Can the Clunker Be Saved?

Maybe it was the nickname "cash for clunkers" that doomed the federal government's $1 billion plan to spur new auto sales. No matter, the business press today continues to spin out wheezing car metaphors for this lemon of a program that is now officially suspended as of late Thursday night after running out of cash. The Wall Street Journal contributes this dandy: "'cash for clunkers' runs out of gas," while the New York Times deadpans that the plan is "so popular that it's broke." Matthew DeBord, in an incredulous post on The Big Money's "Shifting Gears" blog, writes "Many commentators assumed that the program’s $1 billion wouldn’t last until November. They probably didn’t guess CARS would run out of money before … August." The culprit was some 250,000 beat-up cars that were turned in for more fuel-efficient models in the first week. At as much as $4,500 a pop, that exhausted the budget for clunkers, Reuters writes.

There is faint hope the program could be extended, but it would require Congress to find the money (and votes) before they leave Washington for the August break. The White House, too, insists the program is not dead, but, the NYT reports, that is only "creating confusion about its status." Still, the White House said in a statement, "Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."

Here's a math riddle: How many million-dollar bonuses can you afford to pay out to your top bankers if you lose a combined $55 billion in a year? The Financial Times, citing fresh data from Andrew Cuomo, New York attorney general, has the answer. Citigroup (C) "which suffered a $27.7 billion loss, paid million-dollar bonuses to 738 employees. [Merrill Lynch], which lost $27.6 billion, paid 696 bonuses of $1 million or more," the newspaper writes. The WSJ tallies the total bonuses tab at nearly $33 billion for just nine banks. That includes "more than $1 million apiece to nearly 5,000 employees—despite huge losses that plunged the U.S. into economic turmoil," the newspaper writes. To put this gaudy sum in perspective, the WSJ tells us, "the $32.6 billion in bonuses is one-third larger than California's budget deficit." The Cuomo report no doubt will stoke the populist ire in Washington over reining in fat cat pay, particularly towards banks that have been propped up by taxpayers. The NYT points out that on "Friday, the House of Representatives may vote on a bill that would order bank regulators to restrict 'inappropriate or imprudently risky' pay packages at larger banks."

Microsoft (MSFT) CEO Steve Ballmer has been forced to defend his company's search deal with Yahoo (YHOO) in the face of mounting investor and analyst skepticism. "People haven't figured it out," Ballmer told a meeting of investment analysts after shares of Yahoo, which had dropped 12 percent on Wednesday, tumbled an additional 3.6 percent Thursday to $14.55. "This was a win-win partnership," Ballmer insisted, adding that Yahoo is set to see its profits expand 70 percent from the deal based on its own figures. The deal fundamentally changes the chemistry of Yahoo with the likely departure of "a wave of top-tier engineers ... taking with them the inner geekiness that's fueled much success over the years," writes Business Week. For years Yahoo has walked a tightrope between being a search company and a content company. "I think they've made the jump now" into content, one search trade editor tells Business Week.

Investors might be down on Yahoo, but after the latest round of earnings results, there are encouraging signs that many companies believe they've weathered the worst of the recession and are "growing cautiously optimistic about an uptick by year's end," writes the WSJ. Analysts note that more companies than usual have beaten earnings targets. That's a trend that normally occurs at the bottom of a recession. With upbeat forecasts for economic growth and fewer job losses, "some economists are saying the worst is over," it writes.

Knauf Gips KG, a German drywall company that does good business in Iran, has warned its employees there: If we catch you taking to the streets to protest, you're out of a job, the WSJ reports after seeing a copy of the edict, which apparently comes down from the Iranian government itself. "The order by Knauf, a drywall-manufacturing company with decades of business history in Iran, shows how foreign companies in Iran are vulnerable to severe repercussions if they don't comply with demands from the regime," the newspaper writes.