Porsche
The vast majority of Germans disapprove of hedge funds and short-selling. Starting in 2005, Porsche used cash-settled options to acquire shares in Volkswagen. As the price rose, these options generated cash for Porsche which it used in turn to buy more cash-settled options. By March 2007, Porsche had acquired 30% of VW. By mid-September of 2008, it had acquired just above 35%. By October 24, it owned 42.6% as well as options linked to an additional 31.5%. This carefully-timed announcement put the squeeze on hedge funds as they all ran to cover their short positions. Essentially, an auto manufacturer beat hedge funds at their own game.
Economy
Unemployment in October rose to 6.5% and non-farm payrolls declined 240,000. Non-farm payrolls for August and September were revised down significantly. The effects of the downturn are becoming more broad-based. Education and Health-Care were the only sectors to add jobs. Familiar companies are gone. Others that remain are surviving with austerity measures.
Japan is facing deflationary risk.
Robert Byrd
Sen. Robert Byrd steps down as Chairman of the Appropriations Committee. Sen. Daniel Inouye, 84, will succeed him.
New York
Mr. Bloomberg plans to meet falling city revenues with spending cuts and property-tax hikes. In the sixties, the city missed a chance to avoid near bankruptcy — instead raising taxes for new spending. It kept raising taxes until it lost half of its one million manufacturing jobs and half of its large-company headquarters. The new spending squeezed out basic services including police cutbacks. Crime spiraled out of control. New York benefited from good mayors like Ed Koch and Rudy Giuliani, and luckily an expanded financial sector.
Now, the financial sector could be at the beginning of a long-term correction. New York’s budget is overly dependent on revenue from Wall Street.
Guns
People are buying more guns — some with the expectation of changes during an Obama-administration, some for investment purposes because of changes during an Obama-administration, and some with the expectation of an increase in crime during an economic downturn.
