General Motors (NYSE: GM) has just announced that it will extend warranties on may of it used cars. According to Reuters, "GM said it would begin offering a 12-month, 12,000-mile "bumper-to-bumper" warranty on all used cars and trucks certified as eligible for the repair coverage by participating GM dealers." The firm has already said it will return to the extensive use of incentives to clear out new car inventory.

GM should have a better solution than to lose more money on each new car it sells and add costs to market its used products. It turns out that is not the case. Vehicle sales in the U.S. are just too awful and Toyota (NYSE: TM) and Honda (NYSE: HMC) take more market share each month.The talk of GM doing into Chapter 11 rings a bit more true as the time passes.

GM is now out of options. It still makes money overseas, but that is overwhelmed but its North American deficit. GM says it will stick to supporting all of its brands except the Hummer. That may end up not being true. GM did say it was moving away from incentives. It did not work out terribly well.

GM has a couple of brands that still sell only a modest number of cars. Saab is one. Saturn in another. Saab could be sold. Saturn could be closed. Saturn might not even be missed.

If GM has to continue using incentives, it will get to the point where it cannot support the marketing and product development costs of all of its brands. That point is probably coming in the next quarter.

Douglas A. McIntyre is an editor at 247wallst.com.

The New York Times DealBook recently asked the question "Should banks take back their bonuses?"

The top investment banks will be paying out a record $39 billion in bonuses for 2007, a year in which most posted massive writedowns on bad subprime loans and saw their share prices shrink precipitously.

Making matters worse, traders and investment bankers earned huge bonuses on deals in past year that have now been written down. The deals weren't valued properly in the first place, but who cares! They already got their bonuses.

At the risk of being inflammatory, I have to tell you: This reminds me of Enron, where executives "marked to market" deals based on hypothetical future profits, paid themselves huge bonuses and, in one case, had cashed out and become the largest landowner in Colorado by the time stuff hit the fan.

The problem with the Wall Street bonus system is that it rewards risk over prudence. The compensation philosophy on Wall Street seems to be "Heads I win, tails I still win, as long as I can convince people it was actually a heads at the time I toss the coin. When they find out it was really a tails in a few years, I'll already have spent my bonus on that mansion in the Hamptons, and the shareholders can jolly well deal with it." Or something.

Until someone has the courage to make some changes in the Wall Street bonus structure, we can expect big blow-ups like this from time to time. As economics teaches us, people respond to incentives, and Wall Streeters are incentivized to take big risks with other people's money.

Coupons: The bane of impatient shoppers and cash register clerks, but always a favored method of driving consumer traffic. How can they remain relevant in the age of the internet?

AOL, a division of Time Warner Inc., (NYSE: TWX), is glad you asked. Its new AOL Shortcuts program will offer merchants a way to use electronic coupons efficiently. The program allows internet users to register their store loyalty card number, then select electronic coupons from emails or web pages with a single click. No need to print off coupons; AOL Shortcuts stores these coupons for the shopper. When he or she then purchases the product, the coupon savings is automatically applied.

For example -- On Tuesdays, Kroger sends me an email of weekly savings, much like the circular in my newspaper. I open the email, click on the "$1 off Perdue chicken breasts" coupon. Later that day, I stop by the store, buy the chicken, and a buck is taken off my purchase, automatically. No need for me or the clerk to screw around with little pieces of paper.

According to Hedge Fund Research, the average hedge fund returned less than 13% last year, versus a 14% rise in the S&P 500. But it's important to keep in mind that hedge funds aren't necessarily correlated with a particular index, which makes benchmarking difficult. Hedge funds can go short, trade commodities and currencies, and all kinds of exciting derivatives. So it's hard to know whether the 13% average is good or bad -- some hedge funds take more risk than an index, others take less.

But I'd still rather invest in a hedge fund than an actively managed mutual fund. If there's one thing that you have to remember from economics, it's this: incentives matter. Hedge funds have a compelling reason to earn big returns: They often get to keep around 20% of the profits as a management fee (in addition to 2% of assets under management which can, sadly, give big funds with lousy performance big paydays). Mutual funds are compensated solely based on their ability to gather assets. If that seems bizarre, it is. It's like paying a an executive at a record label a flat fee for every musician that he signs. You don't need a PhD in Economics to figure out that that executive will focus on signing artists, not developing hits.

I'd be interested to see what would happen if mutual funds switched to a compensation structure based on returns rather than assets under management. There would be less focus on slick marketing, and more effort would be put into making money for shareholders.

Until that happens, I think your best bet is a passively managed index fund.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

So let's imagine that you like the convenience of shopping attired only in your underwear. In this (purely hypothetical) case, which site, Amazon.com or Barnes & Noble.com, would be your first choice?

With over 40 product categories ranging from books and DVDs to pet food to health and beauty products, there is something for just about everyone on Amazon.com (NASDAQ: AMZN). The site contains your browsing history, which can be either good or bad depending on who's looking over your shoulder when you next log in. Amazon offers 1-click check out once you set up an account, and also offers incentives to consumers who use Amazon's own credit card. Orders over $25 ship free to continental U.S. addresses. Amazon provides plenty of graphics of book and DVD covers, so even if you can't remember the name of the item, you might be able to recognize it from its picture. Amazon also offers a simple order tracking option called Where's My Stuff.

Barnes & Noble (NYSE: BKS) offers a narrower range of products, mainly books, DVDs, and vaguely educational toys. Books are new and used mass market, as well as new and used textbooks. The site is much less graphics intensive than Amazon, but holds more information on titles. Barnes & Noble also offers incentives for customers to use its own credit card and to join its membership program in exchange for discounts. Shipping is free on most orders over $25. Payment is via Paypal. Unlike Amazon, Barnes & Noble includes an 800-help number on the web page. Barnes & Noble targets more serious readers with weekly online book club meetings in which various authors participate in the discussion and Q&A about their books.

So, clad in whatever manner makes you comfortable, what is your preference for online shopping?

Be sure to vote in our poll for B&N or Amazon as your preferred brand, and lets us know why you love it in the comments. Results of all Battle of the Brands match-ups coming soon.