pelcmarek's blog

And the winner is .....

pelcmarek — Fri, 21 Nov 2008 06:41:39 -0500

Dow Jones index made from 1929-1954 0 points (0%)!
Dow Jones index made from 1960-1982 only 130 points (19%) !
Dow Jones index made from 1929-1982 479 points.(130%)!

Strategy where you can get 80% drawdown is not a good strategy for asset management. David Einhorn and Eric Sprott understood it. At least they set up long/short strategy.

After reading value books I got a feeling only micro matters. From Eric Sprott I learned macro matters. From Manuel Asensio and Steve Cohen I understood everything matters.

Jim Simmons would say:you think you can beat the market- let me check.

After what I saw there is not much alpha out there......

Jim Cramer- and you thought this guy is a loser . This guy is smartest from all.You make money faster when you talk about them than when you trade them.Hillarious!

Bill Miller -made billions on fees from other players (LMVTX).If you gave him money 15 years ago you still didn't make a penny.(I love the yacht he bought last year)

Mohnish Pabrai - his philosophy: low risk, high uncertainity is simply wonderful. Even better is investing like Buffett in early years. What went wrong? He was buying dips when average PE of S&P was around 25. It can go to 9!!!
He lost 80% this year. Don't worry it will come up.

Ken Heebner- this guy is up to something I can assure you. If you invested in his fund 7 years ago you still didn't make a penny. (CGMFX) He lost 50% this year. PS:I always knew the best thing to do is to flip stocks around. The more you flip the bigger is the fun.

Eric Sprott - first took away his performance from front page,now he is showing performance only as at Oct 31,2008. I wonder why

I'd compare stock pickers to astrologers . . . But I don't want to bad-mouth the astrologers.
Eugene Fama in How the Really Smart Money Invests from Fortune (7/6/98)

To cheer you up here is video with Michael Moore on car makers. 5:05 - 6:50 Incredible !!!

http://www.youtube.com/watch?v=j0bbOZ-nkJs

Porsche made $8.7b from VW option trades

pelcmarek — Sun, 09 Nov 2008 18:15:50 -0500

Porsche has fuelled the controversy over its stake building at rival Volkswagen by revealing it had earned eight times as much from its VW option trades than from actually selling cars.

The company said it made 6.83 billion euros ($8.7 billion) from trading in VW options, plus another 1 billion euros from the rising value of its Volkswagen stake, in the fiscal year that ended in July.

This helped Porsche to increase its pre-tax profit by 46 per cent to 8.57 billion euros, even exceeding the company's revenues.

Analysts dubbed Porsche a "hedge fund", and even one of the most successful ones in the world, at a time when other carmakers are struggling with a sharp downturn.

"If they now increase their stake [in VW] to more than 50 per cent and cash in the remaining 25 per cent of the options, they would make hedge funds and banks pay for the whole takeover," said Arndt Ellinghorst, analyst at Credit Suisse.

Klaus Kaldemorgen, head of DWS, one of Germany's largest institutional investors, alleged that Porsche had used massive information asymmetries at the expense of other investors.

"We vehemently reject the accusation of share price manipulation," Porsche said in a statement last week.

David Einhorn

pelcmarek — Fri, 07 Nov 2008 03:41:16 -0500

We appreciate everyone taking the time to join us for the call this morning. As you know, Greenlight Re’s investment portfolio is managed by DME Advisors LP, an affiliate of Greenlight Capital. Greenlight Re’s third quarter investment portfolio results of -15.9% was the worst quarterly performance result in Greenlight Re’s history. We are extremely disappointed with this result.

We have been cautious about the environment since last July. A more conservative net long portfolio exposure compared to our historical positioning helped us weather the financial crisis in the last half of 2007 and the first half of 2008. By adding additional short exposure, particularly in the financial sector, which was most directly responsible for the credit crisis, we believed that we positioned the portfolio to preserve capital, should the financial markets deteriorate further. We were wrong.

Through the third quarter, Greenlight Re’s portfolio was approximately 17% net long. This is the lowest net long quarterly waiting we’ve maintained. We made the mistake of thinking that our significant short portfolio would protect a fairly fully invested long portfolio, that we estimated to be attractive and cheap. In hindsight, we should have been more conservatively positioned from a gross invested standpoint and we took measures to bring down overall exposures in September, as global financial markets deteriorated further.

In September, the US Government took an unprecedented action by banning the short selling of approximately a thousand financial firms, in order to prevent the systemic collapse of the financial system. The stocks that Greenlight Re was short withstood the center of the problem from financial industry are the same stocks that investors believed to be direct beneficiaries of government actions.

While the short selling ban failed to prevent a decline in the overall market, it did support the short term share prices to certain companies. During the quarter, our long portfolio underperformed the S&P, which declined about 9%, while our short portfolio only made a minimal gain. Our long portfolio suffered from analytical errors and a couple of names, and from the wide spread deleveraging occurring across the globe. Greenlight Re generally does not employ leverage in its investment portfolio because we want to be able to withstand systemic shock and not be put into a position to be forced to sell longs or (inaudible 00:06:23) shorts that we believe to be long term attractive investments because of temporary dislocations.

We entered our October with a small positive net exposure. Despite this positioning, our investment portfolio sustained a further loss of 0.7% during the month. The biggest contributor to the loss was our long position in Helux Energy Solutions, an energy company that was hurt by both declining oil prices and the recent hurricanes in the Gulf of Mexico.

The second biggest loss came from a relatively small position we held in the Porsche Stock, whereby we were long Porsche stock and short in Porsche’s ownership in Volkswagon stock. As has been widely reported, both Heiman shares appreciated over 350% in two days after Porsche announced that it cornered the market in Volkswagon shares and invited short sellers to “close their positions unhurriedly and without bigger risks.” Even though this was not a large position, a move of this magnitude did create an outside loss.

I’d like to talk a bit about how Greenlight Re’s portfolio is positioned today and where we stand going forward. Our portfolio is more net long than at the beginning of October. As Greenlight Re has been a net buyer in the global equity market’s collapse in the first half of October, while our short exposure decreased at the same time. We remain long cash-flow positive companies with generally unlevered balance sheets that we believe have already priced at a severe downturn.

We continue to be short companies that we believe will be challenged given the real and present headwinds our economy faces today. Mainly we continue to be short large financial institutions with levered balance sheets, thought to be the best of brief companies that are being severely impacted by the contraction of credit. We are also short companies with optimistic assumptions that are exposed to a weakened consumer. There are plenty of opportunities to evaluate and we think that there will be an expanded opportunity set in the future, although we currently remain in a conservative posture and plan to be patiently opportunistic.

The most important ongoing concern at Greenlight Re is preservation of capital in generating positive risk adjusted returns. Although our investment portfolio hasn’t accomplished this goal recently, we believe our investment approach and discipline will allow us to generate positive risk adjusted returns to our shareholders in the long term.

On the underwriting side, we are excited about the current changes in the market. We believe that the price of risk has increased everywhere, including in the reinsurance industry. Greenlight Re was built specifically to the opportunistically right business and markets where demand for reinsurance greatly exceeds supply. We believe that given our conservative underwriting approach to date, we have the capacity and the expertise to take advantage of any dislocations arising in the market.

Now, I’d like to turn the call over to Bart to discuss Greenlight Re’s underwriting portfolio, in particular, a look forward into 2009.

ABSOLUTE RETURN AWARDS 2008 - FINAL NOMINATIONS

pelcmarek — Thu, 06 Nov 2008 18:55:33 -0500

U.S EQUITY
Pershing Square International
Sprott Hedge Fund
Zweig-DiMenna International

GLOBAL EQUITY
Glenrock Global Partners
Goshen Global Equity
Passport I
Viking Global Equities III

EQUITY SECTOR FUNDS
BlackRock Health Sciences
FrontPoint Financial Horizons
Passport Materials
Seligman Health Spectrum

SMALL CAP EQUITY
Harvest Small Cap Partners
Rivanna Partners
Whitebox Intermarket
YA Global Investments

EMERGING MARKET EQUITY
Claritas Hedge 30
HG Green
JGP Max FIM
Polo Fund

EQUITY MARKET NEUTRAL & QUANTITATIVE STRATEGIES
GMO Tactical Opportunities
Invesco Market Neutral Cash
New Castle Market Neutral

ARBITRAGE & CONVERTIBLES
Capstone Volatility
Paulson Enhanced
Titan Global Return
Waterstone Market Neutral

EVENT DRIVEN
Duma Global Opportunity
King Street Capital
Paulson Advantage Plus

GLOBAL MACRO
Balestra Capital Partners
Clarium
FX Concepts Global Currency
Galtere International
MLM Macro – Peak Partners
QFS Global Macro

MULTISTRATEGY
Atlas Global
Carlson Capital Double Black Diamond
D.E. Shaw Composite
Investcorp Interlachen Multi-Strategy
Millennium International
Platinum Partners Value Arbitrage

MANAGED FUTURES
Crabel Fund
Graham Global
Quantitative Global
Roy G. Niederhoffer Diversified
Roy G. Niederhoffer Negative Correlation
Tudor Tensor
Welton Directional

FIXED INCOME & MORTGAGE-BACKED SECURITIES
Alphadyne International
MKP Opportunity
Moore Global Fixed Income
SPM Structured Servicing Holdings

HIGH YIELD & EMERGING MARKET DEBT
Brevet Capital Special Opportunities
Lazard Emerging Income
Quantek Opportunity
Whitebox Hedged High Yield

DISTRESSED SECURITIES
Harbinger Capital Partners Offshore
Paulson Credit Opportunities
Perella Weinberg Partners Xerion Fund

NEW FUND OF THE YEAR
Brevet Capital Special Opportunities
Capstone Volatility
Global Secured Capital
JGP Max FIM
Laurus Capital Valens
Tokum Offshore

LONG TERM PERFORMANCE
Carlson Capital Double Black Diamond
Caxton Global Investment
Cerberus International
Fairfield Sentry
Kingate Global
King Street Capital
Millennium International

MANAGEMENT FIRM OF THE YEAR
BlackRock
Moore Capital
Paulson & Co.
Sprott Asset Management, Whitebox Advisors

Stock Market Superstars: Secrets of Canada's Top Stock Pickers

pelcmarek — Tue, 04 Nov 2008 03:16:06 -0500

book by Bob Thompson

The stars

Normand Lamarche (Front Street Capital), Tim McElvaine (McElvaine Investment Management), Randall Abramson (Trapeze Asset Management), Allan Jacobs (Sprott Asset Management), John Thiessen (Vertex One Asset Management), Wayne Deans (DeansKnight Capital Management), Irwin Michael (I.A. Michael Investment Council Ltd.), Peter Puccetti (Goodwood Asset Management), Rohit Sehgal (Dynamic Funds), Tom Stanley (Resolute Funds), Frank Mersch (Front Street Capital), Eric Sprott (Sprott Asset Management)

Tim McElvaine:         http://www.mcelvaine.com/
Randall Abramson:   www.trapezeasset.com
John Thiessen:        www.vertexone.com
Wayne Deans:         www.deansknight.com
Irwin Michael:          www.abcfunds.com
Peter Puccetti:         www.goodwoodfunds.com
Rohit Sehgal:          www.dynamic.ca
Tom Stanley:          www.resolutefunds.com
Frank Mersch:         www.frontstreetcapital.com
Normand Lamarche
Eric Sprott:              www.sprott.com

Allan Jacobs

It's always nice to compare them to pure long/short index:
www.casamhedge.com

PS: I think these links are incredible source. You have there performance,reports,commentary etc.

Please, tell me what you think !

pelcmarek — Tue, 21 Oct 2008 20:00:12 -0400

First here are ETF symbols that are valid on finance.yahoo.com:

XIC.TO – tracks the S&P/TSX Composite Total Return Index

XIU.TO – tracks the S&P/TSX 60 Total Return Index

XMD.TO – tracks the S&P/TSX MidCap Index

XCS.TO – tracks the S&P/TSX SmallCap Index

Now here are Year To Date results of Eric Sprott funds according to his website:

Sprott Canadian
Equity Fund (1997) Series A                 -41.70%

Sprott Gold and
Precious Minerals
Fund (2001)
Series A                                              -57.35%

Sprott Energy
Fund (2004)
Series A                                              -50.30%

Sprott Growth
Fund (2006)
Series A                                              -61.88%

Sprott Small
Cap Equity Fund (2007)
Series A                                               -42.02%
...................................................................................
Sprott Opportunities
Hedge Fund LP* (2004)
Series A                                          +0.85%

I like Eric Sprott and his team. So, why I'm posting it?

This question came to my mind: What would be Warren Buffett's results if he was fully invested from 1969-1974 and couldn't add to his positions?

This will sound obvious,but is not.There are 2 weapons you can use: you can be long or you can be fully in cash. If you check long only brilliant value portfolio managers (FAIRX) you will see that during downturn their portfolio don't move down so much (people love great businesses) and during uptrend their portfolios move same as index,but less than growth high flyers,at the end their results are much better than that of index.

To show you how this advantage works imagine that one day Eric Sprott funds will come back to black (roughly 100% up) and then they will start moving again.The people that invested in hedge fund will be up 100% already !!! Recently Buffett announced he was fully in cash and now started moving to stocks.It means he is using his cash weapon quite effectively. Especially when indexes are coming to their historic low P/E=9 from their historic high P/E=30.

I have last question: if indexes drop another 20% will investors in long only funds recover sooner than in 12 years (1.11^12=3.4)?

Only 10 rounds remain !

pelcmarek — Mon, 20 Oct 2008 20:41:52 -0400

I always knew it, Rex.

Every year you buy 10% of all shares.

The lower is the price of shares, the better. ( for the same amount you buy more shares). So what you need,actually what you wish and pray for is market crash.If this happens you will start buying shares like crazy,spreading bad news and buying,buying and buying!

You pray for depression! Anything that would allow you to buy more. The lower it falls the faster you will buy it back !
Your biggest enemy is the price going up and stupid shareholders trying to push you into nonsense aquisitions.

Before they realise it's there last 10M shares.

After 10 years you and your management colleagues own 60%,Rockefeller family owns 10% of all shares and then you take it private! Your shares are deposit and the rest you can borrow.

You won! Checkmate!

I hope you will do it Rex. I will have a free ride on your tail,mate !

PS: Rex Tillerson is CEO of Exxon Mobile, Rockefeller family owns 332 000 shares of XOM and XOM buys 500M of its shares every year.

The 11% Solution

pelcmarek — Sat, 18 Oct 2008 20:39:09 -0400

By ADAM BARTH, Barron's, JULY 11, 2005

The Dow has averaged an 11% return on equity over nearly 75 years. Everything else – earnings included; is just noise.

Examine the Dow's annual return on equity for each 20-year period since 1920 (that is, 1920 through 1939, 1921 through 1940, and so on): Average earnings as a function of book value barely varies in the slightest, and has remained basically immune to inflation, wars, massive changes in the tax code or any other external factor.

For the 34 consecutive 20-year stretches between 1934-1953 and 1967-1986, the return fell in an incredibly narrow range of 10.5% to 11.6% -- or an average of around 11%. Furthermore, the Dow's book-value growth rate has remained near its 4.8% historical average from 1920 to 2003 for every 20-year period on record.

Finding the Dow's normalized earnings in any given year is as simple as multiplying 11% by the Dow's book value at the time. These earnings will grow at a little under 5% per year -- the Dow's steady and predictable 20-year book-value expansion rate.

While earnings gyrate from year to year, the Dow's earnings over the coming 20 years or any 20 years is virtually preordained.

The 11% solution demonstrates why this is so. Of the Dow's 11% ROE, 5% has consistently been retained -- thus allowing the Dow's 5% earnings-growth rate. The remaining 6% has been free cash flow available for distribution to shareholders in the form of dividends and stock buybacks. As such, the Dow is a perpetuity that can be easily valued by dividing its current free cash flow (6% of current book value) by its expected rate of return minus its long-term growth rate (9% minus 5%).

With the Dow's current book value a little under 3000, its normalized free cash flow is roughly 180. Dividing 180 by an expected return of 9% minus free cash flow growth of 5% (.09 - .05) yields a valuation for the Dow of 4500, less than half of its current market valuation. To justify a Dow value of 10,500, one has to lower the future expected investment return for the Dow to 6.7%.

From 1920 to 2003, Moody's Aaa corporate-bond yield averaged 5.9%. Recently, Barron's Best Grade Index has shown a current yield of 5.24% for top-grade corporate bonds. Assuming a forward rate of return of 6.7% for the Dow would imply an equity-risk premium of just 0.8% to 1.5%.

A normalized 20 P/E ratio for the Dow would imply a normalized 18% return on equity (5% earnings yield x 3.6 book value multiple = 18%). While the Dow averaged an 18% return on equity over the prior decade, assuming a lasting return on equity anywhere near this figure is absurd, given the historical record.

Putting history aside, basic logic alone dictates that a sustained 18% ROE is impossible. A return of this magnitude would mean that American business as a whole is capable of lasting, monopoly-type profits. The truth is the exact opposite: Big Business' profit growth has consistently trailed broad economic expansion, with nominal GDP growth increasing at a 7% rate and Dow profit growth lagging behind, at near 5%, for nearly every 20-year period on record.

Another great short: Chesapeake Energy Corp. (CHK)

pelcmarek — Fri, 17 Oct 2008 19:01:39 -0400

Company went almost bankrupt in 1999 and IMHO will go bankrupt again.

I have a great receipt how to make money: take loads of debt,leverage the company pump it went it goes up and dump it went things look bad.Who lose?

Shareholders and big time! Who earns management !

Last week Aubrey K. McClendon, the CEO of Chesapeake Energy Corporation (NYSE:CHK), disclosed that he was forced to sell almost his entire holdings of company stock due to a margin call from lenders. The stock sale took three days to complete. "These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis," McClendon said in a company press release. "In no way do these sales reflect my view of the company's financial position or my view of Chesapeake’s future performance potential

So,so funny! I trust him completely CEO got margin call on shares of his own company and guess what sold it all !

Now comes the best part: company has 14,000,000,000 debt and no cash ! Fixed cost stayed the same and price of natural gas went (UNG) went from 63 to 30 in 3 months.

If you want to know what happened to another natural gas star check CMZ they are down 90%!

Price is now 20.47!

39% is due in less than 1 year !

pelcmarek — Wed, 15 Oct 2008 20:43:00 -0400

Walter Wriston, then chairman of Citigroup, opined that: "Countries don't go broke". In 1982, shortly after this statement, Mexico, Brazil and Argentina defaulted inflicting near mortal losses on Citibank.

US national debt is also shortening in maturity. In December 2000, the average length of US public debt held by private investors was 70 months. As at March 2008, the average length had shortened to 53 months (a decline of 24%). 71% of this debt is due in less than 5 years; 39% is due in less than 1 year. In the Clinton/ Rubin years, the Treasury stopped issuing 30 year bonds (the decision was reversed by the Bush administration). The ostensible rationale was that projected US budget surpluses would allow the government debt to be retired. In reality, shorter dated bonds took advantage of lower shorter interest rates to reduce interest cost and boost surpluses (this was the US government’s version of the carry trade). The US must now "roll over" significant amounts of debt in the coming years.

Warren Buffett in his 2006 annual letter to shareholders observed: "Foreigners now earn more on their U.S. investments than we do on our investments abroad … In effect, we’ve used up our bank account and turned to our credit card. And, like everyone who gets in hock, the U.S. will now experience ‘reverse compounding’ as we pay ever-increasing amounts of interest on interest. …. no matter how rich you are, borrowing on top of borrowing is not a great long-term financial plan. I believe that at some point in the future, U.S. workers and voters will find this annual 'tribute' (of interest payment on the debt) so onerous that there will be a severe political backlash … How that will play out in markets is impossible to predict – but to expect a 'soft landing' seems like wishful thinking."

Municipal bond market

Many closed-end municipal bond funds are down 20% in a month, and many individual municipal bonds have also had haircuts in price.

The town of East Hampton, playground of the rich and pampered, is broke. How broke? Well, the town is likely to end the year with a $12 million deficit - and in recent weeks, it had only $900 in its bank account and barely made its payroll.

California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

Plans by several state and local governments to borrow in recent days have been upended by the credit freeze. New Mexico was forced to put off a $500-million bond sale, Massachusetts had to pull the plug halfway into a $400-million offering, and Maine is considering canceling road projects that were to be funded with bonds.

Eye of the Tiger

pelcmarek — Wed, 15 Oct 2008 06:11:45 -0400

by Martin Hutchinson

On 23rd February, Fed Chairman Alan Greenspan appeared before Congress in his biannual Humphrey-Hawkins testimony and announced that he had finished raising short term rates; his next move would be towards easing. What he didn’t tell Congress was that the policy of easier money would be in force for the next 13 years.

The stock market took off in late February 1995 into the stratosphere, and has never looked back.

In the very long run, the price of stocks should move approximately in line with the rise in nominal GDP. If stock prices move far out of line with nominal GDP, the ratio of stock prices to GDP increases to a level at which the stock market is clearly overvalued, and eventually it corrects itself. In early 1995, the stock market was if anything rather high; it was 40% above the 1987 peak that had seemed at the time an unsustainable bubble and had led to a famous one-day crash. Thus, inflating February 1995’s Dow Jones Industrial Index of just under 4,000 by the 95% increase in nominal GDP since 1995 gives a current “rather high” stock price guideline of Dow 7,800.

Most important, the long-term value of real returns on holdings of US common stocks will reassert itself; if you buy a broad portfolio of stocks at Dow 7,800 and hold it for a decade or more, it will on average return you around 8% or so in real terms. That comforting equation is definitely untrue for those deluded optimists who brought stocks at around the twin peaks of 2000 or 2007; they may well not see a positive real return on their money on a consistent basis until well into the 2020s or even the 2030s.

7,800 is a reasonable estimate for a “midpoint” of where stock prices should be. To see where a “low” might take us, we should perform the same exercise for the growth in nominal GDP since the Dow’s low of 776 in mid-1982. Since that date, nominal GDP has risen by 340%, so an equivalent of the 1982 stock price low would be 3,421 on the Dow. That gives a very pessimistic outlook for the future Dow trend from a current level that is still well over twice that.

Short nr.8

pelcmarek — Tue, 14 Oct 2008 18:57:07 -0400

Bill Miller owned shares worth billions according to report from 30/6/2008.If the shares go where they were in 2001 he will make BIG,BIG LOSS. IMHO if this happens his company will go bankrupt.
(of course only if he still holds shares in this company)

There are several reasons why I think this company is a good short:

1. current price of shares assumes their revenues can increase by $35,000,000,000 in 5 years ! This is highly unlikely!

2.consumer willingness to spend has deteriorated broadly

3.company just got a downgrade

4.investors are able to find more attractive opportunities after current fall and will close positions where they have profit

Interview with Marc Faber !

pelcmarek — Mon, 13 Oct 2008 20:10:50 -0400

It is also assumed that the worst of the financial crisis is over, but that is just an assumption.

I'd just like to remind you when the market crashed in 1929 ahead of the Depression between November '29 and the summer of 1930 the market rallied 50 per cent before collapsing again by 85 per cent and before having the greatest depression ever.

The US doesn't produce anything, it consumes. So if consumption goes down in the US, Okay, Americans become a bit slimmer. But the translation mechanism goes then into the producers for America. Notably, China and other Asian countries that then have falling industrial production and diminishing exports to the United States. And, therefore, their demand for raw material goes down and so the Asian economies are like a warrant on the US economy.

I'd like to point out in the US we have now an additional problem coming out. Commercial real estate, and then rising unemployment, rising default rate and globally, we have the credit default swap that is still a time bomb and the whole derivatives market, that is another time bomb.

Obviously, if the Government bails out the entire system, the credit of the Government diminishes and in my opinion Treasury bonds in the US should already be rated as junk bonds. I'm sure the US Government will eventually go bankrupt. Maybe not tomorrow, but as far as the eye can see, we will have deficits in the US Government, deficits of more than $1 trillion annually.

It is very difficult to call the bottom, but I think these things take time and if you look at Japan, we peaked out in 1989 on the Nikkei at 39,000. We're now at 9,000 or so. So it can take a very long time and I think this crisis will be a crisis, a milestone in economic history.

The way people used to ask, "Are you born before 1929 or after 1929, or before the World War II, or after World War II?" People will ask in future, "Were you born before 2007, or after 2007?"

GM shares rose 33% today !

pelcmarek — Mon, 13 Oct 2008 19:24:58 -0400

U.S. auto sales for September sank to a 15-year low, with automakers reporting that the financial crisis had made consumers less willing to make big purchases and left many remaining car shoppers unable to secure financing.

GMAC, the finance company affiliated with General Motors Corp said on Monday it would pull back from riskier and longer-term auto lending in response to tight credit conditions that has limited its access to funds.

GMAC also said it has increased the rate it charges car dealers for providing standard auto financing by 75 basis points.

GM alone will burn through about $10 billion next year. GM needs minimum cash balances of $14 billion just to keep creditors away, so if it burns through money that quickly, the car maker will need to find more money just as many doors are closing. Part of the problem is the cost of credit for the automakers. GM, for instance, has a heavy debt balance of $45 billion, and servicing that debt costs a fortune.

GM has 266,000 employees worldwide, including about 139,000 in North America. GM provides health-care benefits to more than a million Americans.

GM shares are down 90 percent from their 52-week high.

It seems this stock is cheap!

Yamato Life Files for Bankruptcy

pelcmarek — Fri, 10 Oct 2008 03:09:37 -0400

98- year-old Japanese insurer, filed for court protection from creditors in the nation's first bankruptcy in the industry in seven years, with debts exceeding assets by 11.5 billion yen .

The benchmark Nikkei 225 index nose-dived 952.58 points to 9,203.32, a five-year low. That was its third-biggest drop in percentage terms and the largest plunge since October 1987.