CDS on US Treasury Bonds

In the last 4 days, I've read at least two articles on people buying credit default swaps on US Treasury Bonds.  Is there a reason people do this, or is this the dumbest thing in the world?  If the US Treasury defaults on its bonds, chances are, these articles argue, the counterparty that sold you the swap won't be able to honor its obligations.  You won't need the swap - our economy will be royally screwed!

While our economy isn't doing so well, is the US Treasury really a threat such that we need to buy insurance against it?  Or is there another reason that companies are buying CDS's on US Treasuries?

UPDATE:  Can the US government even default on its loans?  Doesn't the Fed have the ability to print an unlimited amount of money?  Sure, inflation would go up, but better we have drastic inflation than the nuclear bomb of a US government default...

USS Enterprise Rent a Car

Enterprise rent-a-car was founded by some guy who used to be in the navy and served on the USS Enterprise (the navy ship, not the ship commanded by Captain Picard).  He named the company after the ship. Who knew?

Enterprise Rent a Car is also the naton's largest rental car agency.

Exxon Boasts Huge Profits In 2008

Exxon made $45.2 billion in 2008.  It increased earnings by $5 billion from 2007. 

Exxon earned more than $1432 every second in 2008.  Every second!

The Walmart Effect

I just finished reading the book "The Walmart Effect."  Although there weren't any real surprises in the book, it was still amazing to read about the power and reach of the company that is known commonly known as the Behmouth of Bentonville.  Walmart not only changes the lives of its own customers, but it changes the way every other company in the world does business.

Ever buy a stick of deodorant from, well, anywhere?  A few years ago, every stick of deodorant actually used to be packaged in a cardboard box.  That is, the stick of deodorant was put in a small box and the box was put on the shelf and sold to the customer.  Then, Walmart came along.  Walmart asked every deodorant manufacturer to stop packaging the stick in a box, and just put the actual stick on the shelf for the customer to purchase.  Now, every retailer in the world, from CVS to Target, sells the stick of deodorant without the box.  Think about the the number of trees that have been saved by this idea!

Other interesting facts:

• Walmart arguably keeps national inflation down.  Imagine that!  A retailer singularly able to keep inflation down
• A Walmart Supercenter employs around 900 people
• The aisle in Walmart with all the pallets on the ground is called Action Alley
• Walmart used to sell a gallon of Vlassic pickles at $2.97.  Just think about what that price says about the product.  How are they able to pack, ship and sell a jar of pickles for that little?  That is the Walmart Effect

Walmart is already a ruthlessly efficient corporate titan.  Still, I wonder if it could do more to become even more profitable...

• Why not add a convenience store to each Supercenter location?  That is, why not have a 3000 square foot store next to each 160,000 square foot store?  That way, when I need a gallon of milk, I can still pay the "always low prices" of Walmart and just pop in and pop out of the store.  Think of it - Walmart prices married to 7-11 convenience would be unbeatable!  Walmart already has the employment and distribution capacity (and obviously the real estate) to do this.  This could substantially increase sales with, I imagine, little additional overhead.  
• Supercenters often have automotive repair centers.  Why not add a car wash? 

Update on Tuesday, February 3, 2009 at 09:20AM by Moiz Ali

Walmart's Lee Scott just retired as CEO of Walmart.  In 2006, when he took a month long vacation, people realized that he was burned out.  Can you believe that?  At Walmart, one one-month long vacation over the course of a CEO's entire tenure indicates you are burning out.  The 43rd President of the United States spent over 450 days as President at home in Crawford, Texas.  Walmart is ruthless, and I love them!

Buy Anything Jerry Seinfeld Tells You To

Microsoft released earnings today that didn't meet analyst expectations. It had 47 cents in earnings per share over the quarter, as opposed to analyst expectations of 49 cents per share (revenue also missed expectations). Today, its paying the price - down 10% and trading at $17 and some change.- a new 52 week low. Its trimming fat by firing 5000 employees and reducing compensation packages - a move thats long overdue (see Suleman Ali).

I think in the short term, its a great buy. It the most solvent company in the history of the world; it has no long term debt and $20 billion in cash right now. Its going to try and acquire some companies that are "distressed" in the near future, although I have less faith than many in its ability to acquire Yahoo. Notably, its earnings report indicated that revenue at its server and tools division, and gaming console divison, were up. Its "twin towers" of Office and Windows OS, however, performed poorly. Part of this is due to the downturn in the economy, and consumers trying to make their PC's last longer since thats an easy way to save a considerable amount of money. Part of this is also due to the fact that Windows Vista sucks ass. I've never used it, and never will. I'm not buying another computer until Windows 7 comes out, and neither are alot of people. Windows 7 got good reviews by the WSJ and the NYT today; its basically a version of Vista that actually works. When Windows 7 comes out (which may be as early as the fall), MSFT sales will increase in its core divison.

Nor is Apple doing so well that it could ever replace MSFT as the dominant OS. Walmart uses Windows, as do all its suppliers, as does everyone else except college students, video professionals, and hippies.

If thats not enough, MSFT also has a 3% dividend thats coming up. They're one of the few companies where you can be assured that the dividend will not be slashed.