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Sales of vehicles from Detroit's Big Three have been weak and getting weaker lately. But the bad news is even worse when you look at just basic passenger cars. According to a piece in BusinessWeek (appropriately titled "Car Sick"), American products accounted for less than a third of all car sales in July, a new low for the industry.

In July, imports grabbed 68% of passenger car sales in the U.S., leaving General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler with only 32%. And some of that meager number include fleet sales to rental agencies, which produce very slim profits. Factoring those out, BusinessWeek estimates that Detroit's share of the American passenger car market is about 25%.

One stunning illustration of just how bad things are: in July, GM's entire Buick division sold just 6,000 cars. Compare that to just one Toyota model, the Camry, which sold over 42,000 units in the same period. And there are roughly 2,700 Buick dealers, about twice the Toyota figure, which means that on average each Buick dealer sold 2.2 cars during the month. You have to wonder how they manage to stay open.

It's no secret how this situation came about. The Big Three bet their collective house on trucks and SUVs in the 1990s, not cars, and now they are paying the price of that unwise gamble. Despite the arrival of decent (though hardly stellar) cars like the Chevy Malibu and the Ford Focus, American passenger cars have a long way to go before they can once again sustain the American auto industry.

The auto industry is deep in the weeds right now, particularly in the United States. American manufacturers are hemorrhaging money -- General Motors (NYSE: GM) alone has lost $30 billion in the last three years -- as high gas prices and an unofficial but very real recession forces consumers to abandon their American-made trucks and SUVs by the millions.

Even with the pronounced shift toward smaller and more efficient cars, the overall auto market in the U.S. is shrinking thanks to the poor economy, and most manufacturers are selling fewer vehicles. But one company stands out as an exception to the rule of declining sales: Honda Motor Ltd. (NYSE: HMC). In the first seven months of 2008, Honda increased its sales by over 3%. By comparison, Chrysler lost 22%, GM fell 17%, Ford (NYSE: F) lost 14% and even mighty Toyota (NYSE: TM) saw a decline of 7%.

An interesting quote in The New York Times from Tetsuo Iwamura, the president of Honda's North American operations, sheds light on how Honda has managed this impressive feat. Honda, Iwamura said, "is a philosophy-driven company." And what is Honda's philosophy? According to Iwamura, "we want to make Honda the company that society wants to exist."

From an American perspective, this is an extraordinary statement. American automakers have followed a very different philosophy for many years, one in which fat and easy profits from poorly designed and hopelessly wasteful SUVs take precedence over the long term health of both the auto industry and society as a whole. But Detroit is suffering now for its short-term approach, while Honda is showing both consumers and investors the value of planning for the long run. And at $32 a share and a P/E of 10, Honda looks like a good long-term buy.

According to a Reuter's report, General Motors (NYSE: GM) is finding "significant interest" in the assets it is trying to sell to raise capital. The biggest asset on the trading block so far is Hummer, the militaristic luxury SUV line that is variously loved and loathed in different corners of the country.

Whatever your feelings toward Hummer, $4 a gallon gas has made it far less attractive to American consumers. And having lost over $50 billion in the last three years -- that's right, $50 BILLION -- GM sure could use the cash it would get from its sale.

At a plant opening in Thailand, GM confirmed that it has been in negotiations with India's Mahindra & Mahindra Ltd. to sell the Hummer division. Automakers in China and Russia are also reportedly interested.

Mahindra is a large and growing company, one that you'll hear lot about in the near future. It's a $150 billion conglomerate that already sells tractors in the U.S., and starting next year it plans to sell a diesel pickup truck here as well. Mahindra got its start making Willys Jeeps in India after World War Two, and now controls most of the utility vehicle market there. Hummer could make sense as a luxury badge for the company, one that it could sell to oligarchs and new capitalist kings throughout Russia, China and the Middle East. The Hummer's days in the U.S. may be limited, but it may have a future in the more turbulent emerging markets where military looks make more sense and where poor gas mileage is less of a problem.

The Federal Reserve has rightly been worried that the economy may be both too hot and too cold at the same time. But today, the Fed leaned toward the recession side of the worry ledger and left the federal funds rate at 2%.

In a statement announcing the decision to keep rates as is, the Fed stated that "Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the committee."

So both inflation and a serious recession are still cause for concern. But in leaving rates alone, the Fed announced that low or negative growth rather than an inflationary spiral is now the main problem.

There are good reasons to focus more on growth rather than inflation. The price of oil is falling and talk of a global slowdown is building. On top of that, labor is at an epic low in terms of political and economic power, so the price-wage spiral is unlikely to occur.

Today's move (or non-move) suggests that the next change in interest rates could be down.

The SEC announced that it will fine Pax World Management $500,000 for violating its own restrictions on buying stocks. Pax World is a 'socially responsible' investment company, operating mutual funds that do not invest in companies which produce harmful things like weapons, alcohol and tobacco.

I guess the return on cluster bombs and cancer sticks was just too tempting.

Pax has issued a statement in which CEO Joseph F. Keefe apologizes for the violation of its self-imposed rules. (He also makes it clear that it occurred before he became CEO). Keefe states that investors were not harmed financially.

By way of explanation, Pax cites the SEC's Settlement Order, which states that between 2001 and 2005, two of Pax's mutual funds bought stocks "that either were not socially screened prior to purchase or had failed a screen. Of these, 10 securities (out of approximately 650 purchased by Pax World Funds during that time period) actually failed the social screens and therefore should never have been purchased."

Major U.S. stock indices moved higher on Tuesday. As of 2 pm, the Dow was up 200 points or 1.7%, the Nasdaq was up 45 (2%) and the S&P 500 was up 20 (1.6%).

The declining price of oil was a significant factor, as crude futures fell $3 to the $122 per barrel level. The dollar rose against the major currencies, gaining 1% on the euro.

The big question, of course, is whether today's rally reflects a turn in the market. More likely, we are seeing a burst of enthusiasm driven by lower oil prices. But plenty of bad news hangs over the market, with more likely to come.

The macro-economic picture is still bleak, and getting bleaker. Layoffs are increasing -- Starbucks (NASDAQ: SBUX) announced that it will cut 1,000 jobs, while Bennigan's and Steak & Ale filed for bankruptcy -- and the credit crisis shows no signs of abating. Housing prices continue to drop at an alarming rate.

So beware this and all the other rallies we've seen lately. This bear market is not over yet.

The folks in Detroit may be pleased to see Toyota Motor Corp. (NYSE: TM) cutting its sales forecasts, but the pleasure is sure to be short lived. Despite its more modest outlook, Toyota leads General Motors (NYSE: GM) in global vehicle sales -- and its lead is only getting bigger.

According to a report on Reuters, GM sold 4.54 million vehicles worldwide in the first two quarters of 2008. This represents a 3% drop from the same period last year. Although sales in Europe, Latin America and Asia actually rose, the General couldn't overcome a whopping 15% decline in North America.

Toyota, on the other hand, saw a 2.2% increase in global sales, to 4.8 million units. This gives Toyota a lead in the range of a quarter million vehicles or more. And with its global sales growing, the lead is likely to widen, especially as Toyota switches over to producing more efficient cars in North America and fewer of the wasteful trucks that Americans loved so much until just a few weeks ago.

As Autoblog points out, the sales crown is important to both companies, although neither will admit it publicly. GM was the global sales king for 77 years, and the loss of that title will certainly hurt. Last year, the sales race ended essentially in a tie. But with these results, it looks like Toyota will be the champ in 2008 and, in all likelihood, beyond.

As if Detroit needed any more bad news, there are reports that yet another foreign producer of sensible, efficient and fun to drive cars is planning a raid on the domestic market share of the SUV-producing giants.

Apparently Germany's Volkswagen (OTC: VLKAY) is considering building a new plant in Alabama to produce Jettas and next-generation Passat sedans, and possibly a small new SUV called the Tiguan, as well as the Audi A5. The plant will cost an estimated $788 million and employ several thousand workers. No decision was made about the plant's location at a meeting on Wednesday by Volkswagen's management board, and VW is reportedly also considering sites in Tennessee and Michigan.

This would not be the first time VW produced cars in the U.S. From 1978 to 1988, the company produced over a million vehicles, mostly Rabbits, in New Stanton, Pa., near Pittsburgh. But VW's quality and reputation suffered in the 1980s, and the company now has less than 2% of the American market. However, VW is making a great comeback across the globe, and senior managers must think the time is right to start selling more cars in the massive North American market, the world's largest.

It turns out that former hedge fund manager and convicted swindler Samuel Israel III did not in fact kill himself. As I, and others, have suspected, he headed for the border after faking his suicide on June 10, the day he was suppose to start serving a 20 year sentence for fraud. But it wasn't the border we thought it was. Instead of Mexico or Argentina, it seems that he headed for . . . Massachusetts.

According to DealBook, Israel popped into a police station in Southwick, Mass., "near the Connecticut border," to turn himself in. He was talking to his mother on a cell phone at the time. No word on what he was saying, but "Hi Mom, I'm going to jail now" probably gets us pretty close.

Israel's disappearance was the subject of much speculation. His SUV was found near a bridge that spans the Hudson River, with the words "suicide is painless" written in the dust on the hood. But the police figured out pretty quickly that the implied suicide was a fake and arrested his girlfriend as an accomplice in his plot to escape prison. Soon after, a photograph of the ratty camper Israel was apparently living in was circulated in the press.

We now know he didn't get very far in that old camper, less than a hundred miles. Was it the cost of gasoline and the lousy mileage of that big V-8 engine? Maybe when Israel was setting aside the escape money he knew he would eventually need, he didn't realize that gas would cost so much in 2008. I suppose high gas prices are hurting everyone these days, even high-flying, big money charlatans like Samuel Israel.

Once upon a time, the minivan saved Chrysler. In 1984, the company introduced this new type of vehicle which went on to sell by the millions, helping Chrysler emerge from near bankruptcy.

But now Chrysler finds itself with too much production capacity for all kinds of large vehicles, including minivans. Today, the automaker announced that it will close one of its two minivan plants. The St. Louis South plant in Fenton, Mo., will close within the next four months; approximately 2,400 workers will lose their jobs. Minivan production will continue in Windsor, Ontario. Chrysler also announced that it will also produce fewer units of its 2009 Dodge Ram pickup truck. Only one shift will run at the St. Louis North plant, instead of the previously planned two shifts.

This news comes as news reports indicate that June auto sales plunged in the U.S. Consumers has deserted trucks and SUVs as gas prices soar past $4 a gallon. Chrysler famously produces a higher percentage of trucks in its lineup, and is suffering accordingly. Edmunds.com is estimating that Chrysler's sales could be down 30% in June. Cerberus Capital Management, the private equity firm that owns Chrysler, continues to say that it is happy with its acquisition of the company. But with results like this, it's hard to see how that could possibly be true.

U.S. futures indicate a mixed to lower opening Monday morning.

Oil prices continue to serve as a powerful market mover, as oil surged past the $143 mark in Monday trading on the ICE Futures exchange in London. On Friday, oil futures charged to a record $142.99 before closing at $140.21.

Inflation in Europe rose to 4% for the month of June, higher than the estimate of 3.9%. Higher inflation comes even as economic growth is slowing, and makes an increase in interest rates by the European Central Bank more likely.

The U.S. Federal Reserve, however, is less likely to respond to higher inflation with a rate hike. Accordingly, the dollar continues to weaken as traders continue to move into the euro and yen.

Some analysts are now saying that the current market will likely resemble the 1974 bear market before all is said and done. Higher inflation and lower liquidity show no signs of changing direction, and the main question now is how long the bear market will last. Some pessimists are saying it could be a decade.

In stock news, Carl Icahn is planning to file a definitive proxy in his battle for Yahoo! Inc. (NASDAQ: YHOO) this week. The proxy should inform investors of just how far Icahn wants to go in shaking up Yahoo!'s management. For those wishing to keep up with Icahn's latest moves, be sure to check his blog regularly.

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

Is there any piece of furniture more classically American than the La-Z-Boy recliner? It goes hand in hand with the image of Dad -- any Dad, all Dads, from the 1950s to today -- enjoying the simple pleasure of sitting with his feet up and his head back, tempting sleep as he reads the paper. After a long day at work but before the wife puts a delicious roast on the table, there's always time to relax a bit in the world's most famous comfy chair.

La-Z-Boy (NYSE: LZB) invented the first version of that iconic chair in 1929. The company got its start a few years earlier when two cousins, Edward M. Knabusch and Edwin J. Shoemaker, founded the Kna-Shoe Manufacturing Co. in Monroe, Michigan. They made furniture and cabinets in the proverbial start-up garage, and they has some initial success, especially with new designs like the Gossiper, a bench with a phone stand built in. But competitors kept stealing their designs and their profits. So when someone suggested that they upholster their popular wooden recliner, they proceeded carefully, filing for patents and choosing a distinctive name. Sit-N-Snooze and Slack-Back were in the running, but La-Z-Boy was the name they finally selected for the world's first reclining upholstered chair.

The La-Z-Boy was a huge hit, although it hadn't yet achieved its truly classic form. That occurred in 1953, when the Otto-Matic model was introduced. The long-running problem of the ottoman, a separate piece of furniture needed to support the feet while relaxing in a comfy chair, had now been solved. From now on, the ottoman was rendered superfluous, since the La-Z-Boy could offer a built-in foot rest. Oh, sweet perfection!

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

Ah, Spam. Doesn't the word make your mouth water? Or maybe not. Either way, Spam must be given its due. It is the most famous of the mystery meats, those exciting concoctions of the meat-packing industry. It has been sold by the billions of cans since its invention in 1937. It helped feed the Allies and win World War Two. It is central to a Monty Python skit about Vikings in a greasy spoon, and now a Broadway musical. It provides a name for unwanted e-mail. It theoretically lasts forever. And it is a product of the Hormel Foods Corporation (NYSE: HRL).

Spam is made in several places, but its ancestral home and main production facility is in Austin, Minnesota, sometimes called Spam Town. Austin is the small town south of Minneapolis that is home to Hormel, proud maker of all things Spam. (I should note that Hormel would prefer that we write "SPAM luncheon meat" but I don't think we'll take that suggestion too seriously.)

Hormel has long dominated the town of Austin, and not just because the Spam Museum is located there. It is by far the largest employer in town and the majority of workers in Austin work for Hormel, producing many of the company's meaty foods. Hormel's roots in the town go deep. Drawn by the town's good rail and river access, George A. Hormel opened a meat packing business there in 1891, and his small company eventually grew into the billion-dollar colossus that today owns a dizzying array of food brands, from Chi-Chi's and Valley Fresh to Dinty Moore and, of course, Spam. (Does it seem fair that one company gets to own both Dinty Moore and Spam?)

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

Few companies are as strongly associated with their hometowns as L.L. Bean, which has been producing outdoor clothing, sporting goods, and brightly colored preppy wear in Freeport, Maine, since 1912. The company's first product, the iconic rubber boot called the Maine hunting shoe, was manufactured in Freeport, and quickly became a big hit despite the fact that most of the first boots sold were returned due to a design defect.

In the past 95 or so years, both L.L. Bean and Freeport have come a long way. The company store, which began in a basement, grew significantly over the years, despite the fact that most of Bean's $1.5 billion in annual sales come through its ubiquitous mail-order catalog. The store has been open 24 hours a day since 1951, with a few exceptions for the deaths of John F. Kennedy and the founder, Leon Leonwood Bean.

Today, the company dominates the very small town of Freeport, population 7,800. It's much more than just a store, as its multiple buildings, parking lots, and outdoor patios and sculptures define the town itself. L.L. Bean has become more of a campus than a store, with different buildings for clothes, hunting and fishing gear, bikes and boats, and a discount outlet, as well as outdoor spaces dedicated to demonstrations of equipment and live musical performances.

The bad news just keeps coming for General Motors (NYSE: GM). The beleaguered auto giant has announced that it will offer 0% financing to help get rid of its growing inventory of inefficient trucks and SUVs, even as it is forced to raise prices due to higher raw material costs. Its once proud Hummer brand is now an albatross that the company is considering unloading. And its market cap of $7.5 billion is lower than not only Toyota (NYSE: TM) but also ailing Ford (NYSE: F) -- GM has lost so much value that a writer at CNNMoney is making the argument that it should be removed from the Dow Jones Industrial Average.

One bright spot for GM has been the Chevy Volt, a hybrid car that has generated considerable excitement in the automotive press. The design of the car is groundbreaking, with a large battery that is recharged by a small gas engine. This is an advance over the popular Toyota Prius and other hybrids, which are essentially gasoline-powered vehicles that use batteries to improve mileage and emissions. With the Volt, scheduled for production for the 2010 model year, GM could claim a real technological advance for the first time in years, and maybe regain some market share.

But there's only one problem: it is highly unlikely that GM will be able to deliver the Volt as promised, according to an Atlantic piece about the car. The article is filled with fascinating details about the ongoing development of the car, especially the frantic pace and rapid innovation required to get the car into production shape. But an unnamed executive told the magazine that this is exactly the problem. The development process has been too compressed, which will force GM to either fail to meet its target date or, worse, to deliver an inferior product. As the executive put it, "They're making a huge mistake."