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Paletta, Hilsenrath and Solomon give an exceptional journalism report on the silence and tension in the room at the meeting on Monday, October 13, 2008, at 3.00 pm in the Treasury building. It was an historic meeting between Treasury Secretary Paulson, Fed chairman Bernanke, and FDIC chairwoman Sheila Bair on one side, and the head of America's leading banks on the other side. The situation was explained, the bankers asked questions, bankers were not allowed to negotiate, and at one point Bernanke had to intervene saying there was no need for this meeting to have a confrontational tone. Wells Fargo's Kovacevich asked why banks had to accept a capital injection. Kenneth Lewis of Bank of America softened the tone of the meeting by saying that "any one of us who doesn't have a healthy fear of the unknown isn't paying attention." Even before the meeting an anxious John Mack of Morgan Stanley asked Paulson for the reason for the meeting and Paulson told him, "come on down, you will be pleased." John Mack who had fought so many rumors of the firm's demise, was surely pleased with the $10 billon injection of capital in Morgan Stanley by the government in return for preferred share and a dividend of 5%, which helped assure markets about Morgan Stanley's future. Goldman Sach's also received $10 billion. The meeting was ended at 4.30pm. Before this Timothy Geithner, head of the New York Fed, acting as the point man went around handing each CEO a term sheet with a place to sign. Another meeting was setup for 6.30 pm and at that time all the term sheets were returned - and all were signed. There was no meeting. Treasury officials and Fed officials and others had hoped that the intervening time would give CEO's a time to talk to their boards, to think things over, and clear their heads. In a few hours the government took preferred shares in the nation's leading banks and injected $125 billion into the largest banks. Treasury injected $25 billlion in Bank of America, Citigroup, and JP Morgan Chase, And between $20 and $25 billion in Wells Fargo, and $3 billion in Bank of New York Mellon, and $3 billion in State Street. Another $125 billon would be injected into other smaller banks in coming days. Officials at Treasury, Fed and FDIC and other government officials hoped this would give a "confidence shock" to the nation's banking system. ...

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GM sells just 30,000 Cadillacs in China. It is one of 8 brands with total GM sales of 2.8 million vehicles in China. The luxury and premium vehicle market is growing in China with 8.5% of the total vehicle market in 2012. GM's 30,000 Cadillac sales makes Cadillac at only one tenths of one percent of its China sales volume, and way behind luxury car makers Mercedes and BMW. GM plans to take a larger share of this market and increase Cadillac sales to 100,000 by 2016. To do this GM will launch a new advertising campaign in China with actor Brad Pitt and increase dealers in China to 200 by the end of 2013. A new Cadillac will be introduced every year through 2016. Cadillac comes in the SRX, a small sport utility vehicle, and the XTS, a full size sedan. A 8 cylinder Cadillac, the SLS, will be discontinued.

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The sale of $4 billion in loans connected to Cerberus's acquisition of Chrysler has been postponed because of sluggish credit market conditions and shortage of buyers.

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Natural gas prices declined to $3.144 a million British Thermal units on the New York Mercantile Exchange for January delivery. Natural gas prices dropped sharply by 30% in December 2014. Earlier forecasts of $4.50 per million BTU by 2014 end underestimated the decline in natural gas prices in the U.S.

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Obama says oil sand leave a big carbon footprint in his interview with the Canadian Broadcasting Corporation, just before his visit for talks with Candian Prime Minister Harper in Ottawa, Canada. The talks will focus on climate change, whether the oil sands can continue to be exempt from regulation, and other issues including a "Buy America" provision.

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Impossible and Beyond Meat, two new companies promoting plant based meat are popularizing the sale of plant based products that contribute to efforts against climate change and at the same time improve health outcomes. Growth of animal based meat consumption is now less than 1% compared to 14% for plant based meat.  New technology is helping improve plant based products using new engineering and production techniques to form plant fibers and proteins that mimic what consumers are used to.  The growth is bringing new companies into the market, including Nestle, Smithfield and Cargill. On the retail side Starbucks, Yum Brands KFC, and McDonalds, Burger King are adding plant based burgers to their product mix.  A new development is cost with the new manufacturing technologies leading to lower costs that compete better on price with animal meat products. Impossible based in Redwood City, California, has a 15% price cut to reduce what it charges to $7.90 to $8.50 a pound.  Impossible and Beyond Meat say they use less energy, water and grain to make burgers from soy and pea protein, than companies that feed, slaughter and transport livestock. Plant based production processes are only now reaching the kind of scale needed to compete with sales of $1 billion in plant based meat. The effects on climate change are not fully understood by people, as animal based products have a much larger footprint on the climate. In particular the health benefits are not understood fully. Animal based fat including from dairy increased chances of prostate cancer say experts. The health benefits of soy protein compared to animal protein are also being better understood in relation to cancer and heart disease. Combining plant based protein with fruits, nuts, beans, ancient grains and vegetables, and reducing meat in the diet,  is now considered a healthy alternative that also is healthy for the environment.   ...

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Henrik Bohme says in DW.com that the German government may have to step in to rescue Deutsche Bank after the $14 billion legal settlement with the U.S. Justice Department for the bank's practices before the financial crisis of 2008. He points out that there are other legal settlements that are expected, including one for money laundering charges. In all he says there are 7,800 legal challenges the bank faces. The share price has dropped by 90% to 10 euros by September 2016. The market capitalization is low at 14 billion euros, and it was dropped from the Eurostoxx 50 index because of this. It has 1.7 trillion in assets under management, is a systemically important bank, which means the German government has no alternative but to step in and rescue the bank. Issuing new shares with so many legal challenges is not an option as there would be few buyers.

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Motoroloa is selling its wireless-networking business to Nokia Siemens, in a $1.2 billion sale. Motorola plans to separate its cellphone business and cable business in 2011.

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For Ford Motor Company 2007, 2008 and part of 2009 should see negative cash flow of $17 billion. Already in the first 9 months of 2006 Ford had $6 billion in losses. About 23 billion in financing arranged to meet these financial cash flow needs to restructure N. American business and finance an entirely new product line and production systems. This includes the largest ever leveraged loan for Wall Street, $17.5 to $18.5 billion, according to Reuters Loan Pricing Corp. Leveraged loans carry an interest rate 1.50 percentage points above the London Interbank Offered Rate (LIBOR) and are loans to non-investment grade borrowers or unrated borrowers. Ford now carries a high yield or "junk" credit rating. To secure the loans Ford pledged all its N. American assets including its logo as collateral. This is the largest such arrangement for an American company in modern business history showing the depths to which the company has plunged. Fitch lowered Ford's ratings to B- from B. Ford is rapidly losing market share to rivals such as Toyota Motor. About 38,000 workers or close to half its factory workers have accepted buyouts or early retirement packages. Ford will shut down 7 assembly plants in 2010....

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Jeremy Corbyn is elected by a landslide in a vote of party members to the leadership of Britain's Labor Party. Like Bernie Sanders in the U.S. Corbyn started out as a fringe candidate, but his campaign gained momentum as he barnstormed the country this summer and was able to draw large enthusiastic crowds. Corbyn has represented the Islington North constituency of London in Britain's parliament since 1983. Corbyn opposes the austerity policies of the Conservative Cameron government and military adventurism. He proposes what he calls "a people's quantitative easing" which would finance new investments in infrastructure, large scale housing, energy, transport and digital projects. He has apologized to students about the restoration of fees for education and loans replacing grants in universities, and would scrap tution fees, restore student maintenance grants, introduce universal childcare, support adult learning.The Bank of England would print money to support a national investment bank to provide the funding. Other funding would come from reducing corporate tax loopholes, and cutting into 20 billion British pounds of tax avoidance and 80 billion pounds in tax evasion. He favors immigration, and staying in the EU, opposes NATO membership on grounds that it has expanded too far to the borders of Russia....

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After heated debate Governor Christie and leaders of the democratic party in the legislature agree on changes to New Jersey's public employee retirement and health benefits and pension system. New Jersey's pension system has unfunded liabilities of $54 billon and some estimates forecast that it will run out of money to pay pensions by 2018. The retirement age for new workers is now set at 65 not 62, pension contributions go up to 7.5% from 5.5% for state workers and to 10% from 8.5% for public safety officers. A major change is to delay annual cost of living adjustments till the pension fund returns to a stable financial footing. The absence of this change would have meant reducing retirees pension value by 30% in the next ten years. After the plan is 80% funded a new employee-employer pension governing board will modify the contribution rates and pension rules based on advice from actuaries. On health benefits the changes are for workers earning more to pay a larger share of premiums- so that a worker earning $60,000 would pay 27%, and a worker earning $95,000 would pay 35%. This particular change is phased in over 4 years and saves $300 million....

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Joe Nocera joins Simon Johnson and other experts in saying that Fed Governor Daniel Tarullo's suggestion to raise capital requirements of U.S. banks to 14% makes sense. He quotes Anat Admati, a fiance professor at Stanford Business School, who says the only way to get rid of bailouts is to raise capital requiremets to an adequate level. The Wall Street Journal editorial on June 16, 2011, also supports the higher Tarullo capital requirements. Why is it that European banks and the Basel III accords provide a 7% capital reserve requirement phased in over many years- to as far out as 2019- if this is the case? The European banks are in much worse shape than the U.S. banks especially with Irish, Greek and other debt on their books and Basel III is designed to accomodate this. The governor of the Bank of England, Mervyn King, is also advocating higher capital reserve requirements than Basel III, including the flexibility for countries like Britain and Sweden to set their own capital reserve requirements based on their own situation and the need to protect taxpayers. The U.S. stands to gain a lot from setting its own standards if France and Germany and other European countries decide to user lower standards through Basel III....

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Acer faces large inventories and a competitive market with declining prices in the PC market. Acer's CEO J.T. Wang expects a loss in 2011, as a result of inventory adjustments, lower demand for notebook PC's, and a slower economy. Second quarter revenues were down 32%, and Acer shows a loss of 6.8 billion New Taiwan dollars ($US 234 million) for the second quarter. Acer has lost sales and market share to competitors. It now comes in fourth after H-P, Dell, Lenovo. The inventory reductions by competitors has created turmoil in PC markets. Another problem Acer faces is on its Ultrabook, a new ultrathin notebook. The Ultrabook to be introduced in September 2011 is to be priced at US$799 to US$1,199. HSBC analyst Jenny Lai is skeptical about the price, and sees a price closer to $700 for the product to make a dent in the market. This will put more pressure on Acer's margins. The Apple iPad and iPhone have reduced the demand for notebooks and created a new dynamic in the market. H-P CEO Apotheker made the decision for H-P to exit the PC and tablet business this week because of the required investment for a continuous stream of new products and low margins....

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A look at Department of Transportation data shows a downward trend in airline ticket prices. Average domestic fares in the U.S. declined 16%, adjusted for inflation, compared to 1995. A comparison shows a round trip ticket price of $410 in 2010 dollars in 1995, the same ticket is priced $338 in 2011, including $22 for bags and reservation charges that were added in recent years. Not including the $22 would give a 21% decline in prices in 2010 compared to 1995. Higher labor costs for American which could not shed legacy costs because it did not go into bankruptcy like some of its competitors, combined with higher fuel prices have posed a serious threat to American Airlines. American Airlines (AMR) experienced a 33% drop in share price on Sept. 3, 2011, with a recovery gaining 21% the following day to close at $2.39. UnitedContinental had a 2nd quarter 2011 average fare- revenue divided by number of passengers- excluding taxes, of $273. Southwest had an average one way fare of $143 for the 2nd quarter 2011. According to DOT figures, passenger tickets provide only 71% of total passenger revenues to airlines, compared to 88% in 1990. The remaining 29% comes from reservations charges, standby service, checked luggage, in-flight food service, transporting pets and other charges. ...

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Honda plans to move more of its manufacturing to the U.S. as the value of the yen drops below 80 to the dollar in 2011. Honda faces problems from parts shortages after floods in Thailand, and U.S. market share down 1.5 percentage points to 9% in 2011. Honda's profit declined by more than 50% for the third quarter of 2011. The yen trading at 77 to the dollar in Dec 2011 is making it impossible for Honda to make a profit from vehicles made in Japan and sold in the U.S. Honda plans to double the capacity of the Civic plant in Greensburg, Indiana, increase capacity at its other assembly plants. It will build a new plant in Celaya, Mexico, in 2014, to manufacture the Fit subcompact. This will raise North American production from 1.29 million vehicles to close to 2 million. About 200,000 to 300,000 of these vehicles will be exported to other international markets. Profits on small subcompacts are small, making manufacture of the Fit more economical in North America than in Japan. In 2011 Honda manufactured between 30-40% of vehicles in Japan, the new plans are to reduce this to 10-20% in the next 10 years, a major shift....

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The "Burning Platform" memo by CEO Stephen Elop, seeks to confront Nokia with the reality of what is happening, as it has fallen years behind competitors who have completely changed the space Nokia was in. Apple's iPhone has redefined the space for smartphones and Apple now owns the high end market. In 2008, Apple's market share in the $300+ price range was 25%, by 2010 it was 61%. Newcomer Android has in 2 years created a platform that by attracting application developers, service providers and hardware manufacturers, is winning the mid-range down to 100 euros. And in 2008, MediaTek provided complete reference designs for phone chipsets, so that Chinese manufacturers in Shenzen could produce phones at an astonishing pace. They now own the low end of the market, producing an estimated one third of the phones sold globally. A crtical part of the memo is about ecosystems. He says it is no longer about hardware and device to device competition, but about ecosystems that include not just hardware and software. It includes developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and so on. And Elop says the decision confronting Nokia, is how to build, catalyse or join an ecosystem....

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To make custom loan modifications of the type that became necessary overnight on a large scale requires resources, investment in people and technology. On top of this a bank makes about $500 a year on a $200,000 mortgage loan, and if the loan is delinquent the bank may already have lost $2500, say experts, so there is little incentive to do much about custom loan modification. As a result, they used what a former J.P. Morgan executive called "Burger King kids." Or the banks outsourced the operation, some to law firms like David Stern, which in turn used outsourcing firms in Guam or the Philippines. The result is a largely chaotic process according to former mortgage officers of banks, and clerical staff that did not know what they were doing. Now atttorneys general in all 50 states have stated that they will investigate foreclosure practices of banks. It all started with the lone effort of Pine Tree Legal Assistance in Denmark, Maine, in succesfully challenging one of these improperly conducted foreclosures. See the NYT article on Pine Tree. In that case it was about a mother with two children who had her payment go up to $474 after loan modification, who is on food stamps after losing her job as an employment counselor....