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What's Important in the Financial World (12/2/2011) Chrysler Victory, Google Chrome Surge

The sovereign debt problem in Europe gets more complex by the hour. The European Central Bank said it may intervene to buy paper issued by nations that are economically weak. This should drive down yields and give countries like Italy more time to show their seriousness about austerity. Angela Merkel of Germany said she wants aid of any kind, particularly if it involves German money, to come at a steep price to those that need it. Membership in the eurozone should involve a stronger union, and one in which nations should be held accountable for their budgets, she argued. Merkel also expressed pessimism about the region’s future, at least short term. She said, “Resolving the sovereign debt crisis is a process and this process will take years.” She also said the eurozone should expect no help from the ECB.

November car sales numbers were telling in several ways. SUV sales picked up. Perhaps American believe the drop in gas prices will be long-lived. If not, drivers with the large trucks face several years of expensive motoring. Japanese car companies continued to lose ground, with the exception of Nissan. Toyota (NYSE: TM) and Honda (NYSE: HMC) still have production disruption problems due to the March earthquake. November U.S. sales also showed the continued rising success of American car companies. All three posted substantial gains. The most impressive of them was Chrysler, which said units sold increased 45% over November of last year. The company sold more than 100,000 cars and light trucks last month. It is a compelling victory for a company that went through Chapter 11 just three years ago. It is also a victory for Fiat, which now owns Chrysler.

Retail results for November and third-quarter earnings from some store chains were another indication that several companies are now permanently out of the race for profits and better revenue. Barnes & Noble (NYSE: BKS) posted poor quarterly results. Its store sales were weak and its investment in e-commerce expensive. The book company has battled Amazon.com (NASDAQ: AMZN) for years, and it is more clear with each quarter that the fight is one it cannot win. Weak retailers like Talbots (NYSE: TLB), Gap (NYSE: GPS) and Kohl’s (NYSE: KSS) continued to get weaker. Their competitions have overwhelmed them in price, store configuration and location, and e-commerce efforts. Those are not advantages that can be overcome.

Google’s (NASDAQ: GOOG) Chrome browser passed Firefox as the second most used product in the business. It sits behind only Microsoft’s (NASDAQ: MSFT) Internet Explorer. The gains could be critical to Google’s advances into businesses like social networking. The Google browser bar offers rapid access to its products, such as social network launch Google+. Microsoft loses chances to promote its products in the browser space as its share shrinks. The Chrome advance is another example of how Google has pushed into businesses beyond search. The most prominent of these is the Android mobile OS. But Chrome, Google Maps, YouTube and Google’s image search product are parts of the largest search company’s success in diversification.

Douglas A. McIntyre