Chris Lau - Seeking Alpha

Wednesday, February 18, 2009

Give a Mouse a Cheese He'll Come back for Crackers and Wine

The problem with the rescue package is that it is trying to solve too many things. This idea is better articulated in the column with Jack and Suzy Welch in Business Week magazine. In late summer, financial institutions required money to get credit flowing again. Then the auto sector climbed on board for assistance.

Here is the latest news on GM:
  • 47,000 jobs globally
  • closing five more U.S. factories
  • GM said it could need up to $30 billion from the Treasury Department, up from a previous estimate of $18 billion. That includes $13.4 billion the company has already received (Net addition is $16.6B in assistance)
  • Company could run out of money by March without new funds - needs $2 billion next month and another $2.6 billion in April.
  • Chrysler LLC said it will cut 3,000 more jobs
Judging from the market's trading action today (DOW down 3.79% and S&P 500 down 4.56%) in reaction to Obama's rescue package, the market will likely test the low reached on November 2008. At that time, markets priced in a sizable rescue package that would work quickly. It is becoming apparent that the package will need to be much larger and must work in a way that gets the financial lending system liquid again.

On a Brighter Note:
KaChing, located in Redwood City, California, will be releasing v1.0 of the kaChing API. This is a piece of history. It's web 2.0 and it is embracing the world of stocks and finance with social networking.

If you live near KaChing HQ, I encourage you to attend.