Friday, November 21, 2008

Brother, Can You Spare a Dime?

Okay, GM execs took a private plane to go to Washington to beg for money. Stoopid! with a capital S. GM leases its planes and had seven planes. They dropped two in December and are planning on cutting two more, leaving their fleet at three. Compare to Intel, where execs are mandated by policy to take coach. Which company makes money, or at least is not in line for a bail out? Hmmm. Let me see. Just so's ya know--OMG Palin-speech, language must be a virus! Ford exec Alan Mulally had a compensation of $22.8M and $750,000 of that was the use of the company jet by him, his wife and kids and guests. It was hard for him and his family to move to Michigan from Seattle.

My heart effin' bleeds. I got moved for my job and I still own my house in Denver because I could not sell it in the current economic environment. My kids rent it. I lose money on it. Notice the ambition of my son and his dog in the icon. (apologies to Jesse) Can I get a job where I can run the company into almost bankruptcy and make $22.8M? and fly in the company jet to see my kids and wife when I want? Oy!

And, yes, the auto companies need bailed out. Yesterday I mentioned that 2,000,000 American jobs depend on it. Today in the press they are saying 3,000,000 and I am glad that congress is asking for controls, a business plan and so on before they hand over the money. Management has made bad decisions. It needs to be changed. And when you ask for $25B, tough shit if you don't like having strings attached. I hope they can make them a world-wide industry leader again. BTW, link on states Detroit lacks salemanship. Isn't sales their business? D'oh!

One more auto-related item--GMAC, the financial arm of GM (mortgages, car loans, credit cards, etc.) has asked for bank status so it can get bank bailout money. and in the SacBee this morning they were stating that GMAC holds a controlling interest in Cerebrus Capital Management. That is incorrect. GMAC sold 49% of its holdings to Cerebrus earlier this year so it would have liquidity. This is important because Cerebrus owns 51% of Chrysler LLC. So, GM and Chrysler do have a connection through a management firm. That management firm holds Chrysler and GMAC, so with common management...


Thursday, November 20, 2008

Now What?

Before I begin talking about the American Auto Industry, I need to say I am sad they need bankruptcy protection.

Why? Labor costs, pension plans, medical costs, bad strategy, bad marketing, lack of foresight. I mean how many Cadillac Cimarrons are out there right now as classic cars? Oh wait, you mean the Chevy Cavalier with wide whites and wire rim wheel covers and Iron Duke 4-bangers. Yes, those POSs. And why has Ford had "Build Bigger trucks" as their business plan for ever? They are lumbering giants of bumbling companies who make bad decisions. They are nor responsive to market demands. They are more like Refrigerator Perry running the ball, rather than Barry Sanders--go in one direction and not be able to change speeds or directions well. Strictly vertical management schemes. Peer review is unknown there. and bonuses are given to the most failed management. They are used to it. and broke because of it.

and worse yet, we need them. It may cost $50 billion to bail them out, but over $250 billion if they fail. and up to 2,000,000 lost jobs. Kaiser, Willys, American Motors didi not have enough capital to keep up.

The whole industry needs to be retooled. I wish I was smart enough to know how. Yes, you need trucks, you need profit, you need industry, you need electric cars, you need flex fule, you need hybrids (and I looked at a Malibu hybrid--got all of 30 mpg, big whoop). How do we make the bailout and then remake the companies. The executives who drove it in to the ground certainly can't (proving how stupid they are asking for bailouts in corporate jets).

Now what?


Tuesday, November 18, 2008

"When Bremer started issuing legal decrees in Baghdad, Joseph Stiglitz, the former World Bank chief economist, warned that Iraq was getting 'an even more radical form of shock therapy than was pursued in the former Soviet world.' That was quite true. In the original Washington plan, Iraq was going to become (an economic) frontier just as Russia had been in the early nineties, but this time it would be American firms--not the local ones or Eurpoean, Russia or Chinese competitors--that would first in line for the easy billions. And nothing would deter even the most painful economic changes...the transformation would not involve a mannnered dance between the IMF and quixotic local politicians while the U.S. Treasury called the shots from down the hall. In Iraq, Washington cut out the middlemen: the IMF and the World Bank were relegated to supprting roles, and the U.S. was front and center. Paul Bremer was the government...there was no point in negotiating with the local government because 'at this point, we'd be negotiating with ourselves.'

...All the careful efforts during the nineties to present 'free trade' as something other than an imperial project were abondoned...seizing new markets directly for Western multinationals on the battlefields of preemptive wars."

The Shock Doctrine, p. 434, Naomi Klein

Three things this brings to mind:
1) Is it any wonder the U.S. is so loved across the world in its current administration and incarnation? Start a war so we can take over. simple. The catharsis across the world of seeing Barack as the country's new leader will bring large crowds, because we are so disliked in our current form.
2) Free market should not even be a debate anymore, it has worked so well for us over the past 16 years (NAFTA and CAFTA come to mind)--through the Enron debacle, the energy market bubble, the dotcom bubble, the housing bubble. This has all worked well for the middle and lower classes. Trickle down is such BULLSHIT!!!! It can't work, won't work and is not even worthy of discussion. So get proponents of it off of my TV. Oh, wait, the station owners want us to hear more about its virtues. I wonder why? The deregulation of the airwave ownership and the deregulation and submergence of news into "fair and balanced" profit centers (keep in mind that for every 300 hours of Republican or further right commentary, there is one minute of left wing commentary--but, let's not go there in this post) has provided propoganda to fuel that fire for over twenty years. Iran-Contra headed by Saint Reagan never received honest coverage (hell, Ollie North and G. Gordon Liddy are commentators on news channels instead of being Bubba's cell wife). All it has done is redistribute the money to the upper 0.5% of the population and those that won it, love it and will fight for their right to party while you don't. and they have the funding.
3) This administration is the most important administration in my lifetime. Maybe the most important since the New Deal. The WORLD'S economy is kind of crumbling and who Barack picks as economic advisors will tell us whether it can recover and recreate itself as a possible paradise. Or will it continue as a free market Stygian thievery? I hear Albright being part of the transition team and that scares me. The world will need a hybrid economic theory (not free market, not socialism, not communism--but something withhheart that recognizes the failures of all the systems and put in place safeguards so human nature and ethics cannot get in the way of what is fair) and practice if it is to survive as something other than a class structure.

As an aside, I have read many stories of Prop 8 maybe being the base of a right wing revolution, or maybe having a Black President. I have been in Kern County CA and talked to men at a gas station driving to Bumfuck rural nowhere to buy the parts to convert their weapons to fully automatic weapons because they feel the need to defend themselves from the gays and the blacks. The need for revolution is near the surface to them and they have guns. This will be a very tense time in our country's history. I don't feel these guys were aberrations. What they believed the country to be, based on God-fearing bible-toting white folks is changing. Add in home repossessions and economic crunches and we are sitting on a tinder keg.

Prayers, good vibes, reiki, whatever are needed at this crucial time.


Sunday, November 09, 2008

Send Lawyers, Cars and Money, The Shit Has Hit the Fan!

In the celebratory atmosphere many of us are feeling after the election (some exceptions are...), I am waiting to see who is the most trusted advisor on the economy. Will it be someone with a free market bent, a Friedmanite or a Keynsian? or some mixture in between. If you have not read The Shock Doctrine, read it. For me, it puts into an understandable context Confessions of an Economic Hitman and fills out so much of the background of South American politics I was just too stupid or naive to understand when I was younger. It makes listening to Thom Hartmann easier too. It is hard to drive, listen to him on the car radio and have your brain hurt. and it also helps put into perspective Rush Limbaugh's comments of the necessity of rolling back the New Deal.

Speaking of New Deals, I see the US auto industry may become part of the bailout. GM was looking at purchasing Chrysler LLC, but has no money with which to do it. GM needs $19.4 billion to meet commitments to retirees, payroll, benefits and suppliers. They are about out. They have already cut 401k matching payments. The industry is needed for an American economic recovery. There is no doubt about it. They are meeting with Pelosi to see what can be done.

But how should these industrial giants retrench? And can their administrations which have made so many STUPID decisions (just last week Ford, for the third time in ten years, is placing hopes of recovery on big pick ups and SUVs - do they know more than one note?) Ford could not figure out how to make small cars profitable earlier in this decade and now has problems. The November 2008 issue of Automobile magazine lists 10 cars that are needed for today's world and three of them are are already existing Fords, one GM (Opal/Saturn). They are out there and will be needed.

I often wonder if we are not in a situation now where you need to make a product and break even, just to keep the doors open. I am sure that will get you no bonuses (at that level are bonuses really tied to economic metrics or are they just expected. evidence recently shows the latter option as the way it is done.) You may even lose your job as investors take no dividends for a while. Aren't we in a situation where country needs to come before return on investment. Maybe keeping the doors open and lowering ROI is a necessary step.


Thursday, November 06, 2008

Krugman is Kool, But...

There is a great read by Paul Krugman today. he states that the Monster Years are over. I have thought of this a lot over the past few years and I hope the following is a coherent encapsulation of many and various trains of thoughts I have had. In my not-too humble opinion, the cultural war against mon sters has posted a small victory this past election, but....for years, I have never understood why the Monstrous Ideas spouted as truth by ninnies and feebs was given any serious thought at all. As a child, I would visit downtown Cleveland with my grandmother and be amazed at how streetcorner preachers ranting about the upcoming "end of the world as we know it" could generate some listeners, but how most reasonable people shook their heads and walked away, paying it no more attention. why, when teaching evolution was challenged as a source of the violence of Columbine, or when 3 presidentail candidates stated they did not believe it, there was not more of a shrug and dismissal of fools who said something like that, still amazes me. just that DeLay was not exiscerated by the news and was not an embarrassment followed by recall to his District lets me know the fool quotient in his District.

Just yesterday I had breakfast with a man from Houston who said now America is in for problems because we now have a President who will deal with terroroists rather than a strong leader like Bush who will slap them down all the time. I reminded him that Clinton bombed Al Qeada sites and wanted to bomb more until Lewinski, as he was then accused of "wag the dog" by very serious people. his rejoinder was that at least Bush bombed the Iraqis who funded and housed Al Qeada and that Rush just spoke of that yesterday. People still get information from fools and tools and do not think or read critically. there is not much of a broad opinion and fact palate among people, or time taken to develop one as they strive to achieve the american dream. or in the recession, pay for housing.

maybe it is time for progressives to realize that the victory over monsters is short-lived if there are still a preponderance of propagandists out there speaking foolish things in large markets, that the work of debunking fools still needs to be continuously done. I will use Houston as an example. Basic cable in a few motels I have stayed in on business has no MSNBC, but 4 Fox channels. Air America or NovaM is not heard, but Rush, Medved, Beck et al are omnipresent. In North Texas, at one time, you had America Freedom Network and the America Family Network as radio choices once you drove west of Amarillo. If there are no choices, people will still think monsters are real serious people.

one of the problems is who can fund a choice for Truth to Power, as hate sells. And deprogramming the message of propagandists takes time and money. In a short-term profit-driven world, even Sacramento could not support progressive radio, let alone North Texas. This is where the culture war against monsters needs to happen.I want no short-term pyrrhic victories, but there needs to be more public discourse, more Truth in the public air waves. Maybe PBS can start to be non-biased again. But I feel there needs to be more in the mass market for people to hear. my problem is how do you start that? In my hometown of Sacramento, what does it take to start an AM radio station, willing to generate living wages and small profits and how can funding be obtained?