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George W. Bush is beginning to realize he made some mighty big mistakes. He admitted today that he's sorry the stock market and economy have collapsed because it happened under his watch. And he thinks that there was an intelligence failure when it comes to those Iraqi WMDs.

He'd like us to believe that he was just a passive victim of all this bad stuff that happened around him. If he is really that clueless, I need help understanding how he got "elected" twice. In any case, there's plenty of evidence that Douglas Feith created the WMD evidence to please Dick Cheney.

And Bush repeatedly ignored warnings that subprime mortgages were being abused and that securitization was creating a huge risk for the economy. He also failed to apologize for two other memorable events during his presidency -- his August 2001 decision to ignore that President's Daily Brief called "Osama bin Laden determined to strike in U.S." and his famed New Orleans Katrina flyover, capped by his heck of a job Brownie comment.

Bush has left the U.S. in a sorry state -- and I'm sorry, but sorry won't cut it.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Johnson & Johnson (NYSE: JNJ) offered to acquire breast implant maker Mentor Corp (NYSE: MNT). At $31 per share, J&J's tender offer for Mentor is a 92% premium to its closing price last Friday.

J&J plans to run the $373 million Mentor as a stand-alone business under its Ethicon division, reasoning that the skills of its 1,300 employees will strengthen J&J's presence in aesthetic and reconstructive medicine. Mentor is not just about breast implants -- mostly for cancer patient reconstruction. It is also awaiting FDA approval for face fillers, which would enable Mentor (and now J&J) to compete in the market for wrinkle treatment that Botox now dominates.

The Mentor announcement comes on the heels of a $438 million J&J deal to buy Omrix Biopharmaceuticals Inc. (NASDAQ: OMRI) giving J&J full access to products that control bleeding during surgery. The Mentor purchase is expected to cut J&J's 2009 earnings by 3 to 5 cents a share.

Mentor's stock popped 90% in response to the $1.12 billion takeover deal. This is pretty good for a day when the Dow is plunging over 300.

J&J's decision to make acquisitions in a down market looks pretty shrewd to me as long as these acquisitions eventually add to earnings.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

It looks like we may have talked ourselves into an overly gloomy outlook for this year's holiday sales. Maybe that was the plan all along -- to depress expectations so much that it would be much easier to exceed them. And it looks like that's what happened -- analysts expected sales to rise 1% in the November/December 2008 shopping season -- and actual Black Friday results were up 3%.

Granted that's not an apples to apples comparison but the International Council of Shopping Centers predicted a 1% rise in same store sales this November/December shopping season and it has already revised its forecast upwards to 2%. For Black Friday, the 3% sales increase amounted to $10.6 billion in sales.

And there were some significant differences across different regions. The South gained the most, 3.4%, over 2007 while in the Northeast sales rose the least, 2.6%.

Nevertheless, other analysts remain gloomy. ShopperTrak has estimated that 9.9% fewer shoppers will descend on stores this November/December shopping season, producing a sales gain of 0.1%. And Gallup suggests that the average individual will spend 29% less, or $616, compared to 2007.

I have always disliked the moniker 'Black Friday.' Explaining that 'Black Friday' refers to the day that retailers go from losing money to making it strikes me as awkward -- particularly when my first instinct on hearing that phrase is to think of something very bad happening on a Friday.

Which is why today's deadly events combining shopping for the holidays and death seem so strange and sad. This morning, a Wal-Mart Stores (NYSE: WMT) clerk at a store in Valley Stream, Long Island was trampled to death by a crowd of 2,000 people eager to grab bargains. "The impatient crowd knocked the man to the ground as he opened the doors, leaving a metal portion of the frame crumpled like an accordion," according to AP. If store cameras can identify who trampled the store clerk, criminal charges could be brought against them.

Later in the day, two people were shot dead at a Toys 'R' Us in Southern California. The Riverside Country sheriff's department reported an argument between two teenagers preceded the shooting. A third person, a male, apparently pulled out a gun, according to AP.

General Motors Corp. (NYSE: GM) just doesn't get it. After flying in a corporate jet to Washington last week with tin cup in hand, its executives have not wised up. Rather than flying on public airlines like the rest of us do, they want to keep flying those corporate jets. But they want to make sure nobody in the public can track their flights.

If this is not the height of arrogance I don't know what is. Bloomberg News interviewed a GM spokesman who said, "We availed ourselves of the option as others do to have the aircraft removed" from a Federal Aviation Administration tracking service. But he declined to discuss why GM made the request.

GM doesn't need to explain why it made the request. I already know -- it wants its executives to be able to keep flying on corporate jets and it doesn't want Congress or the public to know about it. I think GM executives should consider three options: flying coach, getting the boot from the executive suite, or continuing to fly in their corporate jets until they run out of money.

If they pick the third option, they should not get a penny's worth of taxpayer money.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in GM securities.

General Motors Corp. (NYSE: GM) will need to assemble a compelling restructuring plan if it hopes to get the $12 billion it seeks from the U.S. Last week I proposed a six step plan -- part of which suggested GM should get rid of unprofitable lines such as the Saturn, Saab and Pontiac brands and dump their related dealerships. And it looks like GM is now considering just such steps.

But the sales declines and inefficiency of their related dealerships provide a startling look at just how poorly managed GM really is. Let's consider lost sales first -- Pontiac's fell 21% in 2008, compared with a 15% industry-wide decline through October; Saturn's sales tumbled 19%; and Saab's sales plunged 31% through October, according to Bloomberg News.

Along with these plunging sales figures, GM hosts some remarkably inefficient dealerships. Toyota Motor Corp.'s (NYSE: TM) dealers are as much as 10 times more productive than GM's. For example, Toyota, which includes the Scion brand, sold 1,071 cars at U.S. dealerships in 2007 compared with 274 at Saturn, 118 at Pontiac and 115 at Saab.

You might think that since consumer prices have tumbled by near record percentages that this might lead to lower food prices. But much of that consumer price decline is attributable to lower energy prices -- after all oil peaked at $147 a barrel in July only to fall 63.5% to $53.63 yesterday.

Why won't food prices follow oil down? Many food producers panicked as corn and wheat prices peaked this summer -- locking in long term supply contracts at top prices. For instance, corn, which usually trades at $2 or $3 a bushel, pealed at $8 a bushel in June.

Although prices have since dropped to $3.50 a bushel, some food manufacturers locked in prices for corn and other commodities in the spring and summer, fearing that prices could go even higher. The result is that producers will pass on those higher costs in the form of food prices going up 7% to 9% in 2009.

Despite cutting the Fed Funds rate from 5.25% to 1% since August 2007, mortgage rates remained stubbornly high. They also remained elevated after the $800 billion bailout of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). It finally looks like the latest plan to spend $600 billion to buy mortgage-backed securities (MBS) is causing mortgage rates to drop. But are lower mortgage rates good for the economy?

Yesterday's MBS buyout plan helped cut the rate on a 30 year fixed mortgage from 6.38% to 5.5%. If people can qualify for a refinancing, then the lower rate will save them money -- one analyst estimated $200 -- on their monthly payments. But given the state of the economy, with over half a million people losing their jobs every month and banks taking extra care to lend only to the most creditworthy, it looks like the ones who need those lower rates the most won't be able to get them.

With the huge overhang of housing supply from foreclosures and the pain of at least $6 trillion in lost home equity since the real estate market began to tumble, it is unlikely that lower mortgage rates will start a stampede of people into the housing market. But it sure would be bad if the lower rates ended up creating yet another housing bubble. For the time being, the best thing that lower mortgage rates could do is to help people use the extra cash to pay off their other debts.

And eventually it would be helpful if all that extra housing supply got sopped up. That would go a long way to stopping the economic decline.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

As we begin the trek to grandmother's house, it's worth reflecting on what we have to be thankful for. The answer? When it comes to money, most of us have a lot less than we did a year ago. But for those of you who have your health and your families to comfort you, it will cost much less to buy the gasoline to visit than it would have in July. And as you're driving to visit those families -- consider how much less you lost in the last year than the world's 10 biggest losers.

According to the web site, The Business Sheet, those unfortunate people suffered a mind-boggling $176 billion in lost stock market value in the last 12 months. It turns out that 52% of the losses were suffered by three executives based in India. Here they are:

• Anil Ambani - $32.5 billion. Ambani heads Reliance Communications that invested $500 million in Dreamworks earlier this year.
• Lakshmi Mittal - $30.5 billion. Mittal heads ArcelorMittal which has suffered from a decline in the price of steel.
• Mukesh Ambani -$28.2 billion is Anil's brother and controls Reliance Industries, a petrochemical manufacturer.

• Sheldon Adelson -$30 billion. I did consulting work for Adelson about 22 years ago and he is quite a character. His Las Vegas Sands (NYSE: LVS) casino is suffering from the economic slowdown and he's had some trouble with debt.
• Warren Buffett -$13.6 billion. As I posted, Buffett's Berkshire Hathaway (NYSE: BRK.A) has had some problems this year.

Why should you care what's going on in China? It makes many of the products we buy -- particularly the ones sold at Wal-Mart Stores (NYSE: WMT). And it has been recycling the profits it makes due to its relatively low labor costs into buying American debt. In fact, without its willingness to purchase our Treasury bonds, we would probably not be able to afford the $8.2 trillion worth of bailout plans that we've created so far -- or the additional $20 trillion we might need in the future.

If we were in the ninth inning of this financial collapse, instead of the second, then China's slowdown would not matter so much to our future. But if we need an additional $20 trillion over the next several years to put a floor underneath this economic collapse, we are not going to be able to rely on China to help foot the bill as we have in the last year. That's because China is slowing down; it has been growing at 12% a year for several years in a row, but that rate is likely to slow to at least 5.5%.

That would be a great growth rate for the U.S., but it represents a huge slowdown for China. Forty five percent of China's GDP growth is due to fixed asset investment -- like construction of houses and manufacturing plants. And a big part of that business is steel -- whose prices have lost 36% of their value since the peak, dropping from $768 a ton in June to a low of $490 a ton this month. One steel plant is cutting production by 15%. This means that global suppliers of commodities -- such as iron ore, copper, and cement -- around the world are suffering. What does this have to do with U.S. debt?

It's been almost a year since December 12, 2007, when Vikram Pandit took over as CEO of Citigroup (NYSE: C). His performance has been outstanding -- and not in a good way. During the last four quarters, Citi lost $20 billion. Sure Pandit has plans to fire 52,000 people and he's raised at least $45 billion from the U.S., along with guarantees on $277 billion worth of Citi's bad assets. But he botched the acquisition of Wachovia (NYSE: WB). And Citi stock has fallen 81% wiping out $138 billion in stock market value.

By contrast, John Thain, who took over as CEO from the Bank of America (NYSE: BAC) subsidiary Merrill Lynch, was far more agile as things cratered around him. Arguably, Thain had an even worse hand than Pandit when he took over Merrill Lynch because his predecessor had loaded it up with mortgage-backed securities at precisely the wrong time. But Thain could see Merrill's stock plummetting as it got trapped in a short play. And he salvaged shareholders' investment by selling to Bank of America.

Now CNBC's Charlie Gasparino reports that Pandit has about half a mistake more to make before he's out of a job. But this is not a problem for Citi shareholders as long as its board can convince Thain to leave Bank of America where he has taken on a sub-CEO role so he can get back into the big saddle at Citi. Count me among those shareholders who would be happy to see Pandit exit stage right as Thain enters.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup stock and has no financial interest in the other securities mentioned.

Big investors who make money by selling stock short have enjoyed a money-making paradise. The Wall Street Journal provided a valuable public service by investigating how they made money shorting Morgan Stanley (NYSE: MS), helping its stock plunge in mid-September.

Conceptually, what shorts did was very simple -- they shorted the stock then they bought thinly-traded Credit Default Swaps (CDSs) on the bonds of the stock they wanted to short. (The Journal quotes Erik Sirri, a Babson Finance professor now working at the SEC whose office is next to mine, on the ease of manipulating CDS premiums.) This forces up the premiums and scares investors. The short sellers, in many cases, also withdraw their considerable funds from the targets' prime brokerage accounts; when asked why, they say that the firm in question is going bankrupt.

Needless to say, these rumors get spread around trading desks. Whether or not they're true, many investors are inclined to withdraw their money first and ask questions later. (The bankruptcy of Lehman Brothers highlighted the dangers of waiting too long to get out -- in the form of frozen hedge fund accounts.) As the stock goes down, the CDS premiums rise further, which spooks more investors and creates a vicious downward cycle for the stock -- and a short seller's paradise.

In October, I suggested that one way out of the mess we're in is to create 100 new banks that would be unencumbered by all the bad bets that incumbent banks have made. Back then, I thought that such a plan would create banks that people would be more confident to do business with. Now, the Wall Street Journal has come along with a similar proposal. I am glad for the company and only wish it had come along before so many hundreds of billions had been added to the so-far dubiously successful bailouts.

The advantages of creating new banks outweigh the disadvantages. Sure, the new banks would give some customers the jitters due to their novelty, and if they were successful, they would speed up the demise of the weaker banks. But on the plus side, if the new banks were adequately capitalized and tightly monitored, many depositors and borrowers would flock to these new banks since they'd be free from all the bad assets that currently crimp many existing ones.

Moreover, among all the recently unemployed bankers, there could be some talented and ethical managers who might be willing and able to take over these new banks and happily recruit some of their colleagues from the weaker incumbents to these growing new banks. Eventually, the failing banks would shrink and could quietly liquidate -- but not before their customers had made the successful journey to the new, healthy banks. While this is not a perfect process, it seems better than throwing hundreds of billions in taxpayer money at banks that will eventually fail anyway.

I think this is an idea whose time has come.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008.

Can someone please stop Hank Paulson from wasting more taxpayer money? Steve Forbes -- a failed 2000 presidential candidate I met a few weeks after 9/11 -- has called Paulson the worst Treasury Secretary in modern times. Now, Paulson wants to launch the fourth reincarnation of the Troubled Asset Recovery Plan (TARP) by buying securities consisting of bundles of consumer loans. In his effort to appear to be helping consumers, he is simply launching another failed Wall Street bailout.

Here's how I view the four reincarnations of TARP:

• TARP 1.0 was to take $700 billion to buy toxic waste from Wall Street in reverse auctions. As Paulson said, America needed to pass this plan to avoid heavenly retribution. But the plan was DOA for reasons I posted about here.
• TARP 2.0 involved buying equity stakes in banks -- the U.S. spent $159 billion for preferred shares in 24 banks. But the banks are holding onto the money and not lending it out. Perhaps they'll use it to pay $26.6 billion worth of bonuses. That's rich -- using taxpayer money to help out the people who got us into this mess.
• TARP 3.0 was the plan to cover losses on $277 billion worth of Citigroup 's (NYSE: C) toxic waste while using $20 billion in cash to buy $27 billion worth of preferred stock yielding 8% along with warrants on 254 million shares at $10.61. Expect more of these deals as Citi competitors complain of a tilted playing field and Paulson scrambles to accommodate them. But with Citi, the U.S. protected Prince Alwaleed's common shares, other banks might not be so lucky.

Forbes -- which was formerly known as The Capitalist Tool -- is reportedly on the verge of being sold to a Russian Oligarch by the name of Mikhail Prokhorov. It turns out that the Russian idea of capitalism is a bit different than the Western one. But that doesn't stop Forbes from taking Russia's cash.

As I posted, Russia is happy to accept Western money. But once Russia has the Western money, it gets rid of the Westerners who brought in the loot. In the U.S., we have our own special brand of capitalism which rewards the richest of the rich with eight figure bonuses by borrowing $30 for every $1 of capital to close huge deals, while the taxpayers cover the deals' losses.

The Forbes sale -- if it goes through for an estimated $625 million to $750 million -- would be tinged with a sad irony. That's because its former Russian bureau chief, Paul Klebnikov, was gunned down in July 2004 after his investigative reporting into oligarchs like Prokhorov made them nervous. The biggest beneficiary of this sale will be Elevation Partners -- which includes U2's Bono -- based on the 40% stake it bought in Forbes for $250 million.

It's a beautiful day for Bono, but a strange one for Forbes and Capitalism.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.