Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. Once, I'll to take a look at five of this week's most head-spinningly dumb financial events.
1. Detroit despairs
Ford (NYSE: F ) , Chrysler, and particularly General Motors (NYSE: GM ) are back where they started: running on fumes. In a shocking upset, their proposed government bailout spun out of control last night, when the UAW failed to concede the resetting of wages comparable to foreign counterparts until at least 2011. Those who opposed the costly lifelines wanted a more competitive cost structure right away. After all, the carmakers want the money now, not three years from now.
The CEOs blew the first round. Now the union is taking its lumps in Round 2.
2. A fumbled delivery
FedEx (NYSE: FDX ) got roughed up earlier this week, after the speedy-delivery specialist slashed its guidance for its fiscal year. The company is now looking to earn between $3.50 a share and $4.75 a share this year, or roughly 18% lower than its original outlook.
FedEx isn't the only company talking down its near-term profitability. It makes the dumb list this week because the company is lowering its guidance, even in an environment where fuel prices are plummeting and FedEx is inexplicably trying to push through price hikes. Those factors should add up to wider margins, but now net income is going the other way. Go figure. It's not "brown," but it's most certainly black and blue.
3. Mad about Madoff
Bernard Madoff was arrested last night, charged with masterminding a Ponzi scheme that may have bilked investors out of more than $50 billion. The former Nasdaq Stock Market chairman obviously should know better than to run afoul of securities-fraud allegations.
Is he innocent? Guilty? We'll let the courts decide that. However, with investors already hesitant to crawl back into the market after the pounding that stocks have taken over the past year, the last thing they need to worry about is a rash of unscrupulous advisors.
There may be one silver lining here: More investors might take charge of over their own investments. If so, the full-service brokerage industry will feel the pain.
4. Soft times for hard drives
Things aren't pretty at Seagate (NYSE: STX ) . The hard-drive maker now expects to generate $2.3 billion to $2.6 billion in fourth-quarter revenue, well shy of its original target of as much as $3.05 billion.
Aren't computers selling briskly? Sure, if they're dirt-cheap netbooks. Even then, the lightest ones are going with lower-capacity solid-state drives over spinning hard disks. As hard drives continue to give way to the more portable flash memory in camcorders, laptops, and MP3 players, the top-dog spot for consumer-level computer storage may belong more to flash giant SanDisk (Nasdaq: SNDK ) than more conventional drivesmiths like Seagate.
5. All that glitters isn't Goldman
Goldman Sachs (NYSE: GS ) is in the doghouse again. Bloomberg is reporting that the company is advising clients to buy credit default swaps on municipal bonds -- essentially, a trade that appreciates if the underlying bonds fall in value. The problem? Goldman Sachs often acted as a lead underwriter in selling those same municipal bonds in the first place?
This isn't the first time that Goldman has tried to profit from the downturn of products it originally championed. "Goldman caught a fair amount of flak earlier this year, after reports that it made a $4 billion windfall shorting asset-backed securities," fellow Fool Morgan Housel writes in taking the company to task this week -- and rightfully so.
Let's beat the dumb drum:
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