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As part of getting federal money, GM released its 5 year restructuring plan this week (download PDF). I briefly scanned the 100+ page document and it touches on some key points but misses the biggest point – build cars that people want to buy. Below are my recommendations:

Only 3 divisions should be left – Chevrolet, Cadillac and GMC. Chevrolet should be focused on cars below USD 40,000.  Cadillac will focus on cars above USD 40,000.  GMC should be the truck/SUV division. Stop the overlap of designs and pricing between divisions which just confuses the shi@#$ out of consumers.  German cars are so damn easy – small, medium, large.  Small (A4, 3 series, C class), Medium (A6, 5 series, E class) Large (A8, 7 series, S class).

Buick/Pontiac – get rid of them. Once again, does anyone believe Tiger Wood’s drives a Buick? Pontiac had it’s glory days but it’s over (NY Times).

Saab/Hummer – Bye. Never could figure out who buys Saab, none of my friends. Hummer…really do we need this kind of fossil fuel consuming vehicle on the road?

Saturn – Should focus on India or China where cheap cars rule.  A Saturn car with ding/dent proof doors would do very well in Bombay traffic. But as far as a US entity selling cars…goodbye.

Of course, I have not addressed the two biggest issues ailing GM – unions and health care. That’s for another day.

Wow…is all I have to say after getting a chance to use Cisco’s video conferencing solution called TelePresence, it’s the way video conferencing should be. Over the years I’ve used video conferencing products from Cisco, Polycom and Tandberg to name a few and they were all kludgy and just never really worked. Granted, you can never replicate an in person meeting but TelePresence gets pretty close. I was in Bombay and initiated a call with several people in Irvine, California and you felt as if everyone was in the same room.

The Cisco team built TelePresence from the ground up and went as far as designing the room, chairs and table that need to be used. The unit I was using cost around USD 300k per side and had three 65″ LCD’s running full 1080p…yes 1920 x 1080. That means several gig’s of data was compressed to under 15Mbps which is still a lot of bandwidth but it is so worth it. Below are some pictures but they really don’t do justice, first 5 pics are from Bombay and the last 2 are from Irvine. I really should have taken a video!

More info on TelePresence from the Cisco website.

I can honestly say I don’t know sh#$% about New York real estate nor really care but an article in the New York Magazine got me some what hooked on it.  The article goes behind the scenes of one of the biggest real estate deals in Manhattan - Tishman Speyer, along with BlackRock Realty, agreed to buy Stuyvesant Town and Peter Cooper Village, a sprawling 80-acre complex on the East Side of Manhattan, for a record $5.4 billion from MetLife. Best quote from the monster article:

“Stuy Town is the quintessential rent-stabilized apartment filled with well-educated old Jews, and you shouldn’t fuck with them,” says one affordable-housing advocate.”

NY Mag article

Doesn’t Look Favorable = DLF. India’s largest real estate developer DLF announced their 3rd quarter earnings this past week and it was not pretty.  I think we all understand the economic environment is grim and the real estate market is REALLY grim but hearing Rajiv Singh, DLF Vice Chairman, speak on CNBC-18 you get the sense it ain’t so bad…whatever.

There is no denying it, most real estate developers around the world and in India are living on borrowed time and borrowed money. Rajiv also stated in the same interview that he doesn’t expect homes prices to get cut beyond 20% yet they have a hugh amount of excess inventory.  Rajiv mentioned people are not buying because bank rates are too high, I think what’s high is either home prices or Rajiv or probably both.

Real estate projects can simply be classified as:

1. New – in today’s environment only a complete moron would loan a dime to a new project
2. Partial – Hugh dillema, throw good money after bad?
3. Completed – sell or lease at rock bottom prices, this screws up the initial project cash flow calculations. Existing tenants will ask for a rate negotiation (read – lower prices)

For DLF the numbers don’t add up and they are massively over leveraged which is not a good thing.  Will DLF or any Indian real estate company file for bankruptcy?  No chance, Indian corporate law is so convoluted that filing for bankrupty doesn’t seem to be an option, instead the company will just be a zombie of it’s former self.

Previous posts on DLF:
May 2, 2006 - India’s next crorepati (billionaire): KP Singh
June 8, 2007 - Yes, DLF. Really?
Oct 10, 2008 - Boom to Bust

Debt is the new four letter word. Debt is affecting everyone from Mr. Consumer to private equity firms like Carlyle.  More precisely, massive debt is the real killer.  Mr. Consumer for years had been charging up a storm on his credit card, buying 4 dollar lattes, hitting the mall and buying every retarded gadget from the Sharper Image and then to top it off he went and bought a home with very little down.  The technical term for Mr. Consumer’s situation is called clusterfu!@#$.  The recipe to get out of this situation is almost like losing weight – eat less (earn more) and exercise more (spend less).  Easier said then done, most companies are cutting back on raises or just getting rid of people.  Any sort of government refund check will most likely go to paying down his debt and not new spending. That is the catch-22, most of the world economy revolves around the American consumer spending and not saving.  But, for the American consumer to get back on track they have to save and not spend. Policy makers around the world seem hell bent on lower interest rates and approving fiscal stimulus packages to boost the economy.

If I’m not mistaken, this whole credit crisis was about cheap money and loose lending practices.  Take India for example, the government has been reducing interest rates but no one seems to be buying houses.  The banks fault the property developers for overpriced inventory and the property developers blame the banks for high interest rates. Who is right? Both share some blame but it’s also the real estate companies that over built which is leading to excess capacity in most Tier 1 (Bombay, Delhi, etc…) and Tier 2 (Poona, Indore, etc…) cities. I don’t think stimulus packages will work and the only thing that will help is just the natural progression of the business cycle.  But, policy makers can’t sit around and wait, they have to show they are doing something which just seems to make things worse…think TARP.