I Want That Job

Although it hasn’t been finalized, it appears we taxpayers are going to make a 17-20 billion dollar loan to try to keep the American automobile manufacturers in business. Unlike the bailout of Wall Street, this one has some conditions attached. It will be called a bridge loan, and a repayment plan is to be negotiated with the borrowers, and might mean the firing of G.M.’s CEO, Rick Wagner. Somehow, if that happened, I think he will wish congress a Merry Christmas by telling them to please notice the mistletoe under his coat tails as he departs. He is young, handsome and rich, and will get along just fine on the millions he has made with GM. This morning, when asked at a press conference if he was going to resign, he said, “After all I have been through, do you think I would leave now!” This man is a tuff guy with a great attitude.

I was certainly impressed by the G.M. management team that accompanied him. Sharp, well educated and trained car guys who are really trying to take this company back toward its former glory.

Anyway, it appears congress want to appoint a car zar to oversee all this. That’s the job I want, and would be able to start immediately. Just a modest salary, and the ability to appoint a few relatives as assistants.

Car Zar! Wow, doesn’t that sound impressive? There probably isn’t that much to do, except be briefed daily on what was happening. Maybe I could get Governor Rod Blog of Illinois to get me the appointment.

After all. I used to work for three different divisions of G.M, was general manager of a metropolitan G.M. dealership, then later became the president of a couple of banks which were successful. I am used to hearing from the executives of G.M. at many different levels, although it was always from the top down. I was always willing, though never asked, to tell their management what to do, although some of my suggestions were physically impossible. Sounds like a good match to me! I could start immediately, but might have to work from home till it warms up in Michigan, or, of course, use one of their corporate jets to commute.

May I use you as a reference?

One thing I thought was great at the press conference, was, when asked if he thought G.M. could possibly match the quality of foreign made automobiles, Chairman Wagner, said, “Just get behind the wheel of a new Chevrolet Malibu, and you will have the answer!” Pretty brave, and good for him! By the way, I must admit I have never been behind the wheel of a new Malibu, but after that, I would certainly like to try it.

Later

Promotors and thieves go where the money is.

Ever hear of a scheme called, “portable alpha?” Most people haven’t and wouldn’t understand it unless they have had contact with the far side of the securities business. But many of us are affected by this complicated investment strategy which has invaded the pension funds of many states for billions of dollars of losses, most of which will probably never be recovered.

Who will make good on the losses? Well, depending on state law, most of it will be made up by the taxpayers of the states involved. Another crushing blow to the American taxpayer who is living in a bankrupt economy.

Portable Alpha is the name of an extremely aggressive strategy using sophisticated investments including various derivatives peddled to pension funds and other institutional investors when the stock market was rising to unheard of heights. Wall Street Journal reports an estimated 74 billion has been invested using portable alpha. Pension funds seem to be the hardest hit including Pennsylvania, South Carolina, San Diego County, Kansas, and Massachusetts. Unless a miracle occurs, investors in alpha funds will find they have bought into a highly leveraged bet on the market and in hedge funds. They will lose a LOT of money!

The idea was to use portable alpha is to match the market with a small dollar amount by using derivatives such as futures, and use other funds remaining for direct investments. Trouble is, (in my opinion) many managers of these funds didn’t understand what they were committed to. Portable alpha was a good idea when started in the late 80s, but no one seemed to know what would happen in a market that fell as fast as the current one. Even the pros that used portable alpha have been burned lately.

Years ago, when I managed investment accounts for two banks, I asked our governor why the state employees pension fund’s board of directors did not include any conservative bankers or investment people, and his answer was, “They tend not to take chances!’ The board was dominated by promoters, and other “Investment” people, who sold the state troubled real estate assets and even a failing business deal or two. I sure didn’t want the responsibility, but still, I wish he had listened. Wonder who oversaw the state’s investments in portable alpha.

Sorry this hasn’t been a spellbinder, but it is just the kind of mistakes that are exposed in tough times that can affect us all-a lot!

Later.