What would it take to push Saddam Hussein off the front page? How about the Ford Motor Company going bankrupt? Impossible? Not according to Egan-Jones, a rating agency whose founder, Sean Egan, recently told Grant’s Interest Rate Observer : “If the name weren’t Ford, they would have been forced to file for bankruptcy already.”
How shaky is Ford? Egan-Jones rates Ford “BB-,” for junk-a gloomier view than that of better-known agencies Moody’s and Standard & Poor’s, which nevertheless are hardly bullish on Ford. And Egan-Jones has been right before, as in the case of WorldCom.
A look at Ford’s capitalization shows the common stock trading at about $8-and with 1.8 billion shares outstanding, it has a market value of less than $15 billion. Ford’s debt is $166 billion, comprising more than 90 percent of the company’s enterprise value. Egan-Jones gave Grant’s eight solid reasons to be bearish on Ford: “tight or negative interest coverage, a big pension-fund liability, low or negative net worth (after giving effect to the pension liability), excessive leverage, heavy reliance on securitized debt sales, long odds against a Bush administration bailout (if it should come to that), long odds against support from the Pension Benefit Guaranty Corp. (which, incidentally, showed a $3.6 billion negative net worth at the end of September) and rising SUV inventories.” In addition, the strong possibility of Ford losing its commercial paper market might very well precipitate a bankruptcy.
Who is leading the Ford Motor Co. down the tubes? William Clay Ford Jr., the 45-year-old chairman and chief executive, whose great-grandfather founded the company. You may recall that Mr. Ford was the greedy C.E.O. who took 400,000 shares of Goldman Sachs stock for himself when the investment bank went public in 1999. It was an almost unprecedented example of corporate overreach; many shareholders were outraged, and the board of Ford formed a committee to look into the matter.
How much have Ford shareholders lost? Since 1999, when the stock reached a high of about $40, $57 billion of the company’s value has evaporated. (By the way, Mr. Ford’s extended family owns a huge block of the company’s stock. We’re starting to feel sorry for all those rich Fordies.)
There is no evidence that William Clay Ford Jr. can do the job. He should be paring down debt, closing plants, liquidating nonproductive assets and developing strategic alliances around the world using the strong franchise of the Ford brand. Instead, he’s posing for ads on nationwide television.
His epitaph will read: He made a small fortune from a very large one.
How Homeless Advocates Endanger the Homeless
It would seem fairly simple: New York City has an extensive and expensive system of shelters to provide housing for the homeless, no questions asked. There is, however, one catch-the city believes that those taking advantage of the shelters should obey the rules. And the rules are not especially oppressive. Drug-dealing isn’t allowed (it being illegal, after all). Smoking in bed isn’t allowed (the practice has been known to kill people in fires). Stealing isn’t allowed (this rule has its origin in the criminal code of the City of New York and most of the civilized world).
Pretty simple, eh? Well, perhaps not.
The city would like to evict homeless single adults who don’t abide by this simple code of conduct, as well as those who refuse to take part in medication plans and job-training programs. Homeless advocates, however, are trying to block the city’s efforts to impose some order in the shelters. Homeless advocate Steven Banks, who is arguing against the city’s position in State Supreme Court in Manhattan, said that some of the misbehavior can be explained away as “garden-variety violations of administrative rules.” Presumably he was not referring to theft, drug-dealing and smoking in bed, but to the practice of some shelter residents of skipping social-service appointments. With friends like Mr. Banks, the homeless don’t need enemies.
The Bloomberg administration’s commissioner for homeless services, Linda Gibbs, presented a far more realistic argument for enforcing the rules. She noted that many “frail, elderly individuals” are risking their lives by staying on the streets because they’re afraid to enter a shelter. With good reason: The person in the bed next to them may steal what few possessions they have. “The purpose of this regulation is to say if you’re in a shelter, you have certain responsibilities,” she said. Commissioner Gibbs has shown a refreshing courage to go face-to-face with homeless-advocacy groups, who have historically abused the court system to shape municipal policy for the homeless.
By demanding that the homeless desist from illegal, disruptive activity, the city is looking after the best interests of the people in the shelter system. The same cannot be said of the ideologues who oppose the evictions.
The Floating Hospital
Years ago, New York’s infamous “garbage barge” caused much mirth in late-night comics’ monologues, as a floating barge piled high with the city’s refuse meandered around the Eastern Seaboard, unable to find a state that would let it dock. But there’s little amusing about the plight of another New York barge, the Floating Hospital, a nonprofit outpatient medical facility that treats 3,800 low-income patients a year. The Floating Hospital is currently marooned in Brooklyn, at a cargo pier run by the Port Authority. It so happens that the pier is unsafe, and the barge is forbidden from letting any patients come on board. How did the barge end up there?
The Floating Hospital is an orphan of 9/11 and the threatened transit strike: For years it was docked at Wall Street, then moved to the South Street Seaport after the attack on the World Trade Center, because the city needed the Wall Street piers. Then, when the transit unions were about to strike last December, the Seaport booted the barge out to make room for ferries. But when the strike threat passed, Seaport Marketplace L.L.C.-the company which manages the Seaport-told the hospital it would no longer provide a free berth. One might think that a large retail operation might like to offer a patch of
Surely there’s a place on the city’s 548-mile shoreline for the Floating Hospital. The city should do what it can to make sure that thousands of its neediest residents are no longer medically adrift.