5 Dumbest Things on Wall Street: June 5


Michael & Me

Michael Moore is enjoying the last laugh over GM's bankruptcy. But we are having the best laugh over his plan to turn the Motor City into Grand Central Station.

Filmmaker and provocateur Moore danced on GM's grave Monday (Stock Quote: GM), posting a letter to readers where he expressed " joy" over GM's demise. Writing from his hometown of Flint, Mich., he was surrounded by "friends and family who are filled with anxiety about what will happen to them and to the town," Moore cranked the schadenfreude up to 10, reveling in the fact that his once powerful nemesis—well, his first nemesis since he has now amassed quite a collection—is now gone.

One might think that Moore would cut the company a little slack considering it played such an instrumental role in launching his career. Twenty years ago, Moore shot to fame producing and starring in "Roger & Me," a documentary in which he illustrated the negative impacts of then-CEO Roger Smith's decisions to shut several auto plants in Flint.

Clearly there would be no Moore had there been no Roger, and the world would never have discovered the director's talents for raking muck at Wal-Mart (Stock Quote: WMT) and trespassing on Charlton Heston's property without getting shot.

Nevertheless, Moore's ungracious attitude toward his late co-star is not the bone we are picking with the director today. No, the reason we single out his missive as worthy of our dumbest list is his misguided plan for Detroit to manufacture cabooses instead of cars.

In his letter, Moore advises President Obama to act like President Roosevelt did after the attack on Pearl Harbor and "tell the nation that we are at war and we must immediately convert our auto factories to factories that build mass transit vehicles and alternative energy devices."

"Let's hire the unemployed to build the new high speed lines all over the country. Chicago to Detroit in less than two hours. Miami to D.C. in under seven hours. Denver to Dallas in five and a half. This can be done and done now," Moore urges.

Whether the Denver/Dallas corridor is a hot market for travelers, we don't know. And Moore does not provide statistics on the matter, so we can only assume he doesn't have a clue either. We are also not sure if he has ever heard of a government-owned railway called Amtrak which is expected to lose $476 million in 2009.

As to whether Moore has the slightest awareness that railway bankruptcies due to overbuilding have been the rule rather than the exception in America from the Civil War through Conrail, well, you'll have to jump on a train to Michigan to ask him.

Better yet, take a flight, it's faster and most likely cheaper.

Dumb-o-meter score: 95 -- Hey Mike, even toymaker Lionel Trains went bankrupt in 2004.




Tyson Plays Chicken

You know the dollar is weak when companies start settling their debts with chicken wings instead of greenbacks.

Tyson Foods (Stock Quote: TSN) agreed last week to donate up to 1.7 million pounds of chicken to Illinois food banks to settle a lawsuit claiming the company artificially inflated the retail weight of its poultry. Under the deal approved by an Illinois judge, the world's largest meat producer agreed to resolve the matter out of court without having to admit any wrongdoing.

The suit, originally brought eight years ago by a couple from Hartford and an Arkansas man, alleged that the Springdale, Ark. company plumped up its poultry products between 1997 and 2003 through a cold-water immersion chilling process that resulted in absorption and retention of water under the birds' skin and muscle tissues.

Instead of the old butcher trick of weighing your bird with his thumb on the scale, this sounds like Tyson found a high tech way to do it first.

More complicated, however, is the way Tyson set the conversion rate between bucks and birds to make the lawsuit go away.

Tyson is creating a $2 million fund to settle claims by an unspecified number of individual class members. But since only a few customers can prove they bought the chicken all those years ago, the company agreed to donate unclaimed funds in the form of fresh poultry, expected to be about 1.7 million pounds, according to John Hoffman, a St. Louis attorney for the plaintiffs.

Hoffman also said Tyson will pony up $750,000 in attorneys fees—in dollars, not drumsticks—to be split among six law firms involved in the litigation.

We say the lawyers deserve every penny. They did, in fact, beat Tyson in a high stakes game of chicken.

Dumb-o-meter score: 90 -- At this rate it won't be long before Colonel Sanders replaces Ben Franklin on the $100 bill.




Housebreaking Citigroup

Citigroup's new master in Washington sure has trained it well. The bank used to just rollover and beg. Now it welches too.

Citigroup (Stock Quote: C) informed about five former top executives that it won't pay them tens of millions of dollars in promised severance payouts in order to avoid public and political backlash, according to Tuesday's Wall Street Journal. The affected executives include Michael Klein, who co-ran Citi's investment bank, and Kevin Kessinger, formerly head of operations and technology, said the WSJ.

Klein and Kessinger have already pocketed more than half of the roughly $100 million they were promised by Citigroup when they left last year. But company officials recently decided not to cough up the remaining cash, preferring instead to wait for a chill in the political climate.

Citigroup has received $50 billion in taxpayer-funded capital, and the U.S. government soon will own as much as a third of the company's common shares. Company officials reportedly told the Treasury Department about their plan to stiff the executives out of their severance payouts, even without government officials asking for it. Congress lambasted executives from fellow TARP recipients AIG (Stock Quote: AIG) and Bank of America (Stock Quote: BAC) earlier this year for making oversized payouts to departing executives.

Wow! Citigroup is so afraid to piss off Congress that they won't even honor a contract. Talk about "House"-breaking a company!

But seriously folks, even though these former Citigroup bigwigs probably don't deserve such outrageous settlements considering the bank's sorry state, it makes us even more nauseous to see Citi's new style of management.

Sucking up to Washington for fear of public repercussion is no way to run a company, even a quasi-government business like Citi. And if President Obama says he does not want to be in the banking business (or, for that matter, the automotive and insurance businesses), then Citi CEO Vikram Pandit should at least take him at his word and make his own decisions.

Now run along, Citigroup. That's a good boy!


Dumb-o-meter score: 85 -- Stop pandering Pandit! Just do your job. .




Biogen's Batty Board Battle

The 2000 presidential election has nothing on this week's Biogen Idec's (Stock Quote: BIIB) board vote.

Carl Icahn declared victory in a shareholder vote to put a slate of his own hand-picked directors onto the board of Biogen on Wednesday, ostensibly moving the activist investor closer to controlling the biotech company. Icahn, who was not in attendance, proclaimed his slate won two seats, out of the four people he had nominated for Biogen's 13-member board. Icahn has long been a critic of the company's management practices, especially with regards to executive compensation.

Biogen, however, is telling Carl to cool it. The company says it's still tallying votes and can't confirm when the counting will be completed. Biogen's stock is down about 15% over the last year, weighed down by problems with its multiple sclerosis drug Tysabri.

But that's only part of the nuttiness that emerged from the company's annual shareholder meeting in Cambridge, Mass. The real insanity started when the company's chairman unexpectedly called a recess to the proceedings in order to give shareholders more time to vote. With a slam of his gavel, he extended the voting deadline from 9 a.m. until 2 p.m., much to the chagrin of Icahn's associates, who yelled their displeasure from the floor.

Upon learning of management's filibuster ploy, Icahn immediately released a prepared statement saying: "Shareholders should demand that this board finally act in their interest instead of just attempting to relect (sic) themselves. There is absolutely no reason to adjourn the meeting for hours in order to keep the polls open. Do not let them get away with hijacking the election."

After reconvening at 2 p.m., the meeting was promptly adjourned without final results.

"We have the count. We did the count. We think we're there," Icahn told TheStreet.com two hours after the close of the meeting.

Better wait before taking that victory lap Carl. We've seen this hanging chad story before.

Dumb-o-meter score: 75 -- Icahn defeats Biogen? Biogen Defeats Icahn? Dewey Defeats Truman? Stay tuned..




Fantasy Football Folly

NFL players want to get paid not just for their performance on the field, but online as well. Now that's what we call fantasy football.

Yahoo! (Stock Quote: YHOO) filed a lawsuit against the NFL Players Association Monday, claiming it should not be forced to pay royalties to use player statistics and photos in its online fantasy football game. According to the internet giant's complaint, a licensing arm of the players union is threatening to sue Yahoo if it does not shell out for the information.

Why doesn't Yahoo want to pony up to the players? Well, quite simply because the information is already publicly available.

Makes sense to us. Fantasy footballers watching the game for free on television don't need NFL stars to help them keep score. They just need them to score.

And while Yahoo! doesn't have an offensive line to protect them from an NFL Players lawsuit, they do have the First Amendment on their side plus some pretty powerful precedent. The NFL Players lost a similar dispute in April to CBS Interactive, and the Major League Baseball Players Association and Major League Baseball Advanced Media lost a comparable case in 2007.

Upon further review, we can only believe that the court will rule in favor of Yahoo! if the NFL Players take legal action.

Sorry guys. It's fourth and long. Time to punt.

Dumb-o-meter score: 70 -- Those gridders sure are greedy. NFL fans are already getting sacked by high ticket prices.




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