Another Monday

1 06 2009

It never ceases to amaze me how quickly the weekends go by.  This past one was pretty quiet, which was nice after a very busy Memorial Day weekend.  On the MBA to-do list this week: find out what’s going on with my financial aid package (I got sidetracked last week and didn’t get a chance to call), and deal with getting my immunization records to Northwestern – either by getting them sent from my undergrad university or by a trip to the doctor’s office.

It’s a pretty big Monday in the business world.  As has been expected for a little while now, GM has declared bankruptcy.  Quite a hard fall for a company that at one time was the largest corporation in the US, and one of the largest employers in the world.  I won’t get too far into how I feel about the US government emerging with a majority ownership stake in GM (Hint: I’m not a big fan).  However, this shows that the market works: if your company produces products that people don’t want to buy, or pays costs (for whatever reason) exceed what people are willing to pay for your product, your company will fail.  It’s just unfortunate that tens of billions of taxpayer money was sunk into GM to end up in the same place it would’ve been had the government not gotten involved.

An interesting side note, Dow Jones announced this morning that GM and Citi are being removed from the Dow Jones Industrial Average, to be replaced by Cisco and Travelers Group.  DJ explained that it was removing GM and Citi, in part, because of the level of government involvement in those companies, which places them on an inequal playing field with privately owned enterprises, and that it was keeping an eye on Bank of America and may remove it from the index for similar reasons if it appears that the government begins exercising greater influence on BofA’s operations.





Are you not stimulated?

17 05 2009

Saw this posted this morning over at Greg Mankiw’s blog:

Stimulus chart

As Prof. Mankiw points out, it doesn’t necessarily mean the stimulus has been ineffective since the baseline could have been worse than originally thought. However, I can’t help but note the irony/coincidence that the actual unemployment figures so far have pretty well tracked the forecast of what would have happened if we hadn’t spent an extra $787 billion to stimulate the economy.