Archive for November, 2008

Ganders and Geese

Whether or not you believe the government should be “bailing out” Wall Street banks, I think it’s fair to say that the financial system itself is critical to the functioning of our economy. If it wasn’t, we wouldn’t see our current problems growing so quickly and pervasively.

The automobile industry is another issue. It’s certainly a smaller part of our economy, even after the shrinkage of investment bank market caps. And there’s no way I’d ever call it essential. Fundamentally, people aren’t buying cars, so what does anyone expect to happen? Why should the auto industry be different than any other industry that’s facing a deep recession?  And do you notice none of the foreign-owned manufacturers are crying?  All of them operate plants here, why aren’t they in dire straits?

All of which makes talk of a bailout of Detroit significantly more contentious, notwithstanding the recent pilgrimage of auto and union execs to genuflect before the newly vitamin-fortified Democratic leadership in Congress.

automoneyBut OK, I’ll bite. The failure of any of Detroit’s Big Three would have a large impact on jobs, at least in the short term. And it would propagate to the auto parts industry, and probably a few service industries, as well as financial services (think GMAC). So let’s suppose that a bailout of some sort makes sense, and Congress decides to pump some of that rapidly vanishing $700M into GM, Ford, and Chrysler.

What are they going to do with it? How do we know they’re going to use it to solve their problems? Even more important, what sort of return should America expect from this “investment”? Are we just bailing out a bunch of fat-cat executives who flubbed their corporate strategy? I mean seriously, these incompetents have been lining their pockets with big bonuses, and now they want us to bail them out? WTF?

I have this strange feeling of deja vu.

Seems to me the same politicians in Washington that have been screaming for oversight of the financial services industry, and influence on how any bailout money is used, ought to be making the same kind of noises here. After all, what’s good for the goose is good for the gander. But so far, not a peep. Or a honk.

Here’s what I’d like to see:

  1. The Chief Executive of any auto company taking government bailout money should be fired.
  2. Suspend executive bonuses for the rest of the top management ranks
  3. No dividends of any kind to be paid out to shareholders of the auto makers (sorry, Cerberus Capital Management, no quick exit here.)
  4. Only two permissible uses for the money: reducing carmakers’ onerous pension obligations to a more manageable level, or retooling plants inside the U.S., to produce more fuel efficient and/or otherwise competitive cars

Think any of this is going to happen? Nah, neither do I. My bet is that the money will go out with only token strings attached to it.

autogooseAnd in 5 years or so, the Big Three–whichever ones are left–will still be limping around getting their butts handed to them by foreign manufacturers who are making better cars in U.S. plants for less money and selling more of them.

I think our goose is cooked.

Disclosure: I hold no position in any of the stocks mentioned here.

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November 7, 2008 at 9:33 pm 2 comments

‘tennas, Anyone?

Ever wake up in the morning, fire up the PC, and then find your Internet connection doesn’t work? Annoying, isn’t it? Particularly if you have no idea why. Imagine if that happened to your television set.

It could, if the day you wake up is February 17th, 2009.

That’s the day that over-the-air TV stations in the U.S. are required to cease analog transmission and go to all-digital. People who have analog televisions will no longer be able to receive broadcasts.

martian

These unfortunate souls have three options: buy a new digital TV, purchase a special converter box (subsidized by government vouchers), or subscribe to satellite or cable.

All of this has been getting fairly wide publicity. It’s also confused a lot of people. Naturally, cable and satellite providers have joined the party, by trying to con their customers into believing they need to upgrade to digital service to watch (any) TV after the cutover. DISH Network is just one example.

(In reality, no one is “forcing” the telecablecos to upgrade to digital. But since they want to go digital for their own reasons, they’d dearly love for you to opt into higher monthly fees.)

The government ran a DTV “beta test” in Wilmington, NC in September. However, the hoopla surrounding the test, the low percentage of analog households, the presence of special help lines, and FCC commissioners lurking in the area are conditions unlikely to be duplicated when the nationwide conversion occurs.

That will affect an estimated 13 to 23 Million households–most of which are, understandably, not tech savvy. And 35% of which are completely unprepared for the transition.

Wait, it gets worse.

The dirty little secret, not widely publicized (or understood), is that even if you have a new converter box, you may lose your signal anyway.

snowAnalog signals degrade in a familiar way–the poorer the reception, the more snow you see, and the fainter the picture gets. Digital doesn’t work like that. It tends to fall off the cliff entirely. Except for a bit of pixelation, the picture is either there or it isn’t. So people with indoor rabbit ears, or bad rooftop antennas, may lose some or all of their stations, depending on how good their reception was in the first place.

But there’s more.

Some stations are broadcasting at intentionally reduced power levels during the transition, but will ramp up subsequently. People could lose their signal only to have it restored later–perhaps after they fall off their roof trying to install a new antenna. On top of that, so-called “low-power” stations aren’t required to go digital at all. So to receive those, you’ll need to be sure and get a converter box with analog pass-thru.

What a mess.

People who want to learn more about the transition to DTV can do so at the FCC’s official site. Detailed help on antennas can be found here.

One thing’s for sure. Congressmen and FCC commissioners (current or budding) will be getting their ears bent big time after the switchover, once hundreds of thousands of loyal constituents are without their bread and circuses. The response will undoubtedly be swift, accompanied by pompous rhetoric, rolling heads, and ill-advised new laws.

Still, it could be worse. Imagine the response if 2009 were an election year, and politicians faced the prospect of people not seeing their re-election ads.

Disclosure: I hold no position in any of the stocks mentioned here.

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November 4, 2008 at 9:20 pm 3 comments


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