Scoundrels

Lots of trash being talked about the BIG 3, and I don't disagree with most of it. A few caveats:

1. We talk about the Japanese companies like they never put out crap. Seriously, you ever see a circa 70's Datsun? Closest analogue would be a Yugo. Not that they haven't got their acts together, mind you.
2. And now we're talking about "making the car companies take their medicine" without a bailout? Whatever the argument there pro or con, if the Japanese government had done that to the Japanese auto giants back in the day, then they wouldn't be in the position they are in now.
3. Japanese do small cars the best. Period. But, on every other level, American cars are in the same class. J D Power has Cadillac and Mercury right up there with Toyota. The last Consumer Reports I saw has American cars being more reliable than much-revered Germans BMW & Mercedes. The product the Americans are putting out now is competitive. Not better, but competitive. And sure, they put out some crap in the 70's & 80's, but nobody's perfect (see #1. above). I think that we may even look at this time as a golden era of design for Chrysler. It's time to get over the "American cars suck" thing.
4. The Big 3 are addicted to the energy pigs, but if you don't think the Japanese were moving there, you've never seen a Honda Ridgeline (beastly as a damn Hummer!) or a Toyota Tundra.
5. And speaking of the gas hogs, these were the biggest part of the market in the US. Do you want to be the CEO trying to tell the board of directors why you were trying to foist small cars on an unreceptive public? Maybe you could get away with it, if you had the government backing development of efficient but unpopular cars . . . once again, there are reasons the Japanese could develop their markets: first, the domestic market (for obvious reasons) fostered the development of small cars. Second, there was support from the government, and implicit understanding from the boards all the way down that the future was in these initially unpopular small cars. The Japanese did not have the same kind of pushback that Americans get from their instant gratification "free market", where minute-to-minute results matter, and every tick down the stock price takes endangers someone's job.

That said, if one penny of public money goes into the BIG 3, then it better be with the understanding that it is time to turn the page. It's going to hurt (Ford has Explorer and F-150 lines here in Lousville), but it has to be done. Now seems to be the best time: all auto sales are going to hell, so they may as well put all that dead capital outlay into projects which may pay off in the future, instead of clinging desperately to the past.

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Oh, those bastards! I hate insider trading. All those white-collar Capones need to be locked up. And now, Mark Cuban is accused? Well, string him up, I say!

Not so fast. This is an odd little case. Cuban isn't exactly innocent, but this isn't the case of another rich guy scamming the public. There are pretty good accounts about exactly what is going on (mostly on the True Hoop blog at ESPN), but it seems to go something like this:

Cuban invested in a search engine start up called Momma.com, in spite of being suspicious of some of the people associated with the IPO. Not long after he bought in, he owned approximately a 6 % stake in the company. At a certain point, the company decided it was going to offer more stock to further capitalize their venture, and thought it wise to call Cuban to ask him if he wanted to buy more stock. Cuban was understandably pissed off, since a new stock issue would devalue his holdings (and the holdings of everyone else that bought in before the second stock offer). The company CFO informed Cuban that he was receiving confidential information, to which Cuban reportedly replied "Well, now I'm screwed. I can't sell." He then promptly did sell his entire stake in the company BEFORE THE INFORMATION ABOUT THE NEW STOCK OFFERING WAS MADE PUBLIC. That, friends, is a no-no (in most people's opinions).

Now, that's theoretically a bad thing, since the person buying the stock from Cuban had no access to the information Cuban knew (though there are those who argue that Cuban did not assume a "fiduciary obligation of confidentiality", which means he wasn't bound by insider trading laws). But it's also clear that Cuban made the move out of anger rather than a desire to rip someone off or even cover his own ass. Most reports say that he made about $750,000 by dumping his stock early. That sum is nothing to Mark Cuban. He dumped that stock out of spite, not for any kind of financial gain.

On top of everything else, there is a lot of evidence that Cuban was getting extra attention for backing the movie Loose Change, a documentary critical of George W. Bush. At very least, there were some improper threats from people associated with the investigation based on Cuban's political affiliations (perceived affiliations: actually, Cuban usually votes Republican).

Right now, this is a civil case. Chances are it won't go any further (remember, the Martha Stewart criminal case came up not because she did insider trading, but because she lied about it to prosecutors). Cuban could (and probably should) just write a check and make it go away. But he won't. He'll probably spend down to his last dime to fight back against the SEC. That's just the kind of guy he is. More power to him, I say.

Meanwhile, given what has been going on all this time, this has the appearance of Barney Fife cracking down on speeders while every bank in Mayberry is being looted.