US Auto-Makers In Trouble

Kirk Kerkorian is still dumping Ford shares. Tracinda, Kerkorian's investment vehicle, pared its position to 4.89% from 6.09% on October 20. At its peak, Tracinda owned 6.43% of the company.

The National Automobile Dealers Association estimates 700 new-car dealerships will close this year, and 37,100 jobs will go with them. The country's 20,700 dealerships accounted for $693 billion in sales last year, 18% of all retail sales. Dealership salaries make up 13% of the country's retail payroll.

Despite the obvious effects these closures will have on the economy, they could also make things worse for the Big Three. As their biggest dealerships shutter, GM, Ford, and Chrysler will have fewer avenues to push their vehicles.

However, Porsche still seems to be doing fine. Porsche a 74.1% stake in fellow German automaker Volkswagen. Shares rose as much as 93% on the news. Volkswagen soared so much due to heavy short covering. No one expected Porsche to have increased its stake from 35% to 74%. Hedge-fund managers were literally in tears, according to the Financial Times.

The rise makes Volkswagen the world's largest publicly traded company. Volkswagen had a peak market cap of $370 billion, more than ExxonMobil's $343 billion as of Monday.

I wonder how other luxury sports car manufacturers are faring?

What Should Gold Bugs Do?

“I believe the gold juniors offer the best value for your paper dollar going forward,” says Ed Bugos of the violently beaten-down junior mining sector. The Canadian Venture Index, the bellwether of juniors, is down a nauseating 70% from its 2007 high.

Ed sent over a lists of what gold bugs should NOT do:

* Don't be overly short the stock market at this stage of the collapse.
* Don’t slow down your gold buying just because the market is down. Buy a lot of gold - coins and bars. Buy as much as you can before it breaks through $1,000. Then hide it.
* Don't buy the GLD streetTRACKS, unless you're just trading.
* Don't buy gold from your bank.
* Don’t put all your eggs in one basket. Diversify your wealth between tangible assets, like gold, silver and platinum, or even real estate, and continue selectively accumulating bargains in the equity sphere. Diversify geographically.
* Don’t invest more than 20% of your wealth in junior miners. It is not a safe-haven panacea. The rewards are potentially high, but the risks are, too.
* Don't keep all your wealth in gold, because the government will one day probably come for it.

The New Communism: Capitalism!

The US ban on short-selling financial stocks just expired last week. And during most of the 2-week duration stocks plummeted anyway. The WSJ had an article on it where several large financial bigwigs admitted it was a farce and a bit like "having a big glass of orange juice only to have a sugar crash a few hours later".

But while the rest of the world is scrambling to shore up its financial markets through bailouts, short-selling bans, and de-leveraging balance sheets, China announced a trial introduction of margin trading and short selling.

In the announcement, the China Securities Regulatory Commission didn't refer to the current global economic crisis, but said it plans to introduce "new vitality" into the stock market.

Isn't is ironic that even the "communist" Chinese have a stock market more open and free than our own?