, so I bought $10,000 worth of shares at $379.70.
   The market promptly tanked again, even worse than before. Google sank in a few days way below $300. When I checked yesterday, it was back up to $301. Oh, great.
   Come to think of it, I have never made any money on Buffett's Berkshire Hathaway stock. Maybe it's timing, or maybe the stock is simply overrated.
   So you'd think I would have learned not to listen to Buffett, kindly and sensible billionaire though he may be.
   Buffett's well-meaning King Canute act, trying to stem the tide of panic, was reminiscent of the bold move by John D. Rockefeller and his son, John D. Jr., in the dark days of 1929. The aged Standard Oil titan announced, "My son and I are buying stock."
   Well, you know how that worked out.

Bail Out Detroit?

  

   If you are of a certain age, you remember Dinah Shore signing off her singing TV show with a little ditty for Chevrolet: "See ... the ... //U// - S-A in your CHEV-rolet, America's asking you to call. Drive your CHEV-rolet through the //U//-S-A, America's the greatest land of all." And then she would put a kissy-kiss hand to her lips and give her audience a big "MWAH!"

   Is it now the turn of the American people to give a big MWAH to Chevrolet -- that is, to General Motors, Ford and Chrysler?

   If there's anybody who doesn't deserve an air-kiss, it's the Big 3. I would have much more sympathy for the automakers if they had only made decent cars, hadn't wasted so much time offering humongous SUVs and hadn't fought with all their might against increased fuel-economy requirements and reducing greenhouse gases.
   Let's face it: These guys have been bad news for decades. Largely a bunch of smug, weak-chinned, country-clubbing anti-Semites from Bloomfield Hills, Detroit auto executives have been in their own little bubble of pig-headed denial. GM put big bets on the stupid Hummer, the ridiculous Cadillac Escalade and the egregious GMC Suburban. Ford screwed up the redesigned Thunderbird, turned out the rollover-prone Explorer and outrageous Expedition, and with amazingly poor timing brags about its new F-150 monster truck. Chrysler? Let's not get started on their low quality and their clueless product line.

   Even now, when all that's selling are so-called economy cars (and fewer of those every month), the carmakers boast about the few cars in their fleets that get 30 miles per gallon on the highway. Big f---ing deal, 30 miles a gallon. What that means is that these cars get maybe 23 in the city, where most Americans drive. That's lame. Some British imports 60 years ago, such as the Austin, were getting 40 miles per gallon. Of course, Americans made fun of these little cars, so far ahead of their time. There was one limerick that went:

   There was a young fellow from Boston

   Who bought himself a new Austin.

   There was room for his ass

   And a gallon of gas

   But his balls fell out, and he lost 'em.

Even the old Nash Metropolitan got 40 miles per gallon. Why can't Detroit engineer that much economy after all this time?
   Faced with the Big 3's beggarly whining, Congress recently voted $25 billion in bailout money to help the automakers modernize their plants and finally design the cars of the future -- hybrids, plug-in hybrids, straight electrics, fuel-cell hydrogen cars, whatever emerges as the winning technology. I'm not holding my breath in expectation that they'll actually produce cars that do the necessary job of forcing OPEC, Iran and Hugo Chavez to drink their oil. The auto industry can't seem to develop a battery that does better than 40 miles on a charge. Why should this be so impossible? Again, a pretty lame performance.
    And how much will you bet that the Chevy Volt, if it indeed comes out in 2010 at a list price of $40,000, looking much less cool than the intriguing, bait-and-switch prototype, will even go 40 miles on the battery before you start burning gasoline? Odds are that real-world drivers will be lucky to get 20 miles.
   But the $25 billion is not enough for Detroit. Now the companies want hundreds of billions more. And as shrunken and near-bankrupt as they are, they're still too big to fail, because if they go insolvent they'll take an entire industry of suppliers down with them and hundreds of thousands of jobs will be lost in Midwestern states that have lots of electoral votes. So the Big 3 will probably get the extra money. After all, another argument goes, the Chrysler bailout worked out OK.
   Nevertheless, I'm ambivalent about throwing more billions in taxpayer dollars to these automakers. My feelings have nothing to do with socialism, though a form of socialism it is. First, Lee Iacocca is gone. I don't see a truly talented successor as a current industry leader putting the money to good use. And what would be so bad if market forces, meaning the Big 3's own mismanagement, put them out of business? The Japanese automakers, who make much better cars and have even better ones in the technology pipeline, would take over. They'd keep building factories here and employing Americans.
    Still, a huge bailout is inevitable. At least the feds should demand either a stake in the auto companies or guaranteed repayment if and when profits return. Let's force Detroit to remember that these are loans, not rewards for incompetence.