Earthquake: General Electric no longer providing quarterly guidance
Amazing news that General Electric will no longer provide quarterly earnings guidance.
This is not just a decision by a public company to change its relationship to Wall Street, but a sign of a much bigger change in industry itself. It’s not just that people are going to take the longer view out of some appreciation of foresight or sudden development of wisdom, but out of respect for the massive changes currently facing global commerce.
Bailouts make us ask: what is the future of the corporation?
Next up on the bailout list: car companies, cities, healthcare, schools. I guess nobody’s business model is 
working very well, and now everybody needs money from the U.S. federal government, which of course is half a trillion in the red this year. Companies losing billions want loans from a government that’s losing billions.
I think that a lot of things are going to need a redesign in the next few years, to put it mildly.
Regardless, yesterday’s stars were the automotive CEOs who flew into to Washington DC to plead for the U.S. government to provide aid to its most important companies.
But wait, are they American companies? Chris Kelly at the Huffington Post provides an excellent bit of polemic, reminding us that Chrysler is actually owned by a $60 billion hedge fund called Cerberus Capital which owns, in addition to Chrysler:
A Japanese bank called Aozora
A Japanese real estate company called Showa Jisho
A Japanese golf course company called Kokusai Kogyo
An Israeli bank called Bank Leumi
A German bank called Handel und Kredit Bankhaus
A reinsurance company called Scottish Re, with headquarters in Bermuda
A British TV rental chain called Boxclever…etc.
This is a great point - we’ve spent decades making global capital so fungible, so fluid that it readily cros
s borders, ignores nationality, changes hands without making news. So can a corporation possibly be a national entity for which a certain government (and its taxpayers!) might claim responsibility?
If Chrysler isn’t a potent enough example, how about Citibank, which is getting “trouble asset relief” from the U.S. Treasury but is now is owned to an even greater extent by Saudi princes?
This begs HUGE questions. What is a corporation? To whom does it belong? What is the relationship between a corporation and the nation-states of the world?
If you’re in business today, and plan on staying in business through 2009 and beyond, these aren’t just philosophical discussions. This is your future. Give it some thought.
“Nobody could see it coming,” schadenfreude edition
One of the most outrageous things I heard about this current financial crisis was that “Nobody could see it coming.” Early warning was written all over this systemic collapse - and people actively made fun of this view.
Watch this video of economist Peter Schiff and the ridicule he must endure for accurately predicting the systemic weaknesses in the economy.
Think about this kind of dynamic the next time you need to spread news of a systemic disruption in your organization.
Drop in oil prices don’t match the long-term future…or do they?
Don’t get me wrong, I’m not complaining about finally paying less that $3 a gallon for gasoline. Something seems out of balance about the preciptous drop in the crude oil futures, down to $64.
It’s called futures, right? Well, even in the case of a total meltdown in the global economy, the Chinese, Indians, and South Americans will still expand their GDP, putting long-term pressure on global production of refined petroleum and petrochemicals. I understand the recession taking off a few bucks per barrel, but this rapid fluctuation may tell another story.
Perhaps it’s that speculators are leaving various markets in droves. After all, mortgage commodity speculation isn’t looking all that healthy, now is it?
Many people received a weird email from the CEOs of various airlines not long ago about how 60% of oil was bought by speculators who never intended to take delivery, artificially driving up prices. If they are leaving that game, it could be that prices are returning to the actual supply-demand curve.
Perhaps it’s unregulated speculation that has the weaker future.
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