Archive for November, 2009

Power Breakfast: Buffett, Delta, Kia, securities fraud, auto sales

Perhaps the most famous investor in the world, Warren Buffett, is making the biggest bet of his career on the long-term health of the U.S. economy.

Buffett’s Berkshire Hathaway on Tuesday agreed to buy the 131-year-old  Burlington Northern Santa Fe railroad for $26 billion.

A railroad might strike many people as a bit old-fashioned — more 19th century than 21st, the New York Times writes. But Buffett is wagering that as the economy revives, so will the demand for goods to be shipped by train.

Burlington Northern carries coal and timber from the West, grain from the Midwest and imports arriving directly from Mexico and Canada, as well as through California ports, the Times reports.

Buffett is also betting that higher oil prices down the road will work against the trucking industry and for railroads like his.

In the AJC:

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Layaway plans revived in tough times

Today’s tough times have prompted retailers to dust off layaway plans for the holidays.

Different from credit-card purchases, consumers are not charged interest, but can’t take the item home until it is paid off, the Better Business Bureau says.

When purchasing items on layaway, the buyer must typically make a down payment of 10 to 20 percent and pay any service or plan fees for the store to hold the item, BBB says.

The consumer then has typically 30 to 90 days to make periodic payments to pay off the balance. Once it is paid off, the customer can take the items home.

BBB says it’s important to get everything in writing and ask the following questions:

  • How much time do I have to pay off the item?
  • When are the payments due?
  • How much do I have to put down?
  • Are there any storage or service plan fees?
  • What happens if I miss a payment? Are there penalties? Does the item return to inventory?
  • Can I get a refund or store credit if I no longer want the item after making a …

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CARE chief taps business know-how

Dr. Helene Gayle heads one of the most critical non-profits in the world, Atlanta-based CARE.

But she’s increasingly focusing on lessons from the corporate world when directing her organization’s fight against worldwide poverty.

Dr. Helene Gayle

Dr. Helene Gayle

Terms like leverage, supply chain and re-branding flow readily from her tongue, as she describes her strategy to help more people with CARE’s projects. For a second or two during an interview last week, I thought I was talking to UPS CEO Scott Davis or Home Depot CEO Frank Blake, two men who smile when they hear talk of supply chain.

But it was Gayle, a 54-year-old trained pediatrician, who was explaining CARE’s partnership with UPS, so it could get disaster relief more quickly to the next hot spot. To do that, CARE needs sophisticated logistical expertise from a company that knows how to efficiently deliver packages to more than 200 countries.

These days, Gayle said, the line between for-profits and non-profits is blurring. Companies …

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Power Breakfast: Bank failures, election, divorce, Delta, Ford, health care

At least they came to listen.

A Congressional subcommittee decamped to the Georgia State Capitol on Monday to focus on the wave of bank failures here, along with the foreclosures that have decimated neighborhoods, AJC reporter Paul Donsky writes.

During three hours of testimony, the House subcommittee – led by former Presidential candidate Dennis Kucinich, an Ohio Democrat – heard from bankers, builders, homeowners and academics in an effort to better understand the Peach State’s problems and determine how the federal government could help turn things around, Donsky reports.

Dan Immergluck, a professor at Georgia Tech’s city and regional planning program, said Congress should be much more forceful by requiring mortgage servicers to do a better job of modifying loans of homeowners struggling to make payments

Others, including former Atlanta Mayor Andrew Young, said regulators should go easier on the state’s community banks, many of which are reeling from losses tied to the …

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Cash or credit cards for the holidays?

A majority of consumers say they plan to use cash this year when shopping for the holidays, according to a survey.

Sixty-eight percent said they would use cash, while another 12 percent said they would use a credit card but pay the bill in full. The survey was conducted by the National Foundation for Credit Counseling.

Another 10 percent would charge purchases and pay them off over time. The final 10 percent plan to use lay-away programs.

How about you? Will you use cash? Credit cards? Will you spend less or more than you did last year? What’s your strategy?

Also, beyond holiday shopping, has you credit card company made changes in your account, even though you have paid on time?

Did your rate increase? Was your credit limit cut? Did your minimum payment rise?

Besides commenting on this blog, AJC reporter Carrie Teegardin would like to hear from you. She is working on an upcoming article about the latest trends with credit cards.

Please e-mail your experiences to Carrie at …

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A math lesson for your 401(k)

Despite the big gains in the stock market since March, many 401(k)s still look like 301(k)s.

Part of the reason, the Wall Street Journal writes today, comes from a principle of mathematics: When you suffer a very large loss, you need a gigantic gain to get back to where you started.

Money manager and newsletter editor Daniel Wiener calls this  “the tyranny of the mathematics of loss.”

If an investment declines 10%, it takes about an 11% gain to break even (assuming you don’t pump in additional dollars), WSJ says.

If the drop is 20%, you need a 25% gain to recover. A fall of one-third requires a rebound of 50%. And if your investment falls by half, “you need a double,” or a 100% return, Wiener, the New York-based editor of the Independent Adviser for Vanguard Investors, tells the WSJ.

The recovery percentages grow exponentially because you have so few dollars working for you after a big loss.

I never liked math. My 401(k), which was heavily invested in stocks, still has a good …

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Power Breakfast: CIT bankruptcy, Delta, substitutes, Kia, stimulus

It’s not AIG or GMAC. The next initials you’ll be reading a lot about in the business world are CIT.

Sunday’s bankruptcy of CIT, a key lender that helps retailers stock their shelves, is adding to the industry’s worries ahead of the critical holiday shopping season, the Associated Press reports.

CIT Group Inc. filed for Chapter 11 bankruptcy protection in New York after months of struggling to avoid collapse.

The company provides badly needed credit to thousands of small and mid-sized businesses, and is a critical part of the flow of capital in the retail sector.

CIT stressed that its lending operations will continue to operate as it proceeds through bankruptcy with the hope of shedding $10 billion in debt, AP reported.

But retail groups and analysts warn that the case will likely add to the instability in the retail sector. CIT is an important source of capital, working with 2,000 vendors that supply merchandise to more than 300,000 stores, AP wrote. About 60 percent of the …

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