Tomorrow I will be live at the Los Angeles Auto Show.

We have a live interview with the CEO of Nissan at 7:45am PT / 10:45am ET followed by interviews with auto execs from Audi, Volkswagen, Ferrari and more.   We should be showing you the new Chevrolet Volt, the electric car that GM has big hopes for.

In addition to discussing the state of the auto industry with the executives we are going to have a little fun (don’t we all need it?) and show you some of the coolest cars and concepts around.   Be sure to tune in on Fox Business all day long.

A bit of sad irony though that while we sit down with Nissan’s Carlos Ghosn, his counterparts from the American automakers are in Washington asking for government money.

Economic anecdote: Newark airport was only mildly busy on flight out to California today.    Fewest people I’ve seen in security line in a long time.

The U.S. auto industry (via GM) is going straight to the people in the form of a new video on YouTube.   It’s designed to lay out a case for a government-sponsored cash infusion.    Conclusions are in the eye of the beholder, but there are two main takeways in my mind:

1. The extent of the health care/benefits/pension problem is greater than previously thought.   Together GM, Ford and Chrysler employ 239,000 people yet as the video states around 2 million people rely on these companies for health care and other benefits, a nearly 10:1 ratio.

2. The debate over whether trickle down economics is dead should be given a gravestone after watching this video.   The automakers make the case that millions of Americans would be impacted by their failure, even those only indirectly affiliated with the auto industry.    The argument is that if one or all of the “Big 3″ go down, cars won’t be sold and everyone in the chain (builders, sellers, distributors, mechanics, etc) would be injured economically.   The negative impact trickles down.   The inverse then must be at least partly true.   Benefit costs aren’t the only reason the U.S. automakers got into this precarious position.  It is also slowing sales of large and profitable SUVs.   If sales didn’t drop off a cliff as gas prices rose the financial condition of GM, Ford and Chrysler would be less weak.   Suddenly the buyer of that $45,000 GMC Yukon looks very important.    Many of the same organizations who shouted that trickle-down doesn’t work are now using a “trickle-up” theory of defense.

The New York Times cover story today is about how some states are facing big budget deficits and are looking at a variety of ways to cut costs and fill gaps in spending.  Those include reducing social services, freezing hiring and, of course, raising taxes.   Michigan is even discussing salting roads less in the winter, a potentially dangerous misstep.

As states try to figure out how to cut costs and services to current taxpayers, it seems no one is talking about is rolling back the retirement age for government workers to help ease at least one part of the budget problem: massive pension burdens.

California, for example, has the nation’s biggest state economy and also the biggest problems.  The Golden State is facing a nearly $15 billion dollar budget gap and is desperately trying to figure out how to close that, likely through a combination of cost cuts and increased taxes and borrowing.  CalPERS, America’s biggest pension fund, has nearly 500,000 retiree members and 1.1 million more active and inactive members.   CalSTRS, the teachers fund, had 812,784 total members and benefit recipients as of June 30, 2007.   That’s about 2 million active and inactive members between the two organizations in a state who’s 2006 population was just over 36 million.

Pensions aren’t the only problem, but they are a big part of them.  The Sacramento Bee, citing a state analysts’ office, reported back in 2004 that California’s pension obligation will nearly triple in 2009-2010 to $3.3 billion, up from $1.2 billion in fiscal 2002-2003.    At the same time, The Heartland Institute, the average retirement age of a California state worker was 59 years old in 2004.   That’s the average, meaning many workers are retiring at an even earlier age.

The problem also exists on the national level.   According to Federal Computer Week, the average retirement age of a federal government worker was 58.7.   Again, many workers therefore are leaving their jobs and collecting benefits in the early and mid-50s.

Americans are living longer than ever.    The average lifespan in this country is around 80 for women, 77 for men.   Assuming government workers live as long as the general population, retirement in the mid 50’s could end up meaning their retirement is funded for 30 or more years.   It’s entirely possible many government workers will be living off pensions more years than they were employed and contributed to those pensions.

There are other issues as well.   In that 2004 Sacramento Bee report, the paper also highlights the problem of “pension spiking.”   As most pensions are based on the highest level of pay achieved, many workers take a promotion, increase their salary and then promptly retire.   That increases the level of their pension, even if they simply took the new job for a few months.    Compounding the problem is that the more workers retire, the more training is needed to fill those slots.   As state employees move from job to job to help push their pensions higher, more spending is needed to hire and train the new workers.   The Bee reports this “pension spiking” and subsequent spending costs the state an extra $100 million per year.

The irony is that much of the news around GM, Ford and Chrysler involves their huge defined benefit obligations.   Much of the debate around whether to put more government money into these companies tends to come back to the issue of pension and health care payments to those companies millions of retirees.   Private workers may end up working longer to balance out the good news that they are living longer.   Yet there is virtually no discussion of this with regard to government and public sector workers.   I imagine that is because government workers tend to be the ones who vote on their own retirement ages.

Living longer is a good thing.  I hope to be piloting a Sopwith Camel at 90.   But living longer is an even better thing when it’s fully funded and the huge financial burden doesn’t drop on the current crop of taxpayers.  Government needs to learn this before it lectures private sector companies on their own mismanagement.

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One-hundred largest corporate pensions lose $59 billion in funding

SEATTLE Nov. 17 /PRNewswire/ –Milliman, Inc., one of the premier global consulting and actuarial firms, today released the latest update to the Milliman 100 Pension Funding Index, which consists of 100 of the nation’s largest defined benefit pension plans. In October, pensions faced a record asset value loss — more than $120 billion — and after adjustment for liability gains, surrendered a total of $59 billion, dropping pension funding to 92.7%, a 12-percentage-point decline from the funded ratio at the beginning of the year.

Quick anecdote…

Went to my local Target store this weekend to do some retail recon and also pick up some basic items.   When I checked out and put my debit card into the card reader a message came up asking me if I “wanted to put the entire amount on one card.”   Surprised by a message I couldn’t remember seeing on previous visits, I asked the cashier if this was new.  She said she thought it was.  I then asked if she sees many shoppers use multiple debit and credit cards to pay for the same purchase and she answered “yes.”

Perhaps a sign of the times that Target (and its shoppers) feel the need to use more than one credit card to pay a single trip to the store.

There’s been some debate on the comments board of this blog about the demand for auto-related jobs in the south and the supposed unhappiness of those workers.

While no one can speak for every man or woman working for the foreign companies building cars in the South, there is no question about the desire to work here.

I reached out to VW and asked about hiring at their upcoming Chattanooga, Tennessee facility (rendered above), here’s the verbatim reply from VW’s spokesperson:

Under the mountains of Switzerland lives one of the biggest science projects of all time.  It’s a $15 billion dollar operation called the Large Hadron Collider. It is designed to figure out what the universe is made of by accelerating particles to a rate just under the speed of light, bouncing them against each other, and seeing what happens.   Cool stuff.

Opponents of the project expressed fear that the effort could result in a disastrous unintended consequence: the creation of a black hole.   A giant vacuum that starts eating matter until it has completely devoured the earth from the inside out.

Those fears have been realized.  We have not only created a black hole, but two.   Not the world-eating monster doomsday theorists feared.   These eat money, not matter.  They are called Fannie Mae and Freddie Mac.

This morning Freddie said it posted a record third quarter loss of $25.4 billion dollars.   That’s a per-share loss of $19.44.    Not surprisingly, it needs more money.   It’s asking the Treasury for another $13.8 billion dollars.  This looks relatively modest compared to Fannie Mae’s quarterly loss of $29 billion bucks.

The problem with these devourers of capital is that they are not normal companies.  These are entities which possess a near explicit government guarantee on their assets.   They operate under a federally-sponsored conservatorship and more money may be needed to keep them out of full fledged liquidation.

$55 billion dollars wiped out in just three months between the two.   An endless buffett of taxpayer cooking. As the debate rages on in Washington about whether to help GM, Ford and Chrysler, Fannie and Freddie continue to wipe out capital at a record pace.   But it also is getting more to eat every time it cleans the plate.

It must be all about housing, because it’s surely not about jobs.  Fannie Mae employs about 6,400 people.   Freddie Mac just over 5,000 at last count.   Even as it works to get smaller, GM still has more than 200,000 workers.

While scientists in Switzerland rush to smash particles together, Americans don’t have to venture under the Alps to see nearly the same thing.   Fannie and Freddie are the ultimate collision of money and politics, and the black hole has been realized.

Hard hit Detroit is looking for money from the Federal government.   Not the Detroit-based automakers, but the city itself.

From the Detroit Free-Press…

The Detroit City Council passed a resolution today calling for a $10 billion bailout for the city of Detroit.

Council President Pro Tem JoAnn Watson sponsored the resolution to use the money for public service employment, to fund mass transit plans and to place a moratorium on home foreclosures for two years.

Full story here.

I wrote about this back on July 24th, only half joking when I said we should “bail out Michigan.”   With so much exposure to the hurting U.S. auto industry Detroit’s situation is dire.    And here’s the even sadder part of the story: there is a huge need for talented, hard working autoworkers at new plants in the South.   I’m sure Toyota, Hyundai, BMW et al. would love to have some of the experienced people from Michigan.  The problem is that while the worker may be able to get hired, how can they move if they can’t sell their house?   Ultimately many of the out of work autoworkers may be, in a sense, stuck in Michigan.

Instead of throwing money at a problem that’s not going away anytime soon, perhaps we need to find real solutions to match up good workers with good companies in different areas.

Of course, this story from the Washington Post may be the ultimate example, but if someone can pull this off one can imagine it’s a lot easier for a borrower to fib just a bit on the application about income or other assets and get away with it.

A prominent Northern Virginia businessman pleaded guilty today in a case that prosecutors are calling one of the largest in a wave of nationwide mortgage frauds triggered by the decline in the housing market.

Vijay K. Taneja, 47, admitted that he defrauded banks of at least $33 million through schemes in which he created bogus mortgage loans and obtained funds for the same loans from multiple banks. Prosecutors said the case is the largest in Virginia in at least 20 years.

Click here for full story.

The bull rides again!

Not really, but believe it or not there are winners in the American stock market this year.

We are reporting that Wal-Mart (WMT) is the only Dow component that is higher for the year.   Sad but true, and says a lot about the weakness of this market.

The Dow and big caps get an unfair share of attention.   Time to tell stories is limited on TV.   But thankfully not on the internet.

I figured there must be some stocks that are up this year, not including those that are higher because they were bought out or some other event.   So with that optimistic thought in mind, I ran a stock screener searching for companies that have 1) a market cap of at least $1 billion dollars, 2) are higher in 2008 and 3) are higher in the past 52 weeks.

Here’s the result of the search for companies meeting the criteria above:

ALXN, NSC, TECH, BAX, AMED, CPB, HBHC, CXO, WAB, NTES, NITE, NJR, SWN, RAH, STE, TFSL, FLO, WMT, ORH, ONB, GIS, MANT, HCBK, WABC, CRK, VRTX, CBST, HE, EQ, SQM, BRL, AMGN, DNA, PNY, FNFG, EMS, RKT, SF, CMP, STRA, UST, THOR, FFIN, ROH, MYGN, CFFN, FDO, DLTR, LG, VRX, PHLY

Notice how many are biotechs.