Sunday, May 17, 2009

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Cheaper iPhone Plans From AT&T Top
Victor Lin wants an iPhone, but he's put off by the price. The smartphone costs at least $199 up front, and if he wants unlimited Web and e-mail access in addition to calling, he'll need to pay an additional $70 a month. "I like the idea of having a full-featured Web browser," says Lin, a 43-year-old San Francisco software engineer. "However, I think the monthly fee is a little bit too high."
 
Alan Schram: Government vs. Investors, Round One Top
Last week President Obama declared: "I stand with Chrysler employees...I do not stand ...with a group of investment firms and hedge funds who decided to hold out for the prospect of an unjustified tax-payer funded bailout." This was the first shot in the war against investors. The second shot was when the President announced the administration has begun looking into changing compensation practices across the financial services industry, including at companies that did not receive federal bailout money. This ambitious, controversial and legally dubious agenda is of little surprise given the government's huge new purview in the economy and politicians' natural inclination for power grabs and mission creep. The Wall Street Journal says (Monday, May 11) that the conclusion of the Chrysler negotiations "would upend a longstanding tradition concerning rights in a bankruptcy...secured lenders usually get paid in full before lower priority creditors get anything". Remember, the United Auto Workers were unsecured creditors while the Chrysler bondholders had senior position in the capital structure. The bondholders received only 28% of their $6.9 billion in bonds (in cash), and the Union will receive 82% of the value of their claim (in stock worth approxi mately $4.2 billion plus a note for $4.5 billion). The law gives bondholders certain protections and rights. There is a very good reason why they are given those rights. Indeed, the White House role in restructuring Chrysler sent a shudder through bankruptcy lawyers and bankers. A major principle of American capitalism has been violated, and financial firms, so essential to our economic recovery, are being put on notice. This bring to mind the time when President Theodore Roosevelt asked his attorney general Philander C. Knox to come up with a legal defense to the questionable manner in which the United States acquired the Panama Canal Zone, and Knox said: "Mr. President, do not let so great an achievement suffer from any taint of legality." Those investment firms that held out on the Chrysler deal have clients, and their fiduciary duty is to protect the capital those clients entrusted to them. This is not in any way unpatriotic, no matter how much meretricious demagoguery is being spewed. President Obama chose to side with the UAW. That's his prerogative, although fleecing lenders to pay off powerful electoral groups sounds politically motivated. But instead of resorting to cheap populism he should admit to helping the UAW at the expense of the bondholders, many of them are retirees, teachers and police officers. More importantly, a world where the President bristles at contract rights to marshal the huge resources of government in a war against investors is a world where companies will find it very hard to borrow. Who would provide capital knowing the government capriciously demonizes investors and arbitrarily confiscates their assets? Who would provide capital to have Washington as a foe, ready to subvert the law and pulverize investors on a moment's notice? And how will banks attract the brightest employees if they become a slavish ward of Washington, with compensation restrictions in effect? This is not an insignificant concern given that a modern capitalist civilization cannot function without a sound banking industry that is able to provide credit regularly. Alan Schram is the Managing Partner of Wellcap Partners, a Los Angeles based investment firm. Email at aschram@wellcappartners.com.
 
Ousted CEO Rick Wagoner Still On GM's Payroll As Treasury Considers $20 Million Severance Package Top
Seven weeks after the Treasury Department announced that it was ousting General Motors chief G. Richard Wagoner Jr. in the federal bailout of the company, he is still technically on GM's payroll.
 
Julie Menin: Are We a Pro-life Nation? Top
A new Gallup poll released this week found that a majority of Americans identify themselves as "pro-life." Specifically, 51% of Americans identify themselves as pro-life and 42% as pro-choice. This is the first time since Gallup began asking this question in 1995 that a majority of people have identified themselves as pro-life. While more people are identifying themselves as pro-life, the poll also found that 53% said that abortion should be legal under certain circumstances. New articles trumpeted the poll as "shocking" and "stunning." I think for many people, what is most surprising about these new poll numbers is the timing of this rise in pro-life sentiment. After the election of Barack Obama as President and after the significant Democratic majority in Congress, some might expect these numbers to be very different. So why is the country becoming more pro-life? Well, Gallup posits that President Obama's support of a woman's right to choose through his repeal of the global gag rule and his support of the Freedom of Choice Act, has somehow resulted in a Republican backlash. Gallup's theory appears to be that President Obama's strong support for a woman's right to choose has galvanized Republicans to become more adamantly pro-life. I don't necessarily buy that. First of all, the number of Americans who identify themselves as Republican is at a historic low of 20 percent (http://www.washingtonpost.com/wp-dyn/content/article/2009/05/16/AR2009051601132.html) so the idea that suddenly there is a majority of Americans organizing around the choice issue as a backlash seems tenuous at best. Also, what many people fail to realize is just how pro-life this country really is in terms of the numbers and that it has been for some time. There are more pro-life than pro-choice votes in Congress and there have been for several years. (http://www.prochoiceamerica.org/elections/2008-congressional-results.html). Moreover, President Obama has not pushed a radically pro-choice agenda, such that there would be a backlash. While he did repeal the global gag rule, which prohibited the US Agency for International Development (USAID) from providing funds to foreign health centers that used its own non-US granted funds for abortion services or counseling, he decided not to push forth the Freedom of Choice Act (which would have codified Roe v. Wade), despite promising Planned Parenthood that he would do so once in office. There are many in the choice movement who had hoped the President would commit to the Freedom of Choice Act, but he now says the Freedom of Choice Act is not one of his highest legislative priorities. Furthermore, just because there is a Democratic President does not by any means signify that the choice debate is over. On the contrary, between 1995 and 2008, states enacted 528 anti-choice legislative measures, and Bill Clinton was President during those first five years (http://www.naral.org/search.jsp?query=528&x=0&y=0). What the new Gallup poll most likely means is that President Obama will be under real pressure to appoint a solidly pro-choice justice to the Supreme Court but not one that is so liberal that it will lead to an all out war in the confirmation process. It also means that he will likely appoint a just-left-of-center appointee, rather than a truly left leaning activist judge or politician, as he tries to avoid further polarizing the country over the choice issue. So what this new Gallup poll really means is that we will see President Obama gravitate more to the center on his selection of a nominee than some would have thought. With the country deeply split over one of the key hot button social issues, just-left-of-center will be the key. We saw indications of Obama's focus on the center with his expected appointment this week of his first candidate to an appeals court seat, where he choose David F. Hamilton, a highly regarded federal trial court judge from Indiana, for the appeals court in Chicago. This choice of a well known moderate signals the Obama Adminstration's plans to avoid the type of searing partisan fights that characterized previous judicial confirmations. More on Barack Obama
 
Anya Kamenetz: The Trouble With Suze Top
Generally, I think my fellow Yahoo! Finance Expert gives pretty solid financial advice. Sure, she's compromised somewhat by her endorsements like MyFICO.com , but she seems to genuinely care about helping people, the opposite of an irresponsible stock hustler like Jim Cramer. However, after reading her profile in the New York Times Magazine , I realized that I think her priorities are totally screwed up. She seems to equate financial security with being rich. I mean, maybe this is obvious, since she wrote a book called "The Courage To Be Rich." But really, that's such BS. If we learned anything from the past year's fiscal insanity, it's that financial security, financial integrity, and financial freedom have nothing to do with having a ton of money. You have financial security if you are able to cover your basic expenses and save for the future. You have financial integrity if you're not fronting by buying a bunch of crap you can't afford while neglecting your future. And true financial freedom, for life, means the ability to live well within your means, regardless of the fluctuations of the market. These are all dynamic ways of being in the world, not static numbers. Ok, you might argue that "basic expenses" does require a certain dollar value per year, but I think it's all contextual. You could live on the beach in Goa for $10,000 a year, and as long as you play enough guitar to clear $11,000 in tips, presto, you have financial freedom. This was the part of the story I found the most galling: "She has been reluctant to work on school curricula on personal finance, because she says students can't learn empowerment from people who aren't empowered, and teachers, she says, are too underpaid ever to have any real self-worth." Seriously?? Suze is suggesting that people who go into teaching aren't empowered and don't value themselves because they're too big of losers not to become a stockbroker or a TV personality like she did? Teachers, who do the most important job in our society, have no self worth because they're underpaid? Ok, you might agree that they are underpaid, but objectively in most places in the US they make a solid middle class living, with security and benefits that are unheard-of in most careers. Teaching is an enviable career to a huge chunk of the American public. This is incredibly out of touch. Suze's right about one thing: young people shouldn't be learning about personal finance from her. This is the same kind of GOP-style, rich-person-worshiping BS disguised as "empowerment" of the common person that got us into trouble in the first place. More on Jim Cramer
 
Alec Baldwin: The Rise and Fall of Detroit Top
When I was growing up, some kids dreamed of owning cars like a Trans Am, Camaro, Firebird, Corvette, Chevelle or GTO. Stock or tricked out, owning one of the fastest street cars that American automakers turned out was a dream come true. Mustangs were for the West Coast. Chevy ruled the road on Long Island in the1960's and 70's. Back then, in the middle class neighborhood where I grew up, foreign cars were for foreigners. As fuel economy began to become an issue, NOBODY in my neighborhood gave a thought to buying a Japanese car. Nobody. OPEC appeared and gas shortages came and went. You went Ford, Chevy, Chrysler. That was it. I have a feeling that it was like that in most American middle class neighborhoods back then. The fact that we have arrived where were are now is painful. Americans, who are being asked to invest billions upon billions of dollars in US automakers and their employees' futures, have already been investing in those companies, against their better interests, for decades. Now Chrysler is dead, GM is on critical life support and Ford has cancer but may beat it. What do you care? The heads of these corporations did not spend the last thirty years lying in bed each night, sleepless. They did not turn their spouses in the wee hours and say, "How do I serve the automotive needs of the American public and better protect their health and safety AND help them conserve energy?" They never said that. Instead, they spent billions of dollars attempting to bribe the Congress to avoid putting in seat belts and air bags, installing catalytic converters and reaching more ambitious fuel efficiency standards. For the most part, they succeeded. Congress approached those issues with the same combination of sentiment, fealty and fear that Detroit's customers accepted. It was said to be "bad for Detroit." Little did we know that falling for that bull for so long was what was bad for Detroit. Now, the American automotive industry, once the industrial pride of this country and a source of so many great paying jobs that changed the economic fortunes of millions of Americans in assembly, parts, dealerships and service, is about to go away. What do you care? I feel horribly for every single man and woman who will suffer as the result of this heartbreaking turn of events. I was the voice of Chevy Tahoe TV spots for five years in the early 90's. I drove a Tahoe then and loved it. Now, I drive a Prius. I've owned Mercs, Chevys, Fords and Jeeps. I'm in the market for a new car now. I'll probably get a hybrid from a Japanese company, manufactured at a transplant factory in the American South. (Read the excellent recent article in the New Yorker by Peter Boyer about the path the Big Three and the UAW took to get here.) I'd like to buy an American car, but I'd feel like a fool doing that now. The leadership of the biggest automakers made sure of that. There can be only one legitimate response to this crisis. Let energy conservation and fuel efficiency rule the day. Let the carmakers go under. In the same way we have subsidized Big Oil by destabilizing the governments of petroleum rich countries, or outright invading them, we have subsidized Detroit long enough. Just as every barrel of oil is undervalued because we do not factor in that portion of the defense budget that helped bring that oil to market, so we have undervalued our government's, and therefore our, complicity in producing cars that not only were inferior, but drove Detroit itself right off a cliff. From the ashes of such great innovation, hard work, beautiful design and extraordinary branding-as-myth-making, let's have better cars. From the ashes of arrogance, greed and corporate cowardice, let's have better cars. Until then, pull the plug. More on Celebs Talk Politics
 

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