Richard Blackwell takes your questions on the financial crisis.
Send your questions to rob@globeandmail.com or use the comment function.
What is the "section 363" that Chrysler is using to sell some of its assets, and that General Motors is also considering?
Section 363 of Chapter 11 of the U.S. Bankruptcy Code governs the sale of property when a company is in court protection from its creditors.
Generally it allows a quicker sale of assets than could be done outside of court protection, because it makes sure the buyer is off the hook for liens and claims against the property.
What usually happens is that the court, or the company under protection, arranges to get a bid for some of the firm's assets. This is used as the basis for others to bid — with the idea of getting as high a price as possible.
The original offer is often called a "stalking horse" bid because it is supposed to bring other potential buyers out of the woodwork.
(The stalking horse bidder usually gets a break fee if it doesn't end up as the eventual winner.)
The highest bid wins the auction, and that bidder gets the assets free from most of the claims against them.
There are often court fights over various aspects of the sale, but a deal can sometimes be arranged in two or three months, which is pretty quick as these things go.
Has the worry over layoffs changed the way people take their vacations?
At least one U.S. analyst thinks Americans won't stray far from home this year so they can keep in touch with work.
John Challenger, CEO of outplacement consultants Challenger Gray & Christmas, says many people who are worried about job security will take shorter vacations this year. They will be too worried about what's going on back at the office to really relax during a holiday of two weeks or longer, he says.
Lower gas prices mean many workers will travel by car for a regional vacation, rather than flying somewhere exotic (and difficult to return from in a hurry), he says.
As a result, Mr. Challenger thinks tourism businesses that rely on visitors from more than a day's drive will see a drop in bookings this year. But those that rely on local customers could do very well.
His advice is to take a laptop or BlackBerry along, have your work phone call-forwarded to your cellphone, and even consider having a fax machine installed in your hotel room. Not exactly a prescription for a relaxing break.
The North American automotive industry seems to be in the dumper, but how are things in other countries?
In some emerging markets, the car business is going gangbusters. In China, for example, the number of vehicle sales jumped 37 per cent in April. Annualized sales in that country are now at 6.2 million.
Now there are far more cars sold in Brazil, India and China combined than are sold in the United States, according to a recent Bank of Nova Scotia report. As recently as 2007, the U.S. outsold these three markets by more than eight million units.
Sales in Europe also improved sharply in April, although car purchases there are still down sharply from the levels of the past few years. Governments in several European countries now offer incentives to replace older vehicles, which has helped boost the business.
How does reducing the number of dealerships in North America save General Motors and Chrysler significant amounts of money, when most of those dealers are independently owned?
While the auto makers don't own the individual dealerships, it costs a lot to supply them with cars and support.
Those costs have gotten out of hand, the car companies say, because there are so many dealers and they run so inefficiently.
In a recent U.S. court filing, Chrysler said its large dealer network requires it to spend too much money on training, oversight and support.
Foreign-owned car companies tend to have smaller dealer networks, Chrysler said, allowing them to generate more profits that can be used for marketing and customer service.
In addition, if an auto maker has too many dealers in one market, those outlets begin to compete with others selling the same brands - instead of other vehicle makers. And with entire brands being cut, there just isn't the need for as many retail outlets.
The price of gas seems to be much higher in Toronto than in some parts of Eastern Ontario. Why is this?
Generally, the price of gas is a bit less expensive in big cities, says Cathy Hay, an analyst at Calgary gasoline consultancy MJ Ervin & Associates. That's because gas stations that sell a higher volume of gas can survive on slightly lower margins, and competition is often strongest in the big cities.
However, she says, there are some exceptions and sometimes there is intense competition in specific local markets that keeps prices a few cents lower.
Ms. Hay said studies have shown that prices are often lower in Kingston, Ont., and Airdrie, Alta., for example, compared with other parts of those two provinces. That's likely because of strong local competition, she said.
Could there be collusion going on to keep prices up in some areas?
The only proven cases of collusion in setting gas prices have been in Quebec, where a federal Competition Bureau investigation resulted in charges against 13 people and 11 companies last year.
Six of the accused and four companies have pleaded guilty so far, and $2.6-million in fines have been levied. Some of the guilty parties received jail terms, although most served their sentences through community service.
The bureau is still investigating possible price fixing in other Canadian markets.
We see lots of overall unemployment numbers, but does anyone keep track of the number of top executives who lose their jobs?
Chicago outplacement firm Challenger Gray & Christmas - best known for its calculations of announced job cuts by industry - also keeps track of the departures of chief executive officers in the United States.
Their latest numbers, from April, show that CEO departures have slowed down considerably after sharp increases in 2008 - possibly a sign of a more stable economy.
In the first four months of this year, 387 CEOs left their jobs in the U.S., almost 100 fewer than in the same period last year.
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