Carl from Chicago

Business executive interested in history, economics, taxation and energy policy.

Blogging and the Law

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The Wall Street Journal article titled “Bloggers, Beware: What You Write Can Get you Sued”. The article started with a discussion of a woman who was sued because she was in a dispute with a software company over accusations that customer data was compromised in an online forum. She was sued for defamation and she claimed protection under the “shield laws” which protect traditional (print, television) journalists. Her insurance company, Allstate, was paying for her legal costs under her “umbrella” insurance policy which is designed to fill in for potential issues not covered under auto and home owner policies.

Traditional issues with the web related to copyright infringement issues; one time I ran a different site that was hit with a “cease and desist” letter for publishing data about a certification process (not specific testing information) – I took the information down and posted the letter on the site instead. Nowadays it seems that much of the copyright infringement issues have migrated to downloading music because of the revenue losses; the newspapers and other institutions don’t seem to be going after blogs much.

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Less Is More

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I remember reading stories in the 70’s and 80’s about defectors from the Soviet Union that were brought to the United States (notably Victor Suvorov who wrote a series of books I liked a lot as a kid, including “Inside the Soviet Army”). The Allied handlers would take the defectors from the Eastern Bloc to grocery stores in the United States and they would gawk at the massive abundance of items for sale, since there were very limited quantities of consumer goods available in the USSR at this time.

I can empathize with those defectors nowadays when I go to a “suburban sized” food store. I shop at a local “city sized” Jewel which has tiny aisles that are usually packed with customers (I waited until it was empty to take this photo) and the store only has a few aisles so you can navigate through it quickly. However, the local Jewel seems to have pretty much everything I am looking for; I rarely have to go anywhere else to find something for a recipe. Since I am also carrying my food a few blocks back home, I can’t impulse buy like you would at a local Costco because it is no fun to lug that all back home (especially if it is raining and you can’t carry an umbrella because your hands are full – you are like a wet dog when you get home).

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Beam While Bond Holders Burn

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Let’s run a small thought experiment. Assume that I have a business, and I want to borrow $10,000 from Dan as a LOAN to finance the business. The terms are typical – I pay back the principal, plus interest, on a regular schedule. If the business fails, Dan is a creditor and we liquidate the business and he receives a percentage (some amount of cents on the dollar, from 90 cents to 5 cents) depending on what my failed business can be sold for. WHY would Dan loan me money? He may have some cash available and would like a steady stream of income (interest) and a relatively low risk of losing his principal.

Now let’s say that the business is in trouble. I go to Dan and say… how about I pay you maybe 30 cents on the dollar, and you take these new loans and your investment is now worth only $3000 plus the interest on the $3000 (assuming I pay it out). My old obligation to you is null and void. And, oh yeah, I am going to go talk to all the newspapers and local reporters and tell everyone how great I am at managing the business and put my face on the cover of a major magazine, beaming.

This is pretty much an analogous scenario to the situation facing Ford motor. While Ford motor has done some things better than its two brethren in dire straits, and has been willing to make tougher choices like sell of brands such as Jaguar and Range Rover (to Tata) and has done other things right, the MAIN reason that Ford is alive while GM and Chrysler are circling the drain is because the prior CFO took out $23 billion in bonds, essentially hocking everything Ford had, when the markets were easy on financing (now Ford would never be able to raise those kinds of funds at those low rates).

Here is Mulally’s business plan (edited, obviously). Certainly, compared to the management at Chrysler and GM, he is a relative genius, the veritable “one-eyed man” among the blind. I helpfully updated the plan so that we could see the most important reason for his success, which is his shameless cram-down of debt holders and having them exchange debt while Ford HELD THEIR CASH to use on Ford’s cash-burning operations.

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Odd London 2009

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Odd London 2009

Recently I went to London and took a variety of odd pictures that made me laugh or think.

Upper left – this was a photo of a gas station – nothing odd, right? But from what my “local” contact said, this was one of VERY few in central London, and extremely rare. I guess the local laws and high property values make this an expensive proposition. It did seem very busy. I guess you can’t drive around with your tank on “E” in London.

Upper middle – “Reject Pot Shop” – what a great name for a crockery / cooking store

Upper right – there was a display of English rock bands, and if you look closely at the hats you can see “The Who” and “The Beatles” but how the heck did “Motley Crue” get in there?

Lower left – SMARTIES – you can get them in the UK and in Canada but not in the United States. They are like M&M’s but way better – they are bigger than the chocolate ones (not peanut), come in cooler flavors, and have a better candy “shell”. If you see them, give them a try

Lower middle – a betting parlor. They are all over in the UK, as they are in Australia. The world doesn’t seem to come to an end when sports betting is allowed, does it?

Lower right – when we were in the “Underground” I saw an ad for the city of Chicago. The funny part is that beach scene on Lake Michigan with no one else around. At least we are trying

Cross posted at LITGM

Correction on Jesse Jackson Jr, but pretty much the same…

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In this post I photographed a black SUV with congressional plates in the Gold Coast and said it was Jesse Jackson Jr’s.

In fact, it is from the first congressional district (the “1” I guess, now in hindsight that is obvious) and it is Bobby Rush’s.

Like Jesse Jackson Jr., Bobby Rush is a lockstep Democrat, voting for all of the environmental programs and it is very surprising that such an individual would go for a giant, expensive gas guzzling SUV when their party wants all of America to get into a tiny, fuel efficient economy car. But principles are for the “little people”, not those in power, right?

As far as Jesse Jackson Jr – it is TRUE (according to this post on the Channel 5 blog, a local news channel, so presumably a pretty reliable source) that he doesn’t drive a Lincoln Navigator – but he drives a FORD EXPEDITION.

Bizarrely enough, Mr. Jackson must not be much of a negotiator, because he is paying $1161 / month for a Ford Expedition while Bobby Rush pays $746 / month for a Lincoln Navigator, both 2007 models. He is paying much more to lease the less expensive model. According to MSN, the 2007 Ford Expedition retailed for between $29,000 and $39,000 depending on option packages, while the 2007 Lincoln Navigator retailed for between $45,000 and $51,000.

Using the midpoint of the price range, the Lincoln Navigator costs 41% MORE than the Ford Expedition, and yet Bobby Rush is paying 36% LESS than Mr. Jackson. Very odd.

But to get back to the heart of the matter – as anyone who knows anything about cars understands, the Lincoln Navigator and the Ford Expedition are ESSENTIALLY THE SAME TRUCK. The Ford Expedition weighs around 6,000 pounds, and the Lincoln Navigator weighs around 6,000 pounds. According to the NBC 5 blog post, the Lincoln Navigator actually gets BETTER gas mileage, too, although they are both terrible, as anyone who owns one can attest.

But Jesse Jackson Jr. wasn’t hanging out in the Gold Coast instead of hanging in their neighborhood with their own constituents, Bobby Rush was. He is about 18 miles out of Evergreen Park. After all, why hang out with those that elect you in the first place.

SO, in conclusion:
– I was wrong, Jesse Jackson Jr. doesn’t drive a Lincoln Navigator and wasn’t hanging out in the Gold Coast Friday night
– BUT Jesse Jackson Jr. does drive ESSENTIALLY the same car, a giant gas-guzzling SUV of the type his Democratic party routinely condemns, according to our local news station (see link above)
– Jesse Jackson Jr. doesn’t appear to be much of a negotiator, either, at least compared to his other gas-guzzling hypocritical Democratic congressional brethren

Mayor Quimby (commenter) – care to comment from the US House of Representatives on why someone who votes 100% with environmental causes drives a huge, gas-guzzling SUV, essentially identical to the one that I said he drove in the original post?

Cross posted at LITGM