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Mr. Kerkorian in my view didn't make a very wise investment. While I'm giving my view I'm going to clarify why the Mr. Bernake has continued to lower rates and with the tick down in unemployment to 5% this a.m. he is done with the rate cuts.
Mr. Kerkorian and Vid who was criticizing the cut of a quarter of a point a couple of days ago.don't understand why the Fed was cutting rates. And if the Fed hadn't cut rates do you know what we would have had? A recession! Are we in a recession? No. By the most commonly used definition of a recession,two negative quarters of growth,we are not in a recession. How many quarters of negative growth have we had? Zero Zip Nada. Are we going to have a negative quarter in this business cycle? I had thought maybe one but with this mornings news I don't think we will have one.
Now to Mr. Kekorian and his investment in Ford. Let me backtrack a little to the rate cuts and the falling dollar. Why did the Fed keep cutting rates and in effect let the dollar drop? Exports! What is holding the economy up and keeping us out of a recession? Exports! Why are exports at record levels each month? The weak dollar! So,in my view the Fed has made the best out of a bad situation. If the U.S. hadn't had the right policy to encourage other countrys to import our products ,we would be in a deep whole and it would have taken years to dig out of it. Look at Dupont,GE, Ford and all the other major companys doing the vast majority of the exporting and cut their exports in half and what would be the most likely senario? Higher unemployment and most likely a "recession"!
One other point on the present economic situation. A lot of Americans have paid higher prices on just about everything and inflation is a problem. But,if you look at the other side of the coin,where would we be without the jobs created by the weaker dollar and rate cuts. I would postulate much worse conditions than we currently have.
Mr.Kerkorian is buying into a company that had a good quarter recently but if you look at sales most of Fords improvements were where? Exports! Will this trend in auto exports continue. Maybe. The dollar is strengthening and it will slow exports of Ford eventually. With the pick up in the U.S. economy and dropping unemployment,will Fords domestic sales pick up. Maybe. While Ford and GM reported last week of rising exports,they also had slowing domestic sales due to the "recession". But,if you caught this weeks auto sales Toyota and the other two major Japanese auto makers had "increasing" U.S. auto sales. Ford and Gm sales dropping in the US due to the "recession" and Japanese auto makers had "increasing' sales in the US. Whats the deal? U.S. auto makers domestic sales have been shrinking as the Japenese US sales are increasing. Why? The Japenese are building a better product and they are building automobiles the American public wants. Ford and Gm cant seem to get away from the dual cabs and gas guzzlers they make and they are completely out of touch with the American publics needs. How many years has the Toyota Camery(built about a 2 hour drive from where I live) been the top selling automobile in the U.S.?
I wish Mr. Kerkorian the best and I hope he can have some input on the course Ford takes the next few years. If you think back Ford and GM have been in trouble for years and their problems didn't just begin. Make a better vehicle. And they will come!
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