Amazon's New Kindle the Newspaper Savior?

Hmm, it sure makes some serious sense that the new "Big Kindle" aka the Kindle DX might be able to save millions of dollars for the newspaper industry.

"Newspapers have been an absolute bestseller on Kindle," Bezos said. "People love waking up in the morning to find that their New York Times, their Washington Post, their Wall Street Journal have been 'automagically' delivered overnight. They like the fact that when they travel their subscription follows them around."

The idea of the Wall Street Journal delivered to a mobile device instead of having to be printed on a piece of paper does sound like a game changer. Suddenly the newspaper company can close all of their massive printing presses, get rid of their trucks, and a lay off all their newsboys. You can just pay for a Kindle subscription and cut out all of the middle man.

The newspaper industry might even be able to buff up their staff because content will be the great differentiator and not manufacturing costs. They might even be similar to software companies with their fat margins since most of the newspaper companys' expensive overhead can be stripped away.

Of course Amazon might be able to get a cut of each paper downloaded as well as selling the device. The only thing they need to do is drop the price to something a bit more reasonable. I think $500 for an e-reader is just too much but $200 sounds just about right. In any case I think Amazon might be on the cusp of a truly Apple-like spurt of growth as the Kindle gets more and more ubiquitous.

Is Obama Now the Tax Raider-in-Chief?

Another day another bungled plan that will do more harm then good.

In promoting its new global tax raid, the White House fingered the Netherlands, which it lumped with Ireland and Bermuda as "small, low-tax countries" that supposedly account for an outsize share of reported foreign profits of U.S. firms. The Dutch corporate tax rate is 25.5% -- which isn't even all that low by current European standards. And the U.S. is the largest foreign investor in that "small, low-tax country," according to the Dutch Embassy. Perhaps reducing American investment there and slamming the Netherlands as a tax haven is Mr. Obama's way of reaching out to friends and allies.

But the Netherlands won't be the only country hurt. The explicit goal of this plan is to reduce the incentive for U.S. companies to invest abroad, which Mr. Obama derisively calls "shipping jobs overseas." Foreign companies may relish the loss of U.S. corporate competitiveness that his proposal will bring in the short term. But in the long term, reducing U.S. investment globally will hurt everyone. And that investment is a two-way street -- the Netherlands is also the fourth-largest foreign investor in the U.S.

Ending the foreign tax deferral plan in place is a dagger aimed at the heart of US tech companies. Some of these companies make more then half of their revenues outside of the US. So if they were taxed on that outrageous US tax rate of 39% then suddenly Ireland and their 12% tax rate looks like a great place to move to.

So you might just see quite a few Silicon Valley jobs move right out of the US. So this plan is basically antigrowth, will destroy jobs and, might not even get as money in taxes as they expect.

But even as a revenue raiser, this is likely to fail. Fewer companies will keep their headquarters in the U.S., especially small or mid-sized firms that can slip away without becoming a political target. Those companies that can't flee will sooner or later demand relief from Congress, which will be happy to create even more loopholes.

My guess is that California liberals will fight this measure tooth-and-nail on behalf of their tech constituencies like Google, HP, Amazon, and Dell. There is absolutely 0% chance that this will even get out of committee let alone be put up to vote.

Obama Proposes Budget Cut of One Half of One Percent

It seems that Obama wants to be knows as some kind of budget cutter by proposing to slash a whopping $17 billion from the $3.6 trillion budget.

Compared with the total $3.6 trillion spending plan for 2010, the proposed trims amount to one-half of 1%. Half the cuts would come from defense, especially Pentagon weapons programs already spelled out by Defense Secretary Robert Gates, such as trimming back the fleet of advanced F-22 fighter planes. The other half would come from programs that have strong support among progressive activists who cheered Mr. Obama's election. Programs targeted for elimination or consolidation include education and housing programs that Democratic aides said will have fierce advocates among traditionally Democratic constituencies.

It should have been $170 billion worth of cuts instead of only $17 billion. As it is now this amounts to just a pittance that allows him to pay lip service to cutting his own budget. Maybe he can cut out some of those placeholders and down payments from that budget so he can make some real headway.

Cisco Beats on Revenue and Earnings

I think the drop off in computer spending is not as bad as some analysts feared. At least routers and switches still seem kind of popular. Also Cisco was able to cut costs to $3.6 billion from $4.1 billion which means they are cutting some of the fat of previous years.

The computer networking giant said it earned 30 cents a share in its fiscal third quarter, compared with a per-share profit of 38 cents a share in the same period last year.

Analsyts polled by Thomson Reuters predicted that Cisco would earn 25 cents a share in the last quarter on sales of $8.072 billion, on average.

Revenue in the most recent quarter reached $8.16 billion for Cisco, against $9.791 billion last year.

Obama went "Al Capone" on Chrysler's Senior Debtholders?"

The reports are coming in fast and furious of Obama attempting to strong-arm the senior creditors in the Chrysler deal.

Although the focus has so been on allegations that the White House threatened Perella Weinberg, sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.

Now this part should scare anyone dealing with the White House in the future.

One participant in negotiations said that the administration's tactic was to present what one described as a "madman theory of the presidency" in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.

I guess that is the Chicago way to either act like an organized crime figure or a 5 year old kid. Forget upholding the constitution or the rule of law that secured creditors get their money back before any unsecured creditors. Barack "the Godfather" Obama gets what he wants or he will destroy you!

I can just picture Obama dressed in a white suit with dark glasses and a big stogie like Al Capone in the Untouchables. I guess Perella Weinberg gets to be that guy that gets hit in the head with a baseball bat. This also sets a terrible precedent for any future dealing with the White House:

Imagine telling your bank that you’ve decided to pay off your mortgage in full, but you’re only going to give them 35 cents on the dollar, take it or leave it. Then when they protest, you lose patience, walk out of the room, and go on national television to say that your bank is a bad actor, they’ve exhausted your patience, and now they’ll have to settle for a big fat zero. And by the way, maybe the White House press corps will start spreading nasty rumors about them.

The bad part is the hedge funds would have taken 50 cents on the dollar if Obama didn't go all Capone on them and storm out of the room. This should tell you in no uncertain terms that any company that has TARP funds is now subject to a Bully Pulpit that will actually bully you.

If You Are a Lawyer Do Not Consult with the Government

It seems that the lawyers that okayed the harsh interrogation orders are going to be made the scapegoats according to the Justice Department.

Officials conducting the internal Justice Department inquiry into the lawyers who wrote those memos have recommended referring two of the three lawyers — John Yoo and Jay Bybee — to state bar associations for possible disciplinary action, according to a person familiar with the inquiry. The person, who spoke on condition of anonymity, was not authorized to discuss the inquiry.

I'm not sure why the third lawyer is exempt from the witch hunt but I guess he didn't play such an important role. In any case if this should tell all lawyers that if the Justice Department wants you to draft up some legal memos then you better say "well I'm pretty swamped, I just can't do it." After all it could get your disbarred by a future administration looking to take a few heads.

Pakistan Enters a Critical Phase: Will Now Battle the Taliban

Well, the Taliban is now on the move because fhe truce has broken down between themselves and the government.

The collapse of a 3-month-old truce with the Taliban means Pakistan will now have to fight to regain control of the Swat Valley, testing the ability of its stretched military and the resolve of civilian leaders who until recently were insisting the insurgents could be partners in peace. The government feared the refugee exodus could reach 500,000.

Now we will see if the Pakistan's government will hold up or not. My money is on a military coup d'état in the next few weeks unless they are able to smash the Taliban quickly. If they run into any heavy resistance there will be a vote of no confidence followed by marital law. The part I fear though is that the Taliban will seize missile silos in the confusion. That will end any land battle in one fell swoop.

Did Obama Violate the Constitution in His Chrysler bankruptcy Bid?

It seems he might have run afoul of the 5th Amendment and Thomas Lauria is going to take him to task on behalf of the hedge funds.

Thomas Lauria, who accused the White House of threatening the creditors withn humiliation at the hands of the White House press corps, has filed a motion to halt the administration’s machinations on behalf of the UAW in the Chrysler bankruptcy. Lauria and his allies claim that the Obama administration has violated the Constitution in their bid to devalue the senior creditors’ holdings on behalf of junior creditors, and have some precedent to support the allegation.

The go on to site the case of Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 594 (1935) in their bid against the Treasury. Also, we get another charge of death threats over not agreeing with Obama. It's AIG all over again where the White House bullies people out of contractual obligations through the use of "naming names."

Chinese Stimulus Plan Actually Creating More Jobs then Ours?

It sure seems so according to this article.

I'd rather see money going to programs like the Chinese government's stimulus plan which, in part, gave $2.9 billion for a 13 percent purchase price subsidy on Liquid Crystal Display (LCD) TVs for its rural citizens -- which as I discussed on MarketPlace this week -- boosted demand enough to force Corning (GLW) to hire back 100 of the North Carolina LCD plant workers it had laid off.

We should have just gave the Chinese that $787 billion and had them think up ways of creating more jobs for Americans. The more I look at things the more I think that China is the new America. While the Red Dragon rises in the East the Socialist Eagle set in the west.

Obama Attempts to Close Tax Loopholes

I think there may be quite a bit of pushback on this issue from business groups.

The president said he wants to prevent U.S. companies from deferring tax payments by keeping profits in foreign countries rather than recording them at home and called for more transparency in bank accounts that Americans hold in notorious tax havens like the Cayman Islands.

I think this will be yet another thing that makes more US companies re-domicile in Switzerland or wherever. The more you tax these companies the better the cost-benefit analysis of moving your company headquarters looks. Too bad for the states that used to house these corporations because they will eventually need a bailout from all those lost state taxes.

Why China Does Not Want to See Pakistan Fail

The thing I love about the Internet is that there is potential for learning something new everyday. Like many Americans I am not a foreign policy newbie so this came as kind of a surprise to know that the Red Chinese have real stake in preventing a failed Pakistan.

China has invested heavily in the strategically important deep sea port of Gwadar in the Pakistani province of Baluchistan, which borders Afghanistan's unstable southeast. The port lies some 400 kilometres east of the Strait of Hormuz, through which 60 per cent of China's oil imports travel. It also provides China with a forward operating base from which to better project its naval power and ensure the safe passage of its seaborne energy shipments. A new rail line linking the Aynak copper mine with Gwadar is being considered, as is another linking Gwadar with China's western line in Xinjiang province.

The Aynak copper mine in Afghanistan is the largest untapped copper mine in the world and the Chinese have a claim on it. As most people know the Chinese are the biggest user of copper in the world so a stable Afghanistan is now very important to their interests.

Also a stable Pakistan would allow the Chinese to build that railroad that links Gwadar and China unmolested by militants nutjobs or failing governments. This railroad would save the Chinese billions in shipping costs because it would be so easy to move that Middle Eastern oil out to Gwadar and then stick it on a train destined for south west China instead of going all the way around.

Also the idea that the Chinese would have a blue water port right near the Persian Gulf should be an important strategic consideration as well. The Chinese could probably get a naval port out of any long term Pakistan/China military pact.

The Chinese could then use this port to watch their shipping and project their power into this volatile region to check American dominance there. They could even put military pressure on Iran if they threatened to close the Strait of Hormuz for whatever reason. I really marvel at how well the Red Chinese play the Great Game.

The 50 Tools You Should Own

This is an interesting list of different tools you should own if you want to be a DIYer.

Man is “weak in himself, and of small stature,” wrote 19th-century essayist Thomas Carlyle. Yet, with tools, “the granite mountain melts into light dust before him, seas are his smooth highway, winds and fire his un­wearying steeds.” And this from a guy who never felt a 5800-rpm circular saw scream to life in his hand.

While much has changed since Carlyle’s day, one thing hasn’t: We need tools to build, repair and maintain the mechanical world in which we live. With these 50 tools, you’ll be ready for just about any project—whether it’s melting mountains or swapping out the kitchen sink.

Obama Is Not FDR but Ulysses S. Grant?

At least US News and World Report thinks so.

If anything, the financiers are more solidly in charge now than they were during George W. Bush's presidency, when the New York Times declared that "Government Sachs" was a reality. Today, such figures as Timothy Geithner, Lawrence Summers, and Steven Rattner are accelerating the Bush era's finance-favorable policies, piling bailout on top of bailout. Even nonfinancial policies are being drafted to serve Wall Street; the "cap-and-trade" greenhouse gas proposal, for example, would do more to boost the bottom line of neo-Enronesque pollution mongers than to reduce carbon dioxide.

Auto Sales at 30 Year Low

I guess people just like to drive their old cars rather then have to buy a new one.

Japan's Toyota Motor Corp posted the largest sales drop at 42 percent among major automakers in the U.S. market, followed by Nissan Motor Co Ltd at 38 percent.

Sales at U.S. automaker Ford Motor Co slid almost 32 percent last month, while sales General Motors Corp, which like Chrysler has been operating under federal supervision, fell 34 percent.

Honda Motor Co's sales were off 25 percent.

I think this may be a case of Japanese cars running too well. It is much easier to keep a Honda or a Toyota running for years then it is an American car. They break down less so it is easier to stretch them out for years instead of buying a new one. Plus I have to say there isn't very much difference between a 2003 Toyota Corolla and a 2009 Toyota Corolla.

Obama's Tax Credit Might Have to be Returned by Retirees and Families

Obama giveth but the IRS taketh away. It seems the "making work pay" tax cut for 95% of Americans might have to be returned by quite of those Americans.

It will come as a shock to two income families, some federal workers, retirees, and young people with more than one low paying job that they will be expected to give back some portion of that “extra” money that Obama claimed he was giving them come April 15, 2010.

So the people hit will be two income families where both spouses work. Which makes up just about 55% of all married couples. Also if you have two low paying jobs or are a teenager that is claimed on your parents taxes then you have to pay. So that hits most of the people that would actually benefit the most from an extra $400. It also hits about 20 million retirees as well:

Retirees who have federal income taxes withheld from pension benefits also are getting an income boost as a result of the new withholding tables. However, pension benefits are not earned income, so they don’t qualify for the tax credit. That money will have to paid back next year when tax returns are filed.

GM Bondholders Propose to trade Debt for Control of the Company

This sounds like a pretty good deal for the taxpayers and would save us having to loan the company even more money if it goes Chapter 11.

The ad hoc committee of GM bondholders said their plan would see them get 58% of the new company in return for debt forgiveness while saving U.S. taxpayers $10 billion in cash. The union health-care fund, based on the $20 billion in benefits owed, would own 41%.

So we have the union health-care fund as a stake holder and the bond holders in control of the company. That means the government does not have to nationalize yet another company and be forced to cover their warranties and other undesirable things. My money is on the Obama team rejecting this offer and low-balling the bondholders. If that is the case the bondholders should force the issue by declaring that they will force the company into Chapter 7 and receiving their money through liquidation.

Chrysler Files for Chapter 11: Non TARP lenders say no deal

I think these Non-TARP lenders did not want to be ripped off by the government so they forced Chrysler into Chapter 11.

On Thursday, a group of funds identifying themselves as 20 of Chrysler's "non-TARP lenders" released a statement saying they had been sidelined during negotiations between lenders and the government. The group, which said it holds $1 billion in Chrysler debt, complained that the four banks were "obviously conflicted" because they had accepted money from the government's Troubled Asset Relief Program while they had not gotten TARP money.

The group said its offer to the Treasury Department to reduce its claim to 40 percent was "flatly rejected or ignored."

Yup they did not want to go with that low-ball offer $2.25 billion in cash on their $6.9 billion in secured debt. I mean these guys have the legal rights to get back most of their money if the company goes into Chapter 11 so why shouldn't they take this deal? I mean they have shareholders who they have a fiduciary responsibility to. They should not have to take a low-ball offer and lose millions in principal.

In any case, the company is irreparably damaged and is now owned by like 5 different parties including the UAW. If I was Fiat I would walk away from the deal because you might end up with Darth Vader as a business partner. Whenever I think of any company involved with government money or ownership I hear this line from Empire: "I have altered the deal, pray I don't alter it any further."

Congress Passes Obama's Budget: Cap and Trade Thankfully Omitted

I guess the "down payment" for universal healthcare is now in the works. Wait until Americans have to wait months or years for needed surgery. Then Obama can blame doctors or insurance companies or some other scapegoat when that happens.

Wednesday's House and Senate votes to adopt the nonbinding budget blueprint were only a first step toward Obama's goal of providing health care coverage for all Americans. The budget plan for the fiscal year that begins Oct. 1 sets the parameters for subsequent tax and spending bills expected to boost clean energy programs and student aid and extend many of former President George W. Bush's tax cuts.

It seems the tax cut for 95% of Americans was left on the cutting room floor though. I hope no one got used to spending that $13 per paycheck worth of change that Obama threw our way.

As a result, Democrats opted against extending Obama's signature $400 tax cut for most workers beyond next year and cut $10 billion from his budget for non-defense programs. Also gone are revenues from Obama's "cap-and-trade" plan for curbing global warming by auctioning permits to emit greenhouse gases.

That last bit was enormously important because it would have levied a tax on 100% of Americans whenever they flipped a light switch or filled up their car with gas. I hope someone in the Democratic party understands that taxing energy companies just makes them pass "carbon taxes" right on to Americans in the form of higher prices.

I think this energy bill that is supposed to be passed this summer will be vitally important to any recovery effort. Raising taxes during a recession (even using indirect methods) is a recipe for a multi-year Depression. Maybe Obama will channel Carter and tell us to put on a sweater and turn down our thermostats to save money.

Banks Trying to Avoid all Government "Help"

It seems that the strings attached to government money are just too much for many banks to take.

Regulators, engaged in aggressive ad-hockery for the better part of 2 years, have lost credibility. Congress, engaged in egregious political grandstanding, has lost what little trust it had to begin with. Banks, engaged in a fight to remain solvent as well as independent, want to avoid both.

The more Washington insists on influencing the day-to-day operations of the firms it props up, the less inclined banks will be to accept help. Those that can afford to go it alone will do so - even if it means shrinking their operations. This, in turn, could prolong the recession - even as government efforts strive to do the opposite.

I mean some banks are trying to raise capital by almost any means in order to throw off the government reigns on them. They don't want to lose all their best people to Europe or the Middle East because Congress and the AG of New York threatens their lives over their bonuses. Also the idea that the White House can fire you on a whim has some CEOs rethinking "recapitalization" as well.

Obama Extends America's hand to Cuba: The Castros slap it away

I think Obama needs to understand that some of these nations will not change unless their "dear leaders" die. Cuba is a case in point.

The Cuban president suggested the communist government is not willing to appease Washington by embracing small political and social reforms on the island, saying in a speech before an international gathering of government ministers that "it is not Cuba who has to make gestures."

The Castros are in their 80s so it will just be a few more years until they are dead. After that Cuba will probably be a free and democratic society. I call this the "one-man roadblock to peace" principal. You had this with Stalin, Yasser Arafat, and Kim Jong Il. You might have had this with Saddam too if we didn't remove him from power.

These roadblocks are usually old men with shaky heirs that they probably can't entrust their country to. They want to hold on to power and not be marginalized after terrorizing their country for decades. They won't change their ways because there is absolutely nothing in it for them. They already have the billions stolen from the countries treasuries. Why release political prisoners and change to a democratic system when you had the power of life and death over their subjects for years?

However, once they die then new possibilities are opened up almost immediately. Stalin's body wasn't even cold when Russia started instituting reforms. I can see us lifting the embargo the day after both Castros are put into the ground. Until then any US overture is a big waste of time. Sometimes change can only come over the body of a dictator.