Seven To Ten

Toyota Motor Corp. will start producing the hybrid Prius in the U.S for the first time to meet customer demands for smaller, more fuel-efficient vehicles.

Customers can expect the first hybrid Prius to roll out in 2010, following a hybrid version of the Camry sedan. This is the first time the Prius, which has been on sale for more than a decade, will be built outside of Asia.

The Toyota Tundra pickup and Toyota Sequoia sport utility vehicle are suspended from production because of declining demand. Toyota’s U.S. sales fell 21% in June compared with the year before, an even steeper decline than the industrywide slump of 18%.

Toyota’s moves follow production cuts at General Motors Corp. and other automakers. GM said last month it is cutting shifts, reducing assembly line speeds and temporarily idling seven factories because of declining consumer demand for truck-based vehicles.

Chrysler LLC also announced plans to close a minivan factory and cut a shift at a full-size pickup factory, while Ford has said it is cutting production for the rest of the year.

I read with interest this post on Jeflin’s Investment Blog.

Adverse climate changes can potentially derail our economy and stock market as it affects agricultural output, transportation and power supply.

It is a sobering article. Do your part to save the earth today. Without Mother Earth, all our wealth will come to nought in the end.

Frauds, from embezzlement, identity theft, patent infringement, and product counterfeiting - is increasing. The median loss from embezzlement cost small companies $190,000 in 2006, up from $98,000 in 2004, according to the latest numbers from the Association of Certified Fraud Examiners.

The number of patent-infringement lawsuits rose 6% last year. New research has found that counterfeit goods account for an estimated 15% to 20% of all products manufactured in China. The advance of technology has made it easier than ever for the unscrupulous to victimize your business. Consider that hundreds of pages of sensitive financial information can be stored on a USB drive the size of a thumb - or that millions of dollars can disappear with the flick of a computer key.

In March the regional supermarket chain Hannaford Bros., headquartered in Portland, Maine, discovered that hackers had broken into its database and rerouted customers’ credit card information to accounts overseas.

In another case, an accountant who had electronic access to the books of 15 small companies diverted $1 million meant to pay taxes to his own account. In another case, a thief set up a phony website that mirrored that of a small business, ordered thousands of dollars of supplies from Office Depot, and then had the bills sent to the real business owner.

Given all the day-to-day challenges small-business owners face, most feel they don’t have the time, patience, or money to protect themselves. This helps explain why small businesses are nearly twice as likely to be victims of fraud as are big corporations.

Even as companies trim their payrolls, they are also watching future expansion by stocking up on summer interns.

Employers, in a sign that they are looking beyond the current economic slowdown, are using intern programs to help build their junior ranks. Certainly interns can provide cheap and eager labor. Moreover, they bring fresh ideas and allow companies to build their talent pools.

Firms are hiring a larger number of their entry-level workers from their intern pool, so they are looking to lure top college students well before graduation. Employers plan this year to increase their internship rosters by 3.7% over 2007.

College administrators report similar findings, saying that most students seeking these posts have been able to secure them, albeit not always in the desired company but at least in the appropriate industry.

The bullish market for interns is good news for those in college, who find that internships are increasingly required for landing that first job. The summer posts allow students to bolster their resumes, learn more about their field of choice and meet executives who could hire them for full-time positions one day. And they often pay a good wage: on average, $16.33 an hour, or $7,850 over 12 weeks.

To be sure, some businesses are cutting back on these training programs. A number of Wall Street firms and banks, which are reeling from the credit crunch, aren’t offering as many opportunities. Some newspapers have eliminated their programs. Likewise, smaller firms struggling with the weak economy and the slowdown in consumer spending say they don’t have the time to find duties for students and to supervise them.

But unlike past economic downturns, when companies slashed both their intern and entry-level employee ranks and found themselves struggling to fill positions when business rebounded, most firms now look at these workers as future full-timers.

Many firms pride themselves on cultivating their interns. Walgreens, the largest employer of interns, likes to point out that its president, Gregory Wasson, started as an intern in 1980. This year, the company plans to hire at least 7,300 pharmacy, corporate and business management interns.

Of course, a key reason interns tend to perform better once they are hired is because companies have three months to evaluate them and pick the best ones for full-time positions. How students do during internships tells recruiters more than interviews or resumes ever could.

Universities are also recognizing the increased importance of internships and are working harder to secure spots for their students, said Richard Bottner, founder of Intern Bridge, a college recruiting research and consulting firm. Some colleges are even requiring students to do at least one internship to graduate.

At Washington University in St. Louis, for instance, career center administrators are more aggressively marketing the school to employers these days. Even with the shaky economy, the university saw an uptick in the number of companies coming to campus for career fairs and information sessions.

Lehman is seeking cash again, in the form of billions of dollars. It is estimated that Lehman could sell about $3 billion in common stock, just two months after the firm raised $4 billion in a heavily oversubscribed sale of preferred stock.

That April 1 move unleashed a massive relief rally in the financial sector as Lehman, then rumored to be in danger of following in the footsteps of Bear Stearns into deep distress, showed it could easily raise new money to shore up its balance sheet.

But the mood in the banking and brokerage business has darkened again over the past week. Last week, hedge fund manager David Einhorn, who is short Lehman’s shares, questioned Lehman’s accounting, saying the firm hasn’t sufficiently reserved for possible losses on its portfolio of collateralized debt obligations.

Monday brought management shakeups at two big banks and a warning from ratings agency S&P that its outlook on the sector is negative, due to the weakening U.S. economy, falling real estate prices and the risk of future writedowns on already hard-hit balance sheets.

The Journal speculates that Lehman’s decision to explore raising new capital means its second-quarter loss, due to be reported in two weeks, could be wider than the expected $300 million. All Lehman will say is that it’s intent on reducing risk.

“It is our clearly articulated strategy to reduce the size of our balance sheet this quarter,” the firm told the Journal. After falling 8% Monday, Lehman shares were down about 1% in early trading Tuesday.

You’ll note that this year many companies are reporting the specific performance targets on which CEO pay is based - saying not just that pay is based partly on free cash flow, for example, but reporting the amount that must be achieved.

Companies are doing that because the SEC is making them. But by wangling pay formulas in a dozen ways, they can still pay CEOs as crazily as they like. Look, for example, at one of America’s legendary pay abusers, Occidental Petroleum.

Its latest proxy is full of impressive-looking targets and formulas, but the bottom line is that the company has consistently paid CEO Ray Irani huge sums during his 17 years at the top, regardless of performance, which has mostly been terrible.

Even the way boards are elected appears immune to reform. Since the number of board candidates exactly equals the number of vacant seats, shareholders who don’t like a candidate can only “withhold” their vote, so even one vote is enough to get a candidate elected.

A popular reform proposal would require a majority of votes cast. The theory is that directors who could get voted off the board will more zealously serve shareholders - and that includes getting tough on CEO pay. But the worry is that they’ll adopt the go-along-to-get-along culture of many boardrooms.

It may seem obvious that CEO raises will have to slow down, if only because of simple arithmetic. Pay that gallops ahead far faster than the economy is one of those things that can’t go on forever. If it did, then someday the entire GDP would be used for paying CEOs, and that isn’t likely.

Meanwhile, let the reformers battle on. One of the most prominent, Nell Minow of the invaluable Corporate Library, which rates board effectiveness, says, “My colleagues and I have found that there is no more reliable indicator of investment, litigation, and liability risk than excessive CEO compensation.”

Boards that can’t manage to pay the CEO properly are damaging the company, punishing the shareholders they represent, and weakening America in a global economy. It’s in everybody’s interest to turn them around - or at least to keep trying.

Austin’s entrepreneurial community may be among the strongest in the country, but its heavy traffic and urbanization have driven some experienced business folks to look elsewhere. Enter Georgetown. This suburb of Austin has transformed from a sleepy bedroom community into a city with its own identity and a rapidly growing business climate.

Located 26 miles north of the state’s capital, Georgetown has welcomed 270 new businesses over the past two years. The state’s lack of individual and corporate income taxes is just one reason Texas is considered business-friendly. On a local level, Georgetown charges relatively low water and electricity rates, and its property taxes are among the lowest in the region.

As part of the Greater Austin area, Georgetown entrepreneurs in the city’s growth industries - healthcare, life sciences, and technology - can seek out additional support from the region’s business-development efforts. A convention center slated to open next year should help further build Georgetown’s up-and-coming business scene.

Georgetown is considered one of the prettiest cities in Williamson County, especially during the spring and summer months when poppies and wild flowers are in full bloom. Housing costs tend to be higher than in many of Austin’s other suburbs, but residents who settle into one of the city’s restored Victorian homes or new Tuscan villas can enjoy a walk along the bank of the San Gabriel River or play a round of golf on one of the five local courses.

Mountain biking trails around Lake Georgetown lead riders to the edge of Texas Hill Country. As the self-proclaimed “Live Music Capital of the World,” Austin still offers the best selection of performing arts in the region. However, Georgetown’s annual food and arts festivals, independently-owned restaurants, rodeo, and nearby wineries are enough to keep residents close to home most of the time.

The price of milk and gasoline is so high now, filling up the grocery carts and SUV is really frustrating. Most people just wince, pay, and get along as best they can. But has it anything to do with ethanol?

This corn-into-fuel program has been around for years but gained vast new impetus from President Bush’s program to cure America’s “addiction to oil” by using biofuels. We’ll grow our way to self-sufficiency. Not only are oil prices at all-time highs but diverting agricultural land to energy production is a major factor in the rise of worldwide food prices. We’ve had food riots in Mexico and Egypt.

Had the Bush administration and Congress exhibited the wisdom and courage to slap a big honking gasoline tax on drivers after 9/11 - or even in 2006, when the President made his “addiction to oil” speech - it would have been a better energy policy than the corns.

We could have reduced consumption, cut oil imports, supported low-income drivers with income tax breaks, and used the rest of the proceeds for deficit reduction or something else useful. Food would be cheaper. So would fuel, because demand would be lower and we’d probably have fewer financial speculators.

So in avoiding a gas tax, higher prices persist and hundreds of billions of dollars are transferred to oil-producing countries. America need to demonstrate that it is willing to do painful things in the present to ensure future prosperity.

Turning biological waste like wood chips into fuel makes a lot of sense. But devoting vast acreage of America’s breadbasket to fuel - about a third of the U.S. corn crop is dedicated to ethanol - is a really terrible idea, as we’re now seeing.

In spite of the real estate recession and record-setting energy prices, the art collection market is still partying like it’s 1999. Every shattered record, though, recalls the specter of 1989, when a cooling economy overwhelmed the hot contemporary-art market like a nuclear winter.

A-list artists such as Koons saw their prices plunge, but the hardest hit were small-business owners specializing in contemporary art. In New York City alone, more than 70 galleries folded. Knowledgeable art dealers aren’t waiting around to see if the crash will finally come in May, during the Sotheby’s and Christie’s International annual spring sales of postwar and contemporary art.

Those entrepreneurs are turning to new markets and applying lessons learned in the last downturn to ensure that they’re nimble enough to succeed in either a continued boom or a bust. Burned by that experience, they are now more selective about what they stocks, and won’t deal in works by artists who are are overproducing.

Specializing in lesser-known and regional artists is one strategy as their prices are more stable than top-tier names. Some continue to represent elite names, but manages volatility by boosting prices no more than 10% or so between shows, no matter how an artist fares at auction.

It’s a strategy that worked. When the market was rising, some collectors complained that prices were too cheap and devalued their investments. But when the cycle turned, none of the work was marked down, thus maintaining the prestige and perceived value.

Broadening customer base by focusing on the international market. In the late ’80s high-end art buyers came from the U.S. and Japan; when those economies simultaneously tanked, the art market followed. Now China, the Middle East, and Russia also field wealthy collectors, all of whom are enjoying the effects of a weak U.S. dollar.

Art fairs are another new bright spot, because they bring in new clients and high-volume sales. The main thing is to understand there is a limit to how long people will pay attention. There may be a very nice revenue stream while it lasted. The trick is to know when to move on to the next one.

1. Morocco

Though the Moroccan dirham has strengthened slightly against the dollar, the ancient cities of Casablanca, Fez and Marrakech still have many café meals costing less than $5. Classic budget hotels in atmospheric narrow streets, such as the Hotel El Muniria in Tangier, where Allen Ginsberg and Jack Kerouac stayed, cost around $30 a night. Plenty of luxury hotels are available too.

2. Panama

This small country boasts mountains, rainforests, 1,500 miles of coast and - of course - the magnificent canal, where you can gawk at giant supertankers being raised and lowered through the locks. Exchange rate is unaffected since Panama’s currency, the balboa, is pegged at parity with the U.S. dollar.

3. Vietnam

There’s never been a better time to visit one of Asia’s most fascinating countries, with pristine beaches and unique crafts: The dollar goes further against the Vietnamese dong than it did three years ago. You may have enough left to splurge on a fivestar hotel, such as the new Park Hyatt in Ho Chi Minh City.