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Boeing (NYSE:BA) has gotten a federal mediator on board to help in its negotiations with machinists. It does so as its 787 Dreamliner's deliver date gets later and later. That will further anger customers who have lived though two delays, help rival Airbus pick up business, and allow airlines to ask for compensation for late delivery.

According to Reuters, "Production at Boeing's Seattle-area factories has been suspended since September 6 when 27,000 workers represented by the International Association of Machinists and Aerospace Workers walked off the job." Boeing wants to outsource more of its work. The union objects for obvious reasons.

Boeing should have done almost anything necessary to keep the unions in. The labor contract is for three years and Boeing has a massive backlog for that period. It is unlikely cutting a deal with workers would hurt its margins much. Delaying has almost certainly hurt its revenue and customer relations.

Boeing executives have helped take the firm's stock down 35% in the last month. Even with the market turmoil, the Dow is only off 25%. Management is responsible for that significant difference.

Douglas A. McIntyre is an editor at 247wallst.com

Morgan Stanley (NYSE:MS) waited too long to take new money. If should have gotten the capital long ago the way Goldman Sachs (NYSE:GS) did with Warren Buffett.

But, John Mack, the MS CEO, thought he might go it alone or get better terms, By waiting, he damaged his shareholders more than he could imagine. And, it may get worse.

The good news is that, according to The New York Times, the $9 billion coming from Mitsubishi UFJ will be protected by the federal government. That means the deal is likely to close.

The very bad news is that, according to the FT, "Under the new terms being discussed, the entire $9bn would be in the form of convertible preferred stock, that would eventually convert into common stock at a price that is expected to be between $20 and $25." Under the old terms, the conversion was at above $35.

The latest formula means that current shareholders face more dilution.

At the end of the day, the news has to be viewed in some positive light. MS will survive. But, the cost was awful. On September 8, Morgan traded at $43. No one can imagine that Mack did not know he had trouble then. It was only four weeks ago. He should have done a quick deal while he had the chance. By waiting, he let market fear, and probably some short selling, take his shares below $10.

Mack allowed Morgan to get into the trouble in the first place. He has been in upper level Wall St management for 30 years. He arrogance made him believe that he could get tremendous terms in bringing in new capital.

He was wrong on that account. But, his compensation will probably be fabulous next year.

Douglas A. McIntyre is an editor at 247wallst.com.

Stocks traded up by 5% to 10% across Asia and Europe.

The Hang Seng was up 9.5%. The Shanghai Composite rose 3.7%.

Shortly after the open in Europe, The UK FTSE rose 5.6%. The German DAX was up 6.2%, and the French CAC 40 moved higher by 6.7%.

Date from Reuters.

Douglas A. McIntyre is an editor at 247wallst.com.

The International Monetary Fund said that the world's banking system is on the verge of a "meltdown" and that the problem had to be addressed immediately.

The U.S. Treasury has not made it clear which banks it may invest in to supply capital, how much that may be, and exactly when it will happen. It has also said the the buying-in of toxic assets may take several months. In other words, the government is moving fairly slowly and with some caution.

The American reaction may simply come too late. The U.K. has already begun the process of putting money into its largest banks. Whether or not it will work is a matter of conjecture. But, the British are not going to dawdle. Time is too short.

If the Treasury Department and the Fed do not make some very significant and specific description of their plans before the markets open Monday, they may see the largest daily drop the market has ever seen.

Douglas A. McIntyre is an editor at 247wallst.com.

The Wall Street Journal reported that (subscription required) General Motors (NYSE: GM) had has merger talks with Ford (NYSE: F) as well as Chrysler. The Ford deal would make more sense. Together, the two largest car companies would have 36% of the American market. There would be no reason for the needs of a private equity firm, in the case Chrysler owner Cerberus, to be served.

While many people do not realize it, the Fed can make capital available to institutions outside the banking system if it believes that their problems could have a dire impact on the economy. By most measures, Ford and GM have enough money to make it to the second half of next year. The Fed could provide capital to stretch that well into 2010 when many analysts think that they worldwide auto industry will begin to recover.

While there may not be huge savings in putting the two largest U.S. car companies together, they could improve margins by closing some of their poorest performing brands.

Better that the government provide capital to one combined company than two smaller ones.

Douglas A. McIntyre is an editor at 247wall st.com.

It probably made sense and has for at least a year. General Motors (NYSE: GM) and Chrysler have had merger talks, and probably had them recently. The largest car company in the U.S. has been speaking with Chrysler's owner Cerberus.The conversations may have been slowed by the wild stock market.

According to The Wall Street Journal (subscription required), "Uniting two of the country's Big Three auto makers would prove a watershed for an industry knocked down by high production costs and a looming recession."

But the plan may not work. GM and Chrysler both appear too weak position to weather the bad economy, even together. Analysts believe that GM will be low on money next year, and Chrysler is no better off.

What would make sense is that Chrysler makes a good merger partner for Honda (NYSE: HMC) or VW. Both would like a larger market share in the U.S. Both have strong balance sheets, and both could rip out duplicate costs.

Putting together two troubled U.S. auto operations gains very little for either company.

Douglas A. McIntyre is an editor at 247wallst.com.

As had been expected, The Treasury will begin to take equity positions in major U.S. banks. According to MarketWatch, "The plan calls for banks to be recapitalized with public and private funds, but makes no specific mention of another common suggestion."

The part of the plan that is rarely mentioned is that the government could end up owning huge percentages of very large banks. Citigroup (NYSE: C) has a market cap of $76 billion. What if the Treasury has to put $25 billion of equity into the big bank? The agency might not want to have a board seat, but it would need to have a substantial say in what happens with the financial firm. Otherwise, how are the shareholders protected?

It would be better for the Treasury to give banks very long-term loans. It would be less risky for taxpayers if the debt was senior to all other debt and common shares. And, someone in the government would not have to look over management's shoulders to make sure the average citizen was likely to get his money back.

Douglas A. McIntyre is an editor at 247wallst.com.

Time Warner (NYSE: TWX) hit a new 52-week low today at $9.03. Until recently, it has performed better than most of the other media conglomerates, but it now faces two difficult questions.

Before current CEO Jeff Bewkes took over, it was assumed that Time Warner Cable (NYSE: TWC) would be spun out. Bewkes managed to get over $9 billion from the transaction. That may have been priced into the shares when he stepped into the top job. The other major assumption of shareholders was that AOL would be repaired or sold. The internet unit has been divided into two pieces. The ISP operations will probably be sold to another internet service company. The fate of AOL remains unknown. There are rumors that it could be sold to Yahoo! (NASDAQ: YHOO) or Microsoft (NASDAQ: MSFT).

Because internet display advertising is facing a downturn, sales at AOL will almost certainly suffer in the fourth quarter and into 2009. If Yahoo! is a reasonable proxy, the fact that it has lost half of its market cap this year and has been downgraded by several analysts cannot be good news for AOL.

Advertising weakness is bound to catch up to Time Warner's magazine unit. Print advertising may never recover entirely if the newspaper industry is any guide. Analysts have frequently said that the magazine unit should be sold. It is no longer a growth operation.

TWX cable units, like CNN, which rely on TV ads, are also certain to face an unpleasant if not vicious environment heading into the winter.

Investors in Time Warner are troubled for a simple reason: The company still looks too much like it did last year.

Douglas A. McIntyre is an editor at 247wallst.com.

One of Yahoo!'s (NASDAQ: YHOO) big shareholders wants the company to sell itself to Microsoft (NASDAQ: MSFT) ASAP for $22. And, it has a plan to make the deal work.

Mithras Capital does not own a big piece of Yahoo!, but it wants to help the portal firm to get a price well above where it trades today. According to Reuters, "Microsoft would unload Yahoo's Asian assets and non-search businesses, extract $3 billion worth of cost savings and receive $2.8 billion of tax benefits, meaning the software giant would pay $10.3 billion for Yahoo's search business."

If wishes were horses all the beggars would ride. Microsoft understands that Yahoo! is in distress as its share of the search market keeps dropping and display advertising revenue growth slows sharply due to a rough economy. Yahoo!'s stock is at $12.65 and has been dropping rapidly.

If Yahoo! reports a weak third quarter and revises its guidance for the fourth quarter and 2009 down, its shares could quickly move well under $10. Microsoft knows that. If it still wants to buy Yahoo! it may only have to wait a few weeks to get a much better deal.

Douglas A. McIntyre is an editor at 247wallst.com.

Citigroup (NYSE: C) has dropped out of the bidding for damaged bank Wachovia (NYSE: WB). It may be glad it did. According to The Wall Street Journal, "Wells Fargo & Co. (NYSE: WFC) won the battle for Wachovia Corp. as rival suitor Citigroup Inc. walked away from compromise negotiations because of worries about the quality of some of Wachovia's assets."

Citi wanted the FDIC to put a safety net under the value of some of Wachovia's assets. Investors and analysts viewed the Wells Fargo bid as better because it valued Wachovia's share price at a higher level and did not involve any government guarantees at all.

The lack of government guarantees and the likelihood that Wachovia's balance sheet is getting worse each day could cause Wells Fargo to pass on a buyout just as Citi did. In a credit crisis as severe as this one, it is almost certain that the value of bank assets is dropping due to mortgage-backed paper and weak loans. Wachovia has been viewed as having a balance sheet that is worse than any other large American banks. That would make it likely that its situation has gone from being troubled to being desperate.

At this point, the odds have to be 50/50 that Well Fargo will either disappear or sharply drop the value of its offer.

Douglas A. McIntyre is an editor at 247wallst.com

AIG (NYSE:AIG) has now borrowed $70 billion of the $123 billion made available to it by the Fed. It has to sell assets to become self-funding and the question is whether it can do that quickly in a credit crisis. If not, the government will be faced with putting more money into the insurer or watching it fail. Given the seriousness of an AIG failure and the waves of financial problems it would send though the markets, the Fed is probably on the hook for whatever AIG needs.

In the banking part of the US economy, banks and brokerages took record levels of loans from the Fed's emergency discount window. According to The Wall Street Journal, "Total average daily borrowing climbed to $420.16 billion from $367.80 billion in the prior week." If banks stocks continue to fall and depositors continue to withdraw money, the pressure on the Fed's lending facility may grow. Average daily lending could certainly move well above $500 billion per day.

Lending money to banks may not be an adequate measure to keep them sound. The Treasury needs to start buying banks shares as quickly as possible becoming a major stockholder in financial companies in exchange for billions of dollars in capital This process needs to begin immediately so that the system does not move through serial collapses of its weakest companies like Morgan Stanley (NYSE: MS) and Wachovia (NYSE: WB).

Time for the Fed and Treasury to step up to the plate.

Douglas A. McIntyre is an editor at 247wallst.com.

The federal government is considering backing all bank deposits and guaranteeing huge amount of bank dept. Depositors are withdrawing money from financial companies at an alarming rate.

According to The Wall Street Journal, "If the two moves come to fruition they would mark the government's most extensive intervention yet in the financial system."

"If" is a big problem. Many banks and brokerage stocks are selling off at the rate of 10% to 20% a day. Barclays (NYSE: BCS) opened down over 20% in London trading.

Governments are allowing the collapse of financial markets to get well out ahead of solutions. If that continues, confidence in the banking system could falter further and lending could be shut down completely.

If the Treasury and Fed do not act over the weekend, next week could be unspeakably tough.

Douglas A. McIntyre is an editor at 247wallst.com.

The headline in The Wall Street Journal is "Yahoo! (NASDAQ: YHOO) Investors Seek A Savior." But there probably isn't one to be found.

After moving above $34 on a bid from Microsoft (NASDAQ: MSFT), Yahoo!'s shares have now fallen below $14. One would think Microsoft would come back. The company could be picked up for a song now. But Redmond is nowhere to be seen. With Yahoo!'s piece of the search market still shrinking, Microsoft may think it is not worth the capital or the risk of integrating the portal with its own MSN property.

The press keeps mentioning AOL as a merger partner. The theory is that a deal would involve Time Warner (NYSE: TWX) putting its big internet company into Yahoo! and providing some cash, perhaps $2 billion, for a third of the combined company. The trouble with that is that Yahoo!'s market cap is only $19 billion. Take away its ownership in Yahoo! Japan and China e-commerce company Alibaba, and Yahoo!'s value is well below $15 billion. Time Warner would be getting a piece of a firm with a declining stock price, so its third of Yahoo! would be worth less than $5 billion on day one. With the integration risk of marrying the two internet companies, that is not much of a prize. And what happens when Time Warner wants to sell its Yahoo! stock? It would probably tank the price.

The real key to Yahoo!'s future value is the direction of display advertising. By most accounts, the fourth quarter is not going to be very good. The economy is too rough and marketers are looking for more targeted methods of finding customers. In many cases, this involves dropping internet display ads and using links in search results.

Yahoo! may not find a savior because there is little left to save. If the company has a bad quarter and guides for a poor 2009, its stock could go to $7 or perhaps less. A flailing internet firm is really not worth much.

Douglas A. McIntyre is an editor at 247wallst.com.

IBM (NYSE: IBM) had an astonishingly good quarter, especially given the poor state of IT spending. According to CNET, "IBM said earnings per share were at $2.05 for the quarter, up 22 percent from the same period last year. Net income rose 20 percent to reach $2.8 billion, while revenue rose 5 percent to $25.3 billion." Those numbers were higher than analyst estimates. Over the last two weeks a number of researchers who cover the company said they were looking for poor numbers. They were wrong. But their concerns did take IBM down to $90 from $115 just three weeks ago.

The IBM results might tempt investors to moving into other tech shares, especially those of firms which sell to big companies. Most of the stocks in these tech suppliers trade near 52-week lows.

But that would be a mistake. IBM is diversified across a very broad spectrum of international markets, has large hardware, software and services businesses, and has kept costs extremely low. The only tech company with comparable global businesses and remarkable margins is Microsoft (NASDAQ: MSFT).

IBM is the exception to the rule. Tech stocks are in bad shape because corporate spending is down. The great depth and breadth of Big Blue's business has let it dodge that bullet.

Douglas A. McIntyre is an editor at 247wallst.com.

A cool $85 billion ought to be enough to save any company. That is what the government loaned AIG (NYSE: AIG), the beleaguered insurance company. The money is supposed to be paid back and the Fed got an 80% interest in the firm.

But the $85 billion did not cut it. Yesterday, the government had to come up with another $37.8 billion. According to The Wall Street Journal, "The move, which comes less than a month after the Federal Reserve agreed to bail out the giant insurer, raises questions about whether the government will need to keep injecting money into the troubled company."

It actually raises a much bigger issue than that one. If AIG cannot get by on the $85 billion it got just last week, how much worse is its position getting and how fast? Since AIG is only one of many large financial companies with problems, why isn't it fair to ask whether the Treasury's $700 billion bailout program will be enough?

The AIG trouble shows that the government's aid to the financial system is a slippery slope. US taxpayer money goes into a failing system. As the credit crisis gets worse, the Fed and Treasury feel the need to double down. Gamblers and investors who take that path often find out that they lose everything, their initial investment and money that came later to protect it.

If AIG needs more money, it is a good bet that the rest of the system will need more as well.

Douglas A. McIntyre is an editor at 247wallst.com.