Harold Maass of The Week The Best of Today's Business

NEWS AT A GLANCE

GM makes drive for Indian market

General Motors is investing more than $200 million in a powertrain plant in India, as part of an effort to double its share of India's fast-growing automobile market, to 10 percent by 2010. When the new plant, in western Maharashtra state, is done, GM will be able to make more than 225,000 cars a year in India. GM is unveiling a new small car in India next year, but says it isn't trying to compete against Tata Motors' super-cheap Nano, set to launch in October. (Reuters) The $2,500 Nano was hailed as a car for the masses, but its launch is under threat from large protests over Tata's alleged state-aided theft of farmland for its factories. Similar protests have stalled other factory projects in rural India. (BusinessWeek.com)

Fannie Mae shakes things up

Fannie Mae CEO Daniel Mudd replaced the mortgage giant's chief financial officer and two other top deputies as part of an effort to restore investor confidence. The replacements for CFO Stephen Swad and the other two come from inside Fannie. (AP in Yahoo! Finance) Fannie's shares have dropped 90 percent this year and it has sustained record losses due to the mortgage crisis. "It's like sports, when the team is losing, everyone wants to see a new coach come in," said Len Blum at Westwood Capital LLC. "I'm not that moved by it." Fannie and Freddie Mac sold $3 billion of short-term notes yesterday at yields that eased immediate fears of a government bailout, but worries over their capital levels linger. (Bloomberg)

French banks hit, again, by credit crisis

Credit Agricole, France's largest retail bank, reported a 94 percent drop in quarterly profit, to $112 million, and fellow French bank Natixis booked a worse-than-expected $1.51 billion loss. Agricole's earnings were set back by $1.64 billion in writedowns tied to the slumping credit market and monoline insurers. (Reuters) Natixis, which is seeking $5.5 billion in new capital, was hurt by $2.23 billion in writedowns. It said it will cut back its investment banking unit. "Both banks grew too fast in corporate and investment banking," said analyst Alain Tchibozo at ING Wholesale Banking in Paris, and both will need to "restructure their investment banks very deeply." (Bloomberg)

Dell's direct-sales model pays off, in India

Dell has gotten a lot of flak for relying too long on its direct-to-customer sales model in the U.S., but Indian customers are eating it up. That's great news for Dell, because India's PC market is growing three times faster than the U.S.'s. Thanks in part to bulk purchases by corporations, which prefer buying over the phone or Internet, Dell's share of the Indian market has doubled over the past three years. Dell is also expanding its retail business as it seeks to grow abroad, but India is a validation for keeping Internet sales at part of the mix. "Dell's rise from $20 a share to $25 reflected a realization that Dell was not such a chump of a company," said analyst Clay Sumner at Friedman, Billings, Ramsey & Co. (Bloomberg)

BEST COLUMNS OF THE DAY

Why not bail out the Big Three?

After the U.S. bailed out Bear Stearns and has pledged to do the same for Freddie Mac and Fannie Mae, says the Los Angeles Times in an editorial, the Big Three U.S. automakers "think it's their turn." And why not? With nearly 250,000 U.S. employees, aren't they, too, "too big to fail"? "The short answer is no, they're not." GM, Ford, and Chrysler are demanding $100 billion to compensate them for new fuel-efficiency standards imposed by last year's energy bill. But consumers, as usual, were ahead of lawmakers in demanding better gas mileage, and way ahead of the Big Three. The fault for the U.S. auto industry's fix lies with U.S. automakers. And like it or not, "the flip side of being free to succeed is being free to fail."

Banking pain? Yes. Crisis? No.

We've all heard about the banking "crisis," says David Weidner in MarketWatch, but really, "the facts don't support the 'crisis' label." Sure, this isn't "a golden age for U.S. banks," with lenders refusing to lend, a few teetering on the edge of collapse, and many more unsure of the value of their assets. But compared with, say, the savings and loan collapse, when 1,000 lenders failed, "the current banking crisis is comparatively mild." The U.S. has about 7,200 banks with combined assets of $13.4 trillion, and the current failure rate is low by historical standards. "Banking is a cyclical business," and this is a down cycle. But "it's probably not even in the top 5" moments in bad banking. Hardly time to stash your money under your mattress.

GOOD DAY FOR: Going vegetarian, after the rising cost of meat in Cambodia, where inflation is officially at 37 percent, has made rat meat increasingly popular. But even rat meat, now $1.28 a kilogram, has quadrupled in price this year. "Not only are our poor eating it, but there is also demand from Vietnamese living on the border with us," said agriculture official Ly Marong. (Reuters)

BAD DAY FOR: Added value, as Best Buy is offering a service in which it will remove all the free software that comes on PCs, for a fee of $30. Such services spell trouble for the software industry, which pays PC makers hundreds of millions of dollars to preinstall programs for photo editing, personal finance, and other services. Critics call it "bloatware" that slows computers down. (The New York Times)

NOTED: The Securities and Exchange Commission voted to adopt international accounting standards for U.S. businesses. The rules, which aim to make it easier for investors to compare businesses operating in different regions, are already used in more than 100 countries, including all of Europe. If finalized, the SEC's decision would phase U.S. companies into the accounting system starting next year, with all businesses aboard by 2014. (BusinessWeek.com)

This column was written by Peter Weber and edited by Harold Maass of TheWeekDaily.com.