Archive for the ‘Business’ Category

In Chicago yesterday, President Obama described the essence of his campaign against Mitt Romney. Asked during a press conference about his campaign ads criticizing Romney’s record at Bain Capital in the 1980s and ’90s, Obama disagreed with fellow Democrats’ advice to focus on other issues:

[T]his is not a distraction. This is what this campaign is going to be about — is what is a strategy for us to move this country forward in a way where everybody can succeed?

Well, now. That’s just completely different from every other presidential campaign in history…

Some commentary has focused on what Obama said just before that: his description of the job of president vs. the job of a private equity CEO. And with good reason. There is plenty to address: from his assertion that the president should be involved in helping individual communities plan their economic development, to the obvious conclusion that the job, as he’s described it, is not one he’s done particularly well given the …

Continue reading 2012 Tuesday: Obama wants the election to be about a topic he doesn’t understand »

Facebook goes public today, listing shares on Nasdaq at $38 apiece; if you want to buy, trading of stock listed as “FB” commences at 11 a.m.

So, do you? Do you want to buy Facebook stock at that price?

On one hand, there is precedent for highly anticipated tech listings that soared and have not (to date) flamed out. Google of course comes to mind: The search-engine company went public in August 2004 at $85, more than doubled in price by year’s end, and has been trading lately in the $600s — more than seven times its IPO price.

Of course, Google has a way to make money, and lots of it. Facebook? Well, the numbers would indicate it’s at least as good a moneymaker as Google was circa 2004. But there was ominous news this week, when GM said it was pulling its paid advertisements on Facebook because it didn’t think they were effective.

Continue reading Poll Position: Is Facebook stock worth the asking price? »

Some cheery news from Bloomberg to start your week: The banks that were “too big to fail” just four years ago are now even bigger than before:

Five banks — JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did in 2007 with the Fed-assisted rescue of Bear Stearns Cos. by JPMorgan and in 2008 with Citigroup and Bank of America after the Lehman Brothers bankruptcy, the largest in U.S. history.

“Market participants believe that nothing has changed, that …

Continue reading From ‘too big to fail’ to even bigger in just four years »

It’s bad enough to watch bailed-out company after bailed-out company spend millions and millions of dollars for the most expensive TV advertising slots of the year. There were all those Chevy (GM) slots, as well as at least two for General Electric, whose financial arm survived 2008 in part because it received a federal guarantee of its debt valued at some $139 billion. At least GE didn’t cash in on that guarantee; GM is still part-owned by Uncle Sam and owes taxpayers some $25 billion according to a recent inspector general’s report. GM’s former financing arm, now known as Ally Financial, remains majority-owned by the federal government and owes about $12 billion.

But the halftime Chrysler commercial starring Clint Eastwood, describing America as being in its own “halftime,” was just overtly politicized. After all, what else could “halftime” have meant, in the year 2012, than halfway through the eight years Barack Obama would be president if re-elected this fall? I’m fairly …

Continue reading I hope your like your Super Bowl with a side of politics »

(Note: Apologies for the late Poll Position today, but I wanted the ethics reform post to be online all day.)

This week has seen one of the more amazing attack lines in any GOP presidential primary. It seems some Republican candidates think Mitt Romney was too much of a capitalist.

Well, that’s not exactly how they’d put it. Texas Gov. Rick Perry (yes, he’s still running, despite barely beating the combination of Buddy Roemer and “total write-ins” in New Hampshire) refers to Romney’s career at Bain Capital as “vulture capitalism,” not venture capitalism. A so-called Super PAC supporting Newt Gingrich produced a 28-minute video titled “When Mitt Romney Came to Town” about a company in South Carolina — the site of the next primary — bought by Bain.

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Their attacks have been lauded by some on the right, …

Continue reading Poll Position: Who’s right about Romney’s time at Bain? »

If your blood hasn’t boiled in awhile, you must have missed the AJC story earlier this week about Range Fuels — a multimillion-dollar lesson in why taxpayers usually lose when billionaires with hare-brained schemes sidle up to politicians.

It’s been about a year since Range Fuels shut down its facility in Soperton, the South Georgia town where it had promised to turn our state into a world leader in turning wood into ethanol. There was just one problem: Range didn’t actually know how to turn wood into ethanol. The resulting failure cost taxpayers $64 million in federal loan guarantees and another $6 million in state funds.

This past week, the AJC’s Dan Chapman reported the sale of Range for a mere $5.1 million. The lucky bargain shopper? A New Zealand firm bankrolled by Vinod Khosla — the former tech executive who just happens to have been one of the main backers of Range.

Too bad Georgia didn’t invest in one of Khosla’s other ethanol endeavors: In its 2011 ranking of the …

Continue reading When tycoons and politicians do business, taxpayers lose »

As someone who believes in competition and challenges to the entrenched ways of doing things, I think this is a great idea (from the Wall Street Journal):

By virtue of its size, business model and popularity, Facebook is the rare company that doesn’t need Wall Street to go public. It should press home the advantage and blaze a trail for others to follow.

Mr. Zuckerberg’s has two options: a traditional [initial public offering], in which banks distribute shares to investors in exchange for a percentage of total proceeds; and the little-used “Dutch auction” that cuts out the Wall Street middlemen by making the allocation of shares dependent on prices bid by each investor.

The biggest difference between the two systems, apart from the lower fees paid by companies in auctions, is that when IPOs go Dutch, banks don’t choose who gets shares, giving all investors a fair shake and avoiding potential conflicts of interests.

This is particularly important for “hot” IPOs, like Facebook. …

Continue reading An anti-Wall Street idea that I like »