Remove the costs of binding, packing and shipping and you would think that an e-book would be a relative bargain wouldn’t you? Although an e-book priced at between $12.99-$14.99 is a significant savings over a conventional hardcover retailing over $25, it is not exactly super cheap either since you have to factor in the cost of the e-book reader as well into each purchase of the book.

Book publishers, who have a reputation for being as lumbering as the music industry counterparts, argue that a large price difference will cannibalize sales in the traditional retail market. However, the Office of the Attorney General of the State of Connecticut are now investigating whether Apple and Amazon are using their combined market power to make the e-book market uncompetitive by keeping prices high and preventing competitors from engaging in a price war. None of the accusations have been proven in a court of law.

To make a long story short, when Apple introduced the i-Pad to the market, it negotiated with the publishing industry to move from a wholesale model, where the retailer or distribution channel sets the price, to an agency model, where the publisher sets the price. Although the margin on an agency model is generally less than on a wholesale model, the publisher gets to control the price and avoids massive mark-downs and discounts given by retailers to reduce inventory or boast sales.

According to the Attorney General’s office, Apple and Amazon also negotiated “most favored nations” clauses into their agreement with most of the big publishing houses. In plain English, Apple and Amazon have to receive the best price on ebooks. The accusation is that a most favored nation clause will encourage the publishers to not sell any ebooks cheap to a small ebook vendor since it would have to offer the same price to Apple and Amazon and cut their margins across the board.

What hurts Apple and Amazon’s case optically is that many e-books on Amazon increased in price from $9.99 to $12.99-$14.99 shortly after the i-Pad was introduced. One wonders if the investigation gets beyond mere conversations that Amazon may not throw Apple under the bus for a lenient settlement given other accusations of Apple bullying Amazon in online sale of music.

If history is any guide, a dominant technology company tangling with the regulators and law makers for years on end about its business practices, whether the accusations are substantiated or not,  is typically is a prelude to a gradual reversion to the mean.

For those interested in ebooks, some of the larger public library systems now offer downloadable books. The Toronto Public Library, for example, is now offering titles. Check your local library to see if it is available to you.

In the after-math of the Great Recession, governments in the western world are grappling with how to reform the pension system (aka social security in the U.S.). The particular issue is that in most plans current funding would not adequately pay out those retiring or would pay out those retiring in the immediate future but with declining benefits succeeding recipients. In England, there has been a back-lash against proposals to push back the eligible age for state pensions to 70.

Canada’s more modest reform would consist of raising Canada Pension Plan (CPP) premiums from either a modest increase to fully funded which has elicited a mini-generational war over pension benefits to a larger discussion on whether the issue is not the pension system but our saving patterns during our earning years.

There’s a common theme about pension reform- government knows best, the taxpayer- only the people who fund the plans- should take a passive role and that, in most cases, pension reform should be government centric.

Are these are only choices? Do can we, as taxpayers, legitimately contribute to the debate?

HOW PENSION SYSTEMS WORK

At its core, the pension system is easily understandable. There are really only two fundamental systems a county can use in constructing a pension plan. A “pay as you go” or a “paygo” uses the current contributions of taxpayers to pay current recipients of pension benefits. In order words, there is no money being saved (known as reserves) in the plan- it is money in and money out. A “fully funded plan” is, as the name implies, a plan that can pay out both the current pension recipients and the future recipients (taken as a reserve) based on actuarial calculations on investment returns and future payouts; a crude analogy would be a household that has cash on hand to pay before this month’s fixed expenses and the rest of the years.

Given our aging demographic, a fully funded plan would require extensive contributions from employees and employers. Thus, most countries now run hybrid, paygo-fully funded plan such as CPP. There is enough money to pay current recipients and enough reserve to cap any increase in current pension contributions.

A move to a fully funded plan, while ideal, would be political suicide. It would require steep increases in pension contributions from both the employee and employer. Most countries have moved away from fully-funded plans in the mid-1990′s for this reason. A paygo system would be equally unpalatable.  While it may buy the senior’s vote, how could a political party sell a plan where money contribute would be used 100% to pay others to voters in their prime earning years?

Thus, a hybrid system tends to balance the competing needs of different generations while ensuring job security for politicians. However, the policy question has rapidly becomes how does the government balance the needs of those being paid out against those contributing without damaging the economy in the meantime?

HOW MUCH MONEY DO YOU GET?

Here is where things get slightly more complicated. How much pension money do you receive? Again, there are two primary ways to administer how much to pay out. The first is to pay based on the taxpayer’s earnings history; for example, the U.S. Social Security system looks at the average of 35 years of average earnings in determining payout. The other systems, such as used by CPP, is to pay out based on contributions into the plan.

In order to stem payment out, when you get your pension benefits is as important a question as how much. In Canada, reduced contributions are available as early as 60. In the U.S., the earliest age is 62. Sweden, which has arguably the most comprehensive systems of pension benefits, a taxpayer has 3 milestones to consider, taking their benefits at 61, 65 or 67.

Obviously, the longer a pension plan can wait to pay the recipients, the longer it can cap premium increases. Thus, as we see in Europe, the debate has become soon can anyone be eligible for early pension payouts and what age can anybody receive pension benefits without an early withdrawal penalty. The easy political solution will be to eliminate early application for pensions or to reduce the amount payable if people apply for pension benefits early.

DOES IT HAVE TO BE ALL PUBLICLY ADMINISTRATED?

No.

This is where many governments are omitting a viable option. Pensions do not all have to be publicly administered. In fact, Sweden, socialist Sweden of all places, has a partial privatized option. Although their pension contributions are a staggering 18.5% of payroll, 2.5% of this contribution is directed into a self-administered account. The taxpayer can pick various products within this fund or, in the absence of any choice, there is a default fund. The government does not manage the money (I wrote about this pension option previously at length).

The larger policy argument for privatization surrounds what the government does with pension reserves. In the U.S., social security reserves (which, again, is money that does not need to be paid out today) are stored in nominal trust account but the funds themselves have been loaned back to the government for operating needs with treasury bonds given back in return as security. In other words, a portion of pension contributions are backed by a IOU of a government with a large debt and deficit.

This raises the larger question about entrusting one’s pension to institutions that predominantly do not have good track records of managing money, using funds properly, or have any consequences from failing to manage the money properly.

…I have no special insight into pension reform. However, the point of this post is not to persuade readers that one position is better than another but to educate on a very preliminary overview of how pension systems work so that a more educated and informed dialogue can occur to replace the top-down one-sided conversation occurring now.

In world quick to jump to conclusion, speculation has arisen whether the clean-up costs of the oil spill in the Gulf of Mexico will undo BP. Some have estimated that the total cost to BP resulting from the oil spill (direct clean up costs, damages from lawsuits, fines from government) could reach $40 billion or approximately 2.5 times its profit a year.

Some believe that BP clean costs could exceed $20 billion and the lawsuit damage could exceed $15 billion. Lawmakers are already lobbying for BP to cut its $10 billion dividend a year; wonder how the shareholders of BP feel about a politicians deciding its dividend policy?

The issue with calling for for the end of BP, or a pre-packaged bankruptcy, is twofold. First, its way too early to call anything at this point. The spill has not been cleaned up. BP still has a lot of money on hand and relatively little debt. Lawsuits can be fought for years on end and industries that some thought would be destroyed by lawsuits (tobacco) have survived albeit as a shell of their former glory. Texaco, the much cited example of an oil company filing for bankruptcy after losing a lawsuit, only filed for bankruptcy protection two years after it lost a $10.53 billion lawsuit.

In other words, rather than jump to a quick conclusion, let’s see how the story plays out since the same members of the media calling for the end of BP thought the world was going to end in late 2008. Even if BP loses multiple lawsuits, it will be years before payout will occur.

The other issue is what do you do with a bankrupt BP? Although bankers and lawyers want a merger or acquisition of BP, BP is the 4th largest oil company in the world. Who exactly is going to buy it- even at discount (not even mentioning all the liability attached to an acquisition)? The only players with large enough wallets are other major oil companies. Would a justifiably angry public and Congress give regulatory approval to create an even larger oil giant?

In a similar vein, would an activist President who does not want the BP spill to be attached to his legacy allow a pre-packaged bankruptcy to occur whereby the liabilities from the oil spill are spun off? Given that the American government nationalized the auto, mortgage and finance industry, stepping into a situation with much less opposition to intervention would be plausible.

As usual, read everything with a grain of salt. It makes for interesting speculation but the BP story is far from played out just yet. BP has thus far stated it will stay the course in cleaning up the spill and paying its dividend. More to follow.

Larry McDonald has a mini crusade on adopting a flat tax. The proposal most likely encounters more political issues than purely economic ones. But a flat tax is one way of looking to solve the large economic issue. Mainly, we are a society wedded to the urgency of consuming now and have become terrible savers as a result. While politicians may be setting up financial literacy task forces and regulating the financial industry, it may best spend more time looking at how the tax code promotes us the wrong type of behavior (unless, conspiracy minded people think this is exactly the type of society leaders want…).

For example, the American estate tax is a punitive tax (the Federal tax is 55% in 2011 with an exclusion amount of $1 million assuming Congress does not pass other legislation) which implicitly encourages people to spend it in life rather than pass it onto generations. The larger, more global problem, is that interest income on savings is taxed higher than any other form of investment income.

The reason for this policy used to make sense. When North American society actually saved and the economy was in a long boom period, the tax code was attempting to discourage the taxpayer from stashing money in high-interest savings accounts and, instead, encourage investment in industry by investing in equities. This policy works if you assume: (i) the population is saving; and (ii) the demographics were aligned in such a way that a taxpayer could enter into the risk-reward of investing in equities.

But what happens if you have an aging population with less risk tolerance and the household savings rate is in the single digits? Is the tax code not penalizing savers, the people you most need in an over-leveraged economy, and also forcing seniors, who have the least amount of risk tolerance, to move into equities?

As a matter of industrial policy, governments want people to invest in our innovators and risk takers. Where would Apple and Research in Motion be if not for its early shareholders? But should we begin to readjust the balance between risk and reward to reward savers and to recognize that North American society is aging?

For example, could not the first $2,000 in interest income be tax-free? If governments are attempting to force financial institutions to lend to small business (one of the platforms of the Liberal Democrats in England who now sit in the coalition government), is not the carrot to encourage more lending tax policy aimed at increasing deposits? Alternatively, make interest earned on government bonds tax-free (this has already occurred in some jurisdictions). It could certainly help some cash starved governments.

These are just two ideas I thought of to encourage savings. Any additional ideas are more than welcome. We need to get off this merry-go-around of empty consumption and policies encouraging moral hazard to something more economically and socially sustainable.

The good folks at Intuit have provided to me their QuickTax tax preparation software (standard version). The software includes up to 8 returns and allows for importing of data from Ufile and other tax software. Retail value is $39.99.

If you want to win a free copy, simply post a comment. Canadian residents only are eligible for this giveaway.  I will draw a free copy on Friday March 5 at 6:00 pm (EST) and announce the winner next Monday. Email addresses will only be collected for the contest and for no other purpose. Intuit has provided the blog no monetary consideration for the giveaway.

Good luck.

Mariusz Skonieczny asks a question that many pondered in late 2008: why are we so clueless about the stock market? Written during at the height of the great recession, Skonieczny dissects the fundamental problem with most unsuccessful investors: they fail to understand the difference between stocks and businesses. Stocks are evidence of ownership but such ownership is only worth something if the underlying business is healthy and growing.

Taking this difference as a starting point, Skonieczny walks the reader through the basics of financial statements and the characteristics of a what makes a good business, quoting Pat Dorsey’s 4 factors that economic moats consist of intangible assets, switching costs, networking effects and cost advantages.

Every good investing book has one $10.00 moment. This book’s is found in advice on when to buy. Observing that most money managers are inherently short-sighted, the author notes that many institutional investors will pass up good long term deals if the short-term price movement does not play to their advantage. Money managers measure success in financial quarters whereas the retail investor should measure success in years. Therefore, a good investor should pursue opportunities with short-term uncertainty but long term certainty. In other words, avoid the noise and concentrate on the longer term.

The book is divided into short, easy to read chapters addressing issues such as how to value a company, diversification, investing in IPO’s (the short answer is don’t) and determining when to sell. This is also my criticism of the book. Some complex concepts are addressed very quickly to move onto the next topic. Some chapters could have been fleshed out a little better; for example, the diversification chapter is only 2 pages long- that’s one heck of a short free lunch. The case study chapter, arguably the juiciest portion of the book, was thoroughly educational and it would have been ideal to flesh out this section even further.

There is a little bit of math and finance in the book but it is presented in a straight-forward manner without too much reliance on complex financial equations.  Other than a brief boast in the beginning about the author’s return during 2008 and 2009, the book avoids the two big narrative cliches of investment books: the “look at me” syndrome and the “let me tell you a story” format (this format probably jumped the shark multiple books into the Rich Dad, Poor Dad series). It is to the point and concise in its writing style.

The ideal audience for this book would be someone who has mastered their budgeting and is interested in learning how the stock investing works with no fear of some simple math.

I have noticed lately I am receiving a lot of credit card offers. The offers are for new credit cards or cheques to be drawn down on my existing credit cards. When I pick up the mail in my condo, there are recycling bins by the mailboxes. My first instinct is to toss the offers into the recycling bins. However, I end up taking them to my condo and shredding them.

Identity theft can occur in many different ways. Someone steals your wallet and becomes you. Someone hacks your computer and steals vital information. However, identity theft can also occur as simply as going through your garbage or recycling bin and taking your credit card offers and applying in your name but with a different address. It is so simple yet so effective.

As a practical tip, please make sure you shred all your personalized junk mail. Offers from your existing financial institution, credit card companies or investment advisors provide key insights into where you keep your money to strangers.  These solicitations are both junk mail and insights into your life so guard your privacy accordingly.

I am on a business trip for the remainder of the week so no more posts this week. Have a great week.

Happy New Year. I hope your holiday was a safe and fulfilling one with family and friends and the best of the new year to you. The topic of new year’s resolutions, especially as it pertains to personal finance, has always been a bit of a head-scratcher to me. If you need to make an immediate change in your life, why wait until the new year (doubly important if the change is health related)?

Regardless, there is a certain symbolism of the turning of a new year and new seasons bring new opportunities for change. But are resolutions for change bound for failure? What exactly are the chances that your new year’s resolution will succeed? Dr. John Norcross, a professor of psychology at the University of Scranton, estimated on NPR that 40-46% of new year resolution makers will be successful at six months.

While not particularly encouraging, as the professor indicates, that is better than 0% of those who opt not to attempt a positive change in their lives. There are a myriad of reasons why new years resolutions fail. In the context of personal finance, there are several large ones:

Personal finance resolutions are made without creating or updating your budget

It is encouraging to resolve to pay off credit card or student debt or increase your savings rate but is it actually grounded in the reality of your personal budget?  It would be prudent as a mini-resolution to create or update your budget to determine where you stand at the end of each month  (if you are a newbie to personal finance, setting a budget and following it would be a great foundation to build upon). In this manner, your resolution is grounded in the reality of your particular context and numbers and goals are not being picked arbitrarily.

Personal finance resolutions attempt to accomplish contradictory goals

Saving more money or paying down debt as individual goals are both laudable. But most people cannot accomplish both; if you devote more of your take-home pay towards debt reducation, it is difficult to increase your savings rate at the same time especially if your salary is fixed every month (while not impossible, few can pull off both at the same time). In other words, make sure your goals are not contradictory or very difficult to accomplish at the same time.

Personal finance resolutions ignore the reality of the market

Statistics consistently show that most mere mortals have a hard time matching, much less beating, the market over medium to long term regardless of their education, occupation or skill set.  Over the long term, equities on equity should be in the range of (dividend yield + increase in dividend annually expressed as a percentage- aka the Gordon Equation).

Similarly, if you are interested in being a real estate investor, it would be difficult to achieve a capitalization rate over the range of 6-8% since most REITs have trouble exceeding this rate.

To set as a resolution some goal which ignores the reality of the market is an invitation to set oneself up for failure. In other words, be realistic.

Personal finance resolution ignore your past tendencies

Since a new year’s resolution is supposed to correct some undesirable behavior in the past, this seems like a strange factor to cite. However,  tackling the problems of the past using the same methods often lead to the same results. It is one thing to try to correct a behavior, it is another to use a different approach to solve the problem.

Personal finance resolutions are dropped at the first sign of trouble

This is pretty self-explanatory but loss or failure should be used constructively rather than as a reason to give up hope. Analyze what happened and make the proper adjustment. Perhaps saving 20% of take-home salary is simply too unrealistic but 10% is realistic, reasonable and attainable.

Personal finance resolutions attempt to reinvent the wheel

If you are paying down your mortgage, building up your retirement savings and funding your child’s education, there is nothing wrong with setting as a new year’s resolution doing more of the same. Taking what works perfectly well and moving away from it to achieve change for change’s sake may not necessarily be a good thing.

Best of luck with your resolutions.

__________________________________

A quick thanks to Larry MacDonald for quoting me in his Globe and Mail article about climbing the financial ladder.

2009 was truly an extremely strange and trying year. As someone self-employed, income tends to fluctuate at the best of times. Insert global credit crisis and a larger crisis of collective confidence in the future and you have an environment which, to state the obvious, is difficult for anyone to make a buck. Having said that, failure and adversity are the best of life teachers and success, paradoxically, a very poor one.

As my second last post of the year, I wanted to share a few things lessons learned from 2009.

Personal Finance is a process and not an outcome.

If you are a long time reader of my blog, you will notice that I have ceased really to review individual stocks or companies. This decision is conscious on my part since: (i) many other bloggers do it so well; and (ii) after 500 posts, I see personal finance as a process and not an outcome.

What do I mean by this? An outcome is product. An outcome is a ROI calculation. An outcome, devoid a thorough and analytical process, is often a search for the magic bullet solution.

Seeking outcome means you ask the question: “what should I buy to return me 10% per year?”- a product allocation question- not “how do I need to arrange my personal finances to protect against downside risk and make a moderate amount of money”- a strategic question which only answers the question “what product” at the end of the process and not the beginning.

To frame this distinction another way, think of the tried and true maxims of investing: buy low, sell high, buy companies with economic moats, buy what you understand. These are questions of process and not of outcome. We tend to focus more on what Warren Buffett is buying rather than the thought process behind it.  One would do better not tracking what Buffett is buying but how he arrived at his decisions.

I will give you a recent example of a process versus outcome analysis. I have, as have many of you, been to enough investment seminars where the speaker announces that our government’s fiscal policies (or lack thereof), demographic trends and depleting resources will result in a dark future ahead. What ceases to amaze me is that often the first or second question asked by the audience is “What should I buy?”

That question speaks to outcome without the underlying process (and it also abdicates to a mere stranger one’s decision making). Assume that the economy will have a rough ride ahead. Take stock of your life and determine where you are at and the steps you want to take will result in some favorable outcome.

The process vs. outcome lesson really comes from spending time with some very successful people. When you have a difficult year, you attempt to seek answers from those you consider more successful than yourself. What I noticed when I asked or observed those who I respect is the rigorous process they went through before they actually came to an outcome.

The old saying of: “give a man a fish and he will eat for a day, teach him to fish and he will eat for a lifetime” is ultimately a process vs. outcome saying.

Use the media exceedingly carefully

The Tiger Woods story, in many respects, broke the final barrier between tabloid reporting and traditional journalism. When traditional media outlets engage in tabloid type report-its about speed and not accuracy, no one is fact checking, the story is constantly changing and, quite often, just plain wrong- you know the traditional media is now engaging in the business of screaming at the top of its lungs rather than reporting.

However, caught in a pincer movement between the internet and tabloid reporting, traditional media has probably played the “if you can’t beat them, join them” card. On the personal finance front, this has lead to the Jim Cramerization of the entire medium.

I was in Las Vegas earlier this year and turned on MSNBC. I thought I was watching football commentary. There were 4 panelists and a host just rapid firing information on the price movement of commodities, writing numbers on the screen and going all John Madden on the viewer (“price of gold goes- POW- up and look at the inflation numbers going down- THUMP! Let’s see that again in slow motion…”).  I changed the channel quickly. Personal finance is about your life which I hope is a long one. Life decisions should not be made based on jolts of information on tv.

There are many great columnists out there in personal finance but the medium itself is succumbing to the worst of excesses. Certainly, absorb the information but take everything you see or read with a grain of salt. Things will get worse. The media is fragmenting into specialty niches and the only way that the powers that be seem to know how to get our attention is to increasingly jump up and down and scream the loudest most often.

Avoid dogmatic approaches to personal finance

I blogged earlier this year about attending an investment seminar. What I did not mention was a gentleman in his late 50′s who insisted the only way to make money was through real estate and that the entire stock market was a ponzi scheme. He was willing to tell anyone this that listened.

I encountered this a lot this year. Some people think the stock market is the only way to make money and blame the crash on the bursting of the real estate bubble. Others insist that real estate is the only way to make money and cite the stock market crash as Exhibit A. Some entrepreneurs I know, looking at the masses of unemployed, declare building a business is the true path to financial independence.

I build businesses and I invest in stocks. The former was a real learning lesson for me since, in down times, your margin of error is small and you have to discipline yourself to be great and not just good. As a stock investor, I similarly learned from my investing mistakes (over allocation of financials in my dividend portfolio being the biggest one this year).

I do not believe because I did not experience the success I wanted to in these ventures that they are inherently “bad” approaches to personal finance. My speculation is that dogmatic thinking tends to come from people who experience success in a method and then think the method is the only way to go because of such success (again, success is a poor teacher).

I would suggest the opposite. If you have failed in a method (however one defines failure) but the method is fundamentally sound (have other people of the same age, skill and experience succeeded?), the lesson to be learned should not be the method is bad and give up but one has actually been given important knowledge on how to employ the method properly (knowing what not to do is sometimes more important than knowing what to do).

To answer the question of what is the best method achieving personal finance, I believe the right answer is to find something that works for you (whether real estate, stocks, businesses), learn it and perfect it. Use the mistakes as learning lessons and use those losses to improve on your skills. Most of all, use your energy to make yourself better at it rather than convince everybody else of the rightness of your thinking.

(part 2 tomorrow).

I am honored to be included in Triaging My Way to Financial Success’ best of blogs 2009. There are lots of good articles and tips from each of the bloggers and I would encourage people to read through all of them. With the year ending about Tiger Woods alleged ability to, ahem, multi-task on and off the golf course, 2009 is truly about exposing the life of celebrities trashy tabloid style. After all, with the economic picture so dark what are people to do but to be noisy about the lives of others?

Amid all the scandal through, there are actually personal finance lessons to be learned from the rich and (in)famous this year. A few examples immediately come to mind.

Jon and Kate Gosselin. The craziest parents ever to raise 8 kids taught us a valuable lesson this year about joint bank accounts when Jon emptied their joint bank account of $200,000. But for a court order freezing that account prior to the withdrawal (and Jon having to return the money lest he be found in contempt of court), Kate would have had no recourse. The morale of the story is truly trust the co-signatory of your bank account since there are few controls over one party withdrawing money against the wishes of the other. Having said that, what you can do is have the bank notate that any cheque or withdraw over a certain amount of money requires dual signature.

Miley Cyrus shut down her twitter account this year. Supposedly, she figured out if you tell people the most intimate secrets about your life on the internet, they actually become public knowledge and can be used against you. Like, this is so shocking! O-M-G. Tell your BFF!

With tale after tale about people losing their jobs or insurance benefits over improper use of social media, let us remind ourselves that social media, despite its utility, can be an invitation into your private life and all the consequences, good and bad, that come with it. Parents- please do have a conversation with your kids about social media; it is the Trojan Horse to your privacy.

Glenn Beck, voice of the American political right, is getting flack for alleged conflicts of interest in promoting the purchase of gold on his shows. His reasons, as I understand it, to buy gold is that gold is the only true investment when the economic system collapses. There’s two interesting lessons here.

Glenn Beck may be great at being a media personality but I am not sure he’s the best investment expert out there.  But there’s a certain strain of personal finance that worships the cult of the expert (self-declared or not) over prudent strategy. If 2008-2009 taught us anything, experts are just as fallible as the non-expert; they are just better at getting attention. Strangely, this lesson does not seem to be sticking. Secondly, when main street starts telling you to buy gold, it may be a sign that a gold bubble is forming. Answering the question “when” is just as important as “what” in personal finance and life in general.

Michael Jackson and Ed McMahon both passed away this year. Both made literally millions over the years. McMahon died broke and Michael Jackson died a lot poorer than he should have been. The lesson yet again is it is not what you make but what you keep that matters.

Finally, Tiger Woods crashed his GM SUV while going for a drive/escaping from his enraged wife/under the influence/insert own TMZ inspired story here. Now there are whisperings the sponsors may be leaving the Tiger Woods brand as stories circulated that Tiger may have allegedly kept 10(!) mistresses. The lesson once again is character matters first and foremost in life since money comes and goes but character is forever.

On a lighter note, after Tiger crashed, the air bags failed to deploy. Onstar did not switch on and the front door was jammed shut. This all despite the police reporting the crash was at low speeds. Is this the final confirmation that the GM bailout was not a good idea? No wonder the CEO of GM quit soon thereafter.