POINT OF VIEW


Snow, Chicago, GMand AbuDhabi


BY JOHN VAN HORN E


VERY YEAR, CITIES ACROSS THE snow belt let their citizens know that effective on a certain date (usually Dec. 1), overnight parking is banned on most streets. The reason? Snow. They ban on-


street overnight parking so the plows can get through and move the snow around. Fair enough. But here is my annual question for all you living where the white stuff piles up.Where do you put your cars?


See, during the warmer


months, folks park on the streets and complain that there isn’t enough parking. Now when it snows, the cars just up and disap- pear. Where do they go? And if they can go there in the winter, why not in the summer? I usually get stories about


here. I realize that running a trillion dollar investment bank is dif- ferent fromrunning a tinymagazine, but something doesn’t seem to be right.. I checked with my financial guru on investing and, yep, I


was right.He said thatMorgan Stanleymost likely projected a 10 percent or so return to its investors a year ago when the deal was cut, but then…there are no guarantees.The bankmakes itsmon- ey on the fees it charges to put together these deals and also a per- centage when it is sold. They use OPM(Other People’sMoney), so their corporate downside isminimal if any.His comment: “All in all, I guess that they have some pretty unhappy investors.”


Now when it snows, the cars just up and disappear. Where do they go?


folks who own two cars, one a beater that can take the snow and ice and salt, and the other a good one to drive when the sun is warm. They exchange locations depending on the season. But that doesn’t answer my question. There is still a car floating around that has to be put somewhere. My point is that if there is room enough for all the cars to


park off-street in the winter, why is there such a parking problem in the summer? I’mwaiting for the answer.


*** The New York Times reported in mid-November that the


Chicago Parking Meters operation is pulling in $1.1 million a week and is operating on a 70%net profitmargin.That’s a profit of $700,000 a week or $36.4 million a year. Sounds like a lot, doesn’t it. I know nothing about high finance but consider this. They


paid $1.15 billion for this deal. They are getting a return of 3.17%. I’m sure that if I had a billion dollars to lend, I could get at least, what, 10% on the open market. (Morgan Stanley, the money partner in this deal, has a tax equivalent municipal bond fund that generates 11.5%.Thatmeans, I think, that the fund gen- erates a net amount the equivalent of a normal fund that makes 11.5%and is taxed.) SoMorgan Stanley could have invested the $1.15 billion in


its own fund and made nearly four times what it’s making by investing in the parking business in Chicago.You might say that the income will increase over time as the rates increase, but then the income from the bond investment would compound over the years (double every seven or so years), wouldn’t it? Can someone check my numbers and tell me where I’m off


6 JANUARY 2010 • PARKING TODAY • www.parkingtoday.com *** General Motors reported (in


mid-November) that it lost “only” $1.2 billion in the third quarter, showing that as a sign of progress. This after the U.S. government swept in, fired its CEO, forced it


into bankruptcy, cheated its bondholders, and shored up the com- pany to the tune of $52 billion. The Chief Financial Officer said that the uptick in revenues


and downtick in losses can be used as only a harbinger of a “trend” because the accounting procedures used don’t meet the test of normal accounting practices. The company also said it would begin repaying $6.7 billion


in U.S. government loans with a $1.2 billion payment in Decem- ber. It could pay off the full amount by 2011, four years ahead of schedule, but the money will come from funds lent by the gov- ernment, theAssociated Press reported. Is there anyone out there who thinks this company can pos-


sibly survive? Particularly since the UnitedAutoWorkers now own a large part of it? Sort of reminds me of whenArthur Scargill, leader of the


coal miners in the UK, demanded that a mine be kept open. The problemwas there was no coal left in themine. He didn’t care. Just think. If GMhad gone under a year and a half ago, the


other car companies would be picking up the slack, most of its workers would be working for them, and its assets would have been sold to companies that could actuallymake cars at a profit. But no. It’s just too large to fail. Itwould seemtome that one


of the requirements of “coming out” of bankruptcy be that the companymust operate at a profit. But then, that’s impossible.With its legacy retirement pro-


gram problems and untenable union demands, it has nowhere to go. Its competitors have either cut better deals with the unions (Ford) or are non-union (virtually everyone else exceptChrysler). Their costs are much less than GM’s. I guess GMplans to lose money on every car it sells, butmake it up in the volume.


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