Well, that hasn't worked out so well thus far. You, the taxpayer, are still dragging around a bunch of auto brands that GM can't seem to unload.

The plan was for GM to keep only four of its several brands -- Chevy, Cadillac, GMC and Buick. Chevy is popular, Cadillac is quality, GM makes a profit on every GMC truck sold and Buick is huge in China.

GM would say goodbye to the villified Hummer, the odd-fit Opel, the beloved-but-unselling Saturn and the quirky Saab, raising cash and throwing dead weight overboard.

That was the plan, anyway.

Today, news comes that Saab will not be sold to Swedish super-car maker Koenigsegg, a deal that was announced earlier this year. I was always skeptical of this deal and here's why: Koenigsegg hand-makes million-dollar bespoke sports cars. It does not mass-produce anything, except for profits from California and European millionaires who buy the sports cars. I couldn't see Koenigsegg cranking out even the 10,000 or so Saabs sold every year in the U.S.

So now GM has to do something with Saab and its 4,500 employees.

Earlier this year, GM announced to great fanfare that racing legend Roger Penske would buy Saturn. Penske needed some help from Renault to do the deal, and that fell through. So GM still has a dying Saturn. (In a decaying orbit, you might say.)

Finally, GM's board backed out of its plans to sell Opel, which it has owned for decades, to a Canadian parts-maker.

What will happen to Saturn and Saab? Probably they will be allowed to simply die away, which is Pontiac's fate. Opel may still end up getting sold, but maybe not. Maybe GM ends up as Chevy, Cadillac, GMC, Buick -- and Opel, oddly enough.

The only brand GM has managed to unload so far is Hummer, which it sold to a Chinese company, which has said it will build a new headquarters near Detroit and make the big trucks more fuel-efficient, which somehow seems not quite right. I mean, if you're going to have a Hummer, have a Hummer, right? A fuel-efficient Hummer is like a diet Twinkie: What's the point?

So as of today, your taxpayer-owned, post-bankruptcy GM looks an awful lot like the privately owned pre-bankruptcy GM. That's what your money has gotten you.

-- Frank Ahrens
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And for now, that's a good thing.

Consumer spending accounts for about 70 percent of U.S. GDP. The U.S. officially came out of the Great Recession (which began in December 2007) in the third quarter of this year, when GDP turned positive, hitting a preliminary estimate of 3.5 percent growth.

The turnaround was hailed by those who backed the taxpayer-funded stimulus programs as proof that a strong recovery was underway, boosted by government spending, in true Keynesian style.

But hold on a second, today's data say.

The revision to quarterly GDP -- part of the process each quarter -- provides a more solid estimate of the quarter's GDP. At 2.8 percent instead of the first-reported 3.5 percent, it means consumers spent less during the previous quarter than the government initially thought.

Overall consumer spending in the quarter rose 2.9 percent, not 3.4 percent as originally estimated.

In September, the third month of the third quarter, spending was down 0.5 percent from the same period the year before.

Consumer spending on homes jumped 19.5 percent in the quarter, but that number was lower than the 23.4 percent reported in the first swipe at third-quarter GDP.

Durable-goods spending (cars, refrigerators, the like) was up 20.1 percent in the quarter, not 22.3 percent, as first estimated.

Businesses did not fare as well in the quarter as initially thought. The first estimate on GDP showed that commercial construction was cut 9 percent in the quarter. Today's number shows it was actually cut at a 15.1 percent annualized rate.

And don't hold out hope that holiday spending is going to rescue the fourth quarter. An Associated Press-GfK poll released earlier this week said that 93 percent of us say we'll spend the same or less this holiday season that we did last year.

The takeaway from all of this is two-fold:

a) The government stimulus didn't goose the economy as much as predicted/hoped by some/originally forecast. This is not a surprise, because any time you set a limit on cash infusion -- be it an overall figure of $787 billion, a one-month limit on Cash for Clunkers, whatever -- it sets a ceiling on growth. Only an open-ended, ongoing, market-fueled cash infusion creates unlimited ceiling.

b) Consumers spending less is a good thing. First, it would be a negative reinforcement if people (especially lawmakers) began to believe that government stimulus is the key to economic prosperity. Secondly, it means that consumers are keeping their wallets closed for a change.

September personal saving among Americans rose to $355.6 billion from $307 billion in August, according to the Bureau of Economic Analysis at the Commerce Department, a jump in rate from 2.8 percent to 3.5 percent. This recovery will be more real and long-lasting if people save more and spend less, even though it might translate to a 2.5 percent growth in GDP instead of a headline-grabbing 3.5 percent.

Which only ends up having to be revised downward, anyway.

-- Frank Ahrens
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Okay. Where to start on this one?

The Internet wags are already way ahead of me, lobbing in jokes, such as, "AOL? Aol.? LOL!"

It's pretty easy to be cynical about the changes at AOL, or perhaps Aol. Things have gone downhill for the company pretty steadily since the epic, and epically disastrous, merger with Time Warner in 2000, a $350 billion bet to create a new media giant. It never worked.

AOL got its name stripped off the combined company in 2003, because it was such a drag on Time Warner. A succession of chief executives -- Jonathan Miller, Randy Falco and now former Google sales guru Tim Armstrong -- have tried various ways to turn around the company, attempting to morph it from a dial-up Internet provider to an Internet advertising company and now a content company, it looks like.

Yearly job cuts have come as regularly as Christmas. Prior to next month's spinoff, AOL has offered buyouts to 2,500 employees, or one-third of its staff. The company is now much small than it once was, and now its logo is smaller, too.

The company hired big ad and research firms Publicis Groupe and Omnicom Group's Wolff Olins agency to figure out what people thought of AOL and to craft a new logo. You can see some examples of how the logo will be used by clicking here. Here's an animation of the new logos.

What they came up with was a variation on the historic AOL all-caps logo, moving to an up-and-downstyle Aol., with a dot at the end, presumably in case people didn't know Aol. is an Internet company.

“Historically brand identity has been monolithic and controlling, little more than stamping a company name on a product," Karl Heiselman, chief executive of Wolff Olins, said in a statement. "AOL is a 21st century media company, with an ambitious vision for the future and new focus on creativity and expression, this required the new brand identity to be open and generous, to invite conversation and collaboration, and to feel credible, but also aspirational."

Possibly a better-known AOL logo has been the yellow running man, which you can see by clicking here. (And also here, in a sort of unsettling way.)

Then-AOL put its running man to work in a series of amusing television ads in 2003, as the company was trying to switch its dial-up customers to high-speed Internet. The ads merged live-action with animation, putting the running man on a treadmill, for instance, to the theme of "The Six Million Dollar Man." Another ad put the yellow guy in bed with a very satisfied-looking Sharon Stone, who cooed, "That was the most amazing experience I've ever had."

Ahem.

It's easy to scoff at a logo change for a company like AOL and make Titanic/deck-chair jokes, but logos and branding are an important part of a company's turnaround. AOL is quietly becoming a content powerhouse, with its Sphere newsroom and sports Fanhouse sites.

Now, the company needs earnings, which will be harder to come by. Third-quarter revenue and earnings at AOL continued to fall, with operating income down 50 percent compared to the third quarter of 2008, according to the company's report earlier this month.

-- Frank Ahrens
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]]> http://feeds.voices.washingtonpost.com/click.phdo?i=0d1b2b13706a638c404cf68febd7c817 http://voices.washingtonpost.com/economy-watch/2009/11/for_spinoff_aol_rebrands_itsel.html?wprss=economy-watch http://voices.washingtonpost.com/economy-watch/2009/11/for_spinoff_aol_rebrands_itsel.html The Ticker Mon, 23 Nov 2009 13:40:12 -0500 Existing home sales in October jumped a record 10.1 percent, according to data released moments ago, thanks to buyers rushing in to take advantage of the first-time home buyers' credit before it was set to expire.

Sales are up 23.5 percent since their lows in October 2008, which also is a record for year-over-year jump, according to the National Association of Realtors.

It's not clear the surge represents a bottoming out of the housing market, as the sales are still not happening organically--that is to say, without a government incentive. And now that the home buyers' credit has been extended to April, we won't know if we have an organic, non-subsidized bottom until after then.

The median sales price of an existing home in October was $173,100, down 7.1 percent from October 2008. That's the smallest decline in median home price in more than a year.

How October existing home sales broke down by region of the country:

Northeast: up 11.6 percent.

Midwest: up 14.4 percent.

South: up 12.7 percent.

West: up 1.6 percent.

Why is the number up so little in the West? Remember, the biggest foreclosure home states -- that is to say, the ones that were overbuilt the most during the housing bubble -- were California, Nevada and Arizona.

Existing home inventories are down to a seven-month supply. A healthy housing market is generally regarded to have a six-month inventory of unsold homes.

And let's be clear about this: sales of distressed homes accounted for between 33 and 40 percent of all existing home sales in October, according to the data, so that shows investors are still bottom-feeding off people who've lost their homes. On the other hand, some of those people who lost their homes got mortgages they could not afford and never should have stopped being renters, so that's a necessary adjustment on the system.

On the upside, for the first time in more than a year, we're starting to see some movement in sales of more expensive homes, not just bargain-basement ones that are in foreclosure.

The October figures show some uptick in sales of homes in the $250,000 to $500,000 price range, but nothing yet in the $750,000 and up range.

-- Frank Ahrens
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In the first 20 minutes of trading, the Dow is up 1.4 percent.

The broader S&P 500 is up 1.7 percent, as is the tech-heavy Nasdaq.

The markets closed Friday on a three-day losing streak, which they appear to be trying to flip this morning. The key market-moving data this week comes Tuesday, when third-quarter GDP gets revised. Remember: the number that was reported last month (3.5 percent) was only a preliminary number and it always gets revised when the data gets fully cooked.

Forecasters are expecting a downward revision to 2.8 percent, so we'll see how that affects the markets.

-- Frank Ahrens
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First, a look at the markets right now.

As of about 2:15, the Dow is down three-tenths of 1 percent.

The broader S&P 500 is down four-tenths of 1 percent and the tech-heavy Nasdaq is down six-tenths of 1 percent.

Now, let's take a look back and see how the markets have been trending in recent months. (These numbers do not include today's moves.)

Since the March 9 bottom, the Dow is up about 58 percent, the S&P 500 is up a little bit over 60 percent and the tech-heavy Nasdaq, which has been leading the rally, is up a whopping 70 percent.

As I always say: That's great. That's money back in your 401(k) and your portfolio. But professional traders haven't understood this rally, because it's not based on solid underlying economic fundamentals -- unemployment has only risen during the rally and GDP turned positive only in the third quarter -- but they have thrown up their hands and said, using the Wall Street phrase, "You can't fight the tape."

I wrote a story in today's paper, which you can read by clicking here. But I wasn't able to squeeze some interesting things he said into the newspaper story, so I wanted to share them with you here today.

Let's be clear about this: This sale was probably Leonsis's best play for Revolution Money to continue growing. Trying to go up against the four big payment networks -- Visa, Mastercard, Amex and Discover is like trying to start your own auto company and go up against Toyota and Ford. The barriers to entry are very high and it's hard to overcome the trust hurdle -- complain as people do about their credit cards, they trust a name like Visa or Amex to handle their charges.

RevMoney will continue building online and mobile money transfer applications as it becomes part of Amex. In the best quote Leonsis gave me, he said, "We got their assurance they would not Borg the company," referring to the "Star Trek" alien species that assimilates every species it encounters with the chilling phrase, "Resistance is futile."

The highlights of our chat:

-- Leonsis said he wasn't initially looking to sell RevMoney. Instead, he said, about 45 days ago, he started contacting big financial institutions and card companies about licensing deals; essentially franchising RevMoney's person-to-person money-transfer technology and other applications to several buyers. While talking to Amex about the franchise idea, Amex came to realize it did not have a very strong strong digital platform or strategy and decided it would instead like to own RevMoney outright and exclusively. Hence, the $300 million purchase.

-- "Hopefully, we've learned a lot of lessons from past mergers," Leonsis told me, no doubt referring to the disastrous mega-merger between AOL and Time Warner a decade ago that is just now finally being unwound, with AOL set to spin off next month.

-- RevMoney had grown modestly on its own, but when the financial crisis hit last year, venture capital money started to dry up. Investors in RevMoney include Goldman Sachs, Morgan Stanley and Citi (which has had its own problems). RevMoney didn't have the funds to substantially grow its customer base, Leonsis said; hence the tie-up with Amex, which already has 90 million cardholders globally.

-- RevMoney's credit card business was 12 to 18 months away from profitability, Leonsis said.

-- Younger consumers are much more likely to accept online money-moving than their parents, Leonsis said, which is unsurprising. He said the older generation gets a credit card, then slowly learns how to use online services, such as checking their balances, making payments and so forth. The younger generation goes the other way: They use PayPal to, say, buy virtual characters for their games and, when they get older, they will qualify for a credit card. They go virtual-to-physical worlds, while their parents go, tentatively, the other way.

-- Leonsis gave me an illustration of how his Washington Capitals use RevMoney's 0.5 percent credit card to save money: Let's say a Caps season ticket holder decides to renew his or her tickets and tells the Caps to put the $10,000 on their Visa credit card, which charges the Caps a 3 percent processing fee.

The Caps ticket agent tells the ticket-buyer: "If you open a RevMoney credit card right now and charge your season tickets on that instead of Visa, we'll give you a free autographed Alex Ovechkin jersey." The Ovechkin jersey costs the Caps $125 to buy and the 0.5 percent processing fee to RevMoney amounts to $50.

With this deal, instead of being out $300 per season ticket-holder, the Caps are out only $175. Plus, RevMoney gets a new customer who's got a good enough credit rating to charge $10,000 worth of tickets. Leonsis said the Caps have delivered 2,500 new accounts to RevMoney this way.

-- Frank Ahrens
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Geithner is ostensibly before the committee to argue for financial reform, but Brady used the opportunity to launch a partisan attack on Geithner reading a laundry list of what Brady termed as economic failures of the current administration. Geithner responded with a spirited defense -- edgier than usual -- and was clearly angered by the attack.

Brady noted that the White House said earlier this year that unemployment would peak at 8 percent (true) and that it is now at 10.2 percent. He noted that reports of the number of jobs saved or created by the stimulus has been repeatedly ratcheted back by the White House (true). And he reported calls from both parties for Geithner's resignation (Not that I'd heard, but my colleague Ed O'Keefe informed me that Sen. Maria Cantwell ((D-Wash.)) wondered earlier this month whether Geithner still has his job. Hardly a groundswell calling for Geithner's head, to be fair.).

"Will you step down from your post?" Brady asked, concluding his statement.

Geithner shot back: "It is a great privilege for me to serve this president. I agree with almost nothing you said, almost nothing you said represents a fair and accurate picture of the economy today." He told Brady, "You gave this president an economy falling off a cliff."

Geithner continued: "Congressman, it's just a basic fact that a year ago, this economy was falling at a rate of six percent a year, it was losing between half a million and three-quarters of a million jobs per month and that process was not slowing" until President Obama began implementing his programs, Geither said.

Brady interrupted: "Mr. Secretary, the public has lost all confidence in your ability to do the job...It really is time for a fresh start."

Geithner then said: "If you look at any measure of the strength and stability and health of the American economy, if you look at any measure of confidence in the financial system, it is fundamentally stronger today than when the president took office. It happened not on its own. It happened because of a set of tough, difficult choices."

Geithner then directed his criticism back to the Bush administration, accusing it of "either years of basic neglect of basic public goods in health care, in education...in how we use energy and fixing those problems is the central objective of this administration."

Brady shot back: "Tell that to the millions of Americans who no longer have jobs because of your decisions.

Geithner would not take the criticism lying down: "They would have had more jobs and more confidence and more employment in this country if we had not let this crisis get to the point it did." Geithner said the Bush administration should have spent "eight years of paying for our commitments instead of borrowing against them."

This is the most bristling political theater I've seen on the Hill since last fall when Rep. Elijah Cummings (D-Md.) famously asked Neel Kashkari if he was a "chump."

-- Frank Ahrens
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First, let's look backward.

Here's a terrific graphic that The Post's Business section did today, comparing unemployment, consumption and industrial production during this recession compared with the four previous recessions.

Takeaway: If you had any doubt that this recession was the worst since the Great Depression, this graphic should put that doubt to rest.

Now, forward.

According to the Conference Board's monthly index of leading economic indicators out this morning, slow growth in the U.S. economy should occur during the first half of 2010.

The index ticked upward 0.3 percent in October, following a 0.1 percent gain in September and a 0.4 percent gain in August (fueled by Cash for Clunkers).

“The data indicate that economic recovery is finally setting in. We can expect slow growth through the first half of 2010. The pace of growth, however, will depend critically on how much demand picks up, and how soon,” Ken Goldstein, a Conference Board economist, said in a statement.

Remember this, though, and I can't stress this strongly enough: Most of this recovery so far has been driven by government stimulus -- Cash for Clunkers, the first-time home-buyers' credit, $787 billion in stimulus spending and so forth, while precious little attention has been given to long-term growth stimuli, such as tax cuts for employers.

The best quote on this whole situation still comes from Art Hogan, chief market strategist at Jefferies & Co., who told me the following when the Dow passed back up through 10,000 in October: "My biggest concern is much more akin to taking the IV tube out of the patient. We have to move from an economy that is stimulated by the government to an economy that's self-sustaining. That needs to be orchestrated extremely carefully."

-- Frank Ahrens
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In the first 15 minutes of trading, the Dow is down 1 percent.

The broader S&P 500 is down 1.3 percent and the tech-heavy Nasdaq is down 1.5 percent.

The markets are ignoring encouraging news from last week's new jobless claims report out this morning.

New jobless claims filed last week were flat compared with the week before, the government said in data released this morning, giving hope to those who believe that unemployment is beginning to crest.

New claims filed last week came in at 505,000, the same as the previous week's revised numbers. The four-week moving average fell for the 11th straight week.

New claims have to fall into the low 400,000s in order for the economy to actually start adding jobs. Nevertheless, the number of jobless Americans receiving continuing claims fell about 40,000 last week to about 5.6 million.

Congress has extended unemployment benefits four times during this recession. In the hardest-hit states, benefits can last 99 weeks.

The official U.S. unemployment rate jumped to 10.2 percent in October.

-- Frank Ahrens
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