Capitalists may need to know the rules more than they need bailouts…

April 29, 2010

I don’t have the credentials to speak about finance but I have credentials to speak as an ordinary person. And I still say that the government bailouts for Wall Street investment banks and for the auto companies were a mistake.

You’re not likely to get bailed out when you go to a casino and lose a bet, why should you get bailed out when you bet in the securities markets?

In fact the whole gambling industry would go down the tubes if there was such a thing as a bailout. The game would be ruined.

For there to be winners there has to be losers and for there to be big winners, there has to be big losers — win, win does not really happen in gambling and in Wall Street securities trading.

But it is important for the game to be on the up and up — people lose interest once they realize the deck is stacked. And if they do not realize it, they stand to lose their retirement in the financial markets.

An article I read in the Wall Street Journal (I believe it was there) indicated that regulatory agencies were understaffed. While it does seem to be true that some of the high-priced lawyers were wasting time looking at porn on government computers when they should have been doing whatever they could do to protect the investing public, the article noted, the agencies were understaffed, with lawyers having to do menial work usually given to support personnel. I would say the agencies need to be beefed up and maybe we need some more dedicated personnel.

But what really caught my eye was one of those debate articles in which a for and against position was given on whether collateral debt obligations have any social value. That article was in the New York Times. It was referring to so-called synthetic CDOs that play into the Goldman Sachs controversy.

Without getting into all the technicalities, the one side suggested that they were an innovation with no social value and should not be allowed. And that in fact they were partly responsible for causing the meltdown in the housing market.

But the other side argued that innovations, such as CDOs, are not the culprit. Instead, the culprit is a lack of regulation and the expectation that if things really go wrong, the government will bail people out.

Well that was my quick interpretation of it anyway. If I have misrepresented the arguments, I still basically believe what I’ve said. I know next to nothing — well more accurately, nothing, about CDOs themselves, but I would think most people agree there needs to be at least a modicum of regulation for financial markets to be fair and work for everyone and thus have utility for society, other than to be just crooked gambling casinos. And people who know they stand to lose everything (with no Uncle Sam to bail them out) will likely put a lot more care into what they do, be they buyer or seller.

P.s.

Indications from all the latest financial news seems to be that some type of recovery from this Great Recession is taking place. And some may tout this as vindication for the bailouts. But I am not sure but what things would have recovered anyway. A lot of time is wasted in bailout efforts, because if nothing else, the capitalists have to figure out how to game that system. There is always capital out there, but it wants to know what the rules are. When you monkey with the system, some of that capital lies idle waiting for a sign as to what the new rules will be. From what I have read one of the greatest things Franklin Roosevelt did during the Great Depression of the 30s was to relieve human suffering. But despite his activism in the financial sector it took nearly a decade and finally World War II and the demand it put on the economic system for production to get the economy going.

While I would never want war to be the answer anyway, today’s modern methods of fighting war seem to be more of a drag on the economy overall.

P.s. P.s.

And isn’t it strange that the American car company that did not take the bailout money, Ford, leads the pack now?

While the bailouts may in the long run have helped GM and Chrysler, they set a bad precedent for business. What seems to be saving all American auto makers now is that they are reportedly doing everything to be competitive, including taking advantage of bad publicity suffered by Toyota for either its safety failures or its lack of or slow response to customer complaints, or all of the above. I think the American auto companies for the most part and for too long shorted customers on real quality and longevity in favor of glitz and planned obsolescence and settled for a high-priced niche market, rather than compete with the foreign companies head on. They seem to be back in the game. And it doesn’t hurt that Ford pickups have such a loyal following.


The mighty Toyota falters and tries to soft pedal the malfunctioning pedals…

February 9, 2010

A full-page newspaper advertisement by Toyota that was an attempt to explain the situation and allay the fears about the car manufacturer’s problems with sticking gas pedals and malfunctioning brakes was not convincing to me.

It said there has been “a lot of talk” about safety problems. That implies that it is just all talk — not to worry. It reminds me of a cigarette company that ran an advertisement years ago that said there has been a lot of “hub bub” about the dangers of smoking.

I also notice that sometimes the televangelist folks use the tactic of making light of serious worldly problems or politics that don’t agree with them. One will say to the other in that kind of all-knowing and mocking tone, “oh my it’s all over the newspapers”, as in don’t pay attention to facts, just believe what we tell you and keep on sending the money.

But back to the Toyota thing. First the stuck gas pedals were blamed on slipping floor mats, then it was announced a fix had been found to correct some type of mechanical malfunction of the accelerator. And now we are learning that it has long been suspected it might all be in the electronics, but that is something apparently Toyota would rather not discuss.

And then there is the bad brakes — I’m not sure what the deal is on that. But too much go and not enough stop can be dangerous when it comes to motor vehicles.

Meanwhile, in an ironic twist of fate, Ford Motor Company, the only American car company that did not take government bail out funds, is capitalizing on Toyota’s woes and is trying to build or rebuild a reputation as a maker of dependable and safe motor vehicles.

Maybe success has spoiled at least one Japanese automaker, and hopefully it’s not just hype and at least one American auto maker has decided why not try putting quality and dependability over glitz.

What goes around comes around.

P.s.

And here’s another interesting thing about the whole saga. While the Japanese executive that heads Toyota was shown bowing and and apologizing for the whole mess and demonstrating his shame (as is Japanese custom), the American head of Toyota was quoted in the ads making the soft pedal comments that implied that the whole problem was more talk than fact. How Japanese. How American.

ADD 1:

A day after my original post I saw a Toyota commercial on television that was much more contrite, with the voice saying something like we are sorry that we failed to live up to our own expectations and the voice promised Toyota was already working to regain the trust of customers. Maybe they are taking all that talk seriously after all.   


Republicans finding fault but still short on solutions…

June 9, 2009

While I know Ford is the one U.S. automaker still in business without a government bailout (so far), I drove passed a once prosperous Ford dealership in the town south of where I live and its lot was empty. The owner/manager of the dealership not so long ago was praised by so many in the area for being a winning businessman. But I guess the economic downturn, coupled with higher gasoline prices and, worst of all, a shut off in credit from the financial system for car buyers ruined his business.

We were on a trip to the Sacramento area to see my oldest daughter and along the way I picked up a right-wing radio talk show I used to listen to, the host of which got his start on radio as some kind of business guru. He was sarcastically remarking about the take over of the government of the auto industry and was expressing bewilderment about how Chrysler is deciding which dealers stay open and which do not. While he did not say so himself, I think a caller questioned whether the dealership survival selections were being made on a political baisis. And I think the host kind of said that while he did not know about that, nonetheless something does not seem to pass the smell test.

With all the road noise in our foreign car and the fact my wife did not want to have the radio up loud enough where I could hear it anyway, I really did not catch all that was said and finally turned it off. But I am sure that I could sum it all up by saying that the host thinks whatever is being done is not right because it is being done by a Democratic administration. And I can safely assume he has no alternative, except keep the government out of the car business or business in general and lower his taxes.

Actually I totally agree with keeping the government out of the car business and who wants to pay higher taxes?

What I still have not heard, though, is an alternative solution to this economic mess from the Republican party, other than keep taxes low.

Besides the mantra of lower taxes, about the only thing the Republican Party seems to have been interested in for so many years now is regulating private behavior (abortion and gay lifestyle) and securing access to oil under the guise of the war on terror. Yes, 9/11 happened, but I don’t think that justifies everything afterward.

Back to the car thing, though, I am concerned that throwing billions of taxpayer dollars at the domestic auto industry is folly. I can only think that the Obama administration feels inclined to do this as payback to the autoworkers union vote and support and the fact that, yes, if the domestic auto companies shut down all at once there would be economic havoc because so much of the economy (we have all found out) depends upon the auto industry.

But there is no evidence or reason to think that artifically propping up General Motors and Chrysler will ensure their survival. There has to be a demand for their products, people have to have money to buy the products, and the companies have to be able to compete economically on the global market.

Government is not structured and is not meant for running businesses and making business decisions and figuring out what consumer demand is and how to capitalize on that demand. While President Obama has vowed that he does not want to run the auto industry it is already evident that the industry has to please the government. It cannot bite the hand that feeds it (even if the investment banks got away with that). One CEO has already been forced to resign.

No the Republicans actually are on to something if they complain that the government is trying to run business. But they have to come up with more than just noting that government and business should be separate. They need to come up with clear alternatives to get us all out of the economic doldrums. They need to address the fact headon that their own administration got us all deep into this mess and they need to explain why they think that in light of that fact they would be better qualified to get us out.

While I myself would be more inclined to support the notion that government does need to be a protector of the public welfare than your average Republican, I would also suggest that we have gone down the road to pure socialism and a state-run economy (something I see no evidence that shows it has ever worked anywhere) a lot quicker than I thought possible. But what I would have never predicted is that a Republican president who considered himself a pro-business conservative, George W. Bush, would have started the ball rolling on that.

On foreign policy, I think the Republicans are truly concerned that Obama actually might be on to something by extending the olive branch to the Muslim world, even as he vows to press ahead against extremists or terrorists in Afghanistan and Pakistan (and elesewhere I presume).

I see that actor John Voight during a Republican fundraiser last night ridiculed Obama’s speech to the Muslim world and its gracious gestures of understanding and willingness to make peace. Don’t recall his exact words but he said something to the effect that Obama thinks that we can push each other in swings like on a playground. 

Voight accused obama of making the nation weaker.

For now I don’t see his point. Obama has put more troops into Afghanistan and just as importantly has clearly signaled that he is finished playing games with North Korea. I heard an analysis by Washington insider (for both Republican and Democratic administrations) David Gergen this morning that said the Clinton administration tried to buy North Korea off, the George W. Bush administration vowed to get tough but then reverted to trying to buy them off, and that  the Obama administration has signaled that it will stand up to them and not buy them off.

Hezbollah (enemy of the U.S.) has lost elections in Lebanon and that nut case of a president in Iran is getting a run for his money in the upcoming election, and these situations appear right after Obama’s outreach to the Muslim world.

All the Republicans did for the past eight years or so was get the country bogged down in a costly and misdirected war in Iraq that sent oil prices skyrocketing which helped propel a world-wide economic collapse. Both Republicans and Democrats had supported measures that led to the wild real estate speculation that was the chief cause of that collapse.

Things may well get worse, which ironically might put the Republicans eventually back in the driver’s seat. But will they really know where to go?

CORRECTION:

Oh so many blogs ago I made reference to a GM/Fiat deal. I should have said Chrysler/Fiat deal. I subsequently corrected that blog, but if you read the original post — yeah I realized I was wrong — probably in the middle of the night.

But I still wonder why we go to so much trouble trying to save a domestic automaker for the benefit of a foreign enterprise (and a Chinese company is buying the Hummer brand?). But I do support keeping the work here if we can, no matter who owns the companies.

P.s.

Still another Republican gripe: The Obama administration is pushing us into government health care and the government will be making health care decisions and not doctors and there will be long waits. Actually, the Obama administration has taken the approach of offering to co-exist with private health care while pushing for coverage for all who cannot afford it. The Republicans say that private health care will be run out of business by competition from the government and that is probably the real Democratic motive after all. I just read an opinion piece on the Wall Street Journal site written by a doctor originally from Canada. He said that in Canada and Great Britain and Sweeden and in other nations that have universal single payer health care that health care is not as good and the waits are longer and that in fact in Canada and elsewhere governments are moving toward public-private partnerhships. Well if that is what it takes to provide guarateed universal health care, so be it. The only people who do not think we need universal health care are those fortunate to have good private plans or possibly those already covered under some type of government assistance program. Meanwhile emegency rooms are overcrowded by people seeking normal and often non-emergency treatment because laws mandate that emergency rooms see people and millions go without health care because they either cannot afford private plans or they are not in on employer-sponsored plans because none is offered or they lost their job or they are on part-time and do not qualify. The fact that our leaders all these years have been unable and unwilling to take the lead on universal care is a national disgrace. One big problem is that too many are looking for free health care and there is no such thing. But certainly there has to be equitable and humanitarian health care.


We head down the old road of single industry when we should be diversifying…

June 2, 2009

While I have not agreed with President Obama’s auto company bailouts, with GM going into bankruptcy but propped up by billions of taxpayer dollars and a 72 percent government ownership stake (60 percent U.S. and 12 percent Canadian), and Chrysler coming out of a relative quick bankruptcy – propped up by the government bailout program as well, I sure hope it all works out.

The government has loaned GM nearly $21 billion, but to no avail so the company filed for bankruptcy on Monday and the taxpayers are left with a majority ownership of a failing business.

(And I have to ask why American taxpayers have to fund this whole thing when Chrysler is merging with the Italian car maker Fiat. Also I heard the president say that the government was the only entity that could come up with enough money to bail out GM. And that is probably true since only the government can essentially print its own money – how much that phony stuff will be worth in the long run is hard to know. We are looking at heavy inflation down the road, I’m quite confident.)

I know in times way past I often heard something to the effect that our economy is driven by car production, but it always kind of whizzed by me like so much freeway traffic.

Seems like a lot of us were thunderstruck a year or so ago when we realized that the U.S. economy was virtually totally dependent upon car and light truck production and a super-inflated real-estate market that suddenly deflated.

Going forward it sure seems we need to diversify – never a good idea to put all your eggs in one basket as the old adage goes. Surely we can produce a lot more than cars. We used to.

Rather than go down that wrong road again by bailing out the failing automakers, it seems government efforts would be better spent promoting highly diversified industry for this country, everything from tennis shoe making to highly technical so-called green energy projects. We need to produce things and get people working. How are we going to support the unemployed when too few are employed?

We have come to this pass via the evolving global economy. So many saw the global economy as a panacea, that is as long as the U.S. controlled it, selling Coca-Cola, cigarettes, and cars around the world.

But somehow we lost control of the whole thing. Through inflated real estate values and maybe to some extent inflated wages (and I wish I could have gotten in on more of that) we became a nation of consumers more than a nation of producers.

One of the reasons for all of this no doubt is that capital by itself is not patriotic. Those who have it may or may not be in their own right, but the rules they play by have nothing to do with the interest of their own nation. You invest capital to make more capital. And generalizing here, those with the money found it more profitable is so many cases to invest outside of our borders because labor in less developed nations was cheap. I knew we were in trouble when we no longer made our own Levis here and not even cowboy boots. If memory serves me correctly, Levi Strauss, a company with a proud uniquely American heritage, closed down its last plant in El Paso, Texas and moved south of the border. Justin Boots also moved its production outside the country, as well.

The car production things seems to have gone something like this: American car manufacturers over the years seemed to have decided that the reality of the market and of production costs meant that they would be better off pushing essentially bigger muscle cars and trucks to satisfy a large demand here in the USA and in order to be able to make more money on each unit. They ceded most of the small car market to primarily Asian producers.

And I just heard an auto company CEO concede something we already knew, the Japanese beat us on car quality a long time ago. He claimed, though, that now American manufacturers are catching up (a few decades too late perhaps). To me it is not that we could not produce quality, it is that the automakers did not want to. Planned obsolescence and making money on repairs was long the game plan out of Detroit and its environs and at the old dealership, so many of which have now been closed down.

And I’ve read that investors, such as these so-called hedge funds, look to quick and big profits rolling in each quarter – they’re not big on long-term planning or research and development. As I stated earlier, capital does not think in terms of what is good for the country.

And then there is the consumer. People want what they want. In the case of the United States with the high standard of living it was enjoying, large numbers of consumers went for comfort and did not consider things like gas mileage too much except when fuel prices would spike. The spike last summer really did it. Gasoline approaching or at or more than $5 per gallon, combined with increasing unemployment or fear of unemployment or reduced wages gave the consumer a dose of reality of now and future.

But now I read that although the Obama administration aims to force car producers by way of policy and law ( not to mention ownership – even if Obama vows not to run the companies) to produce smaller and more fuel efficient vehicles, if gas prices don’t go up too much, it might be hard to get folks to buy vehicles smaller than they are used to. And notice, I automatically combined SMALLER and FUEL EFFICIENT. That’s because the assumption always seems to be that in order to get to fuel efficient we have to go smaller.

Well we probably need to go smaller than a main battle tank in the U.S. Army or one of those civilian Hummers you see on the road or those oversized or supersized pickups and SUVs.

But something I would like to look into is just what kind of gas mileage did your average, say, 1956 Chevy get? The reason I ask that is that to me the 1950s really seems the golden age of American cars. I was only a little kid in the 50s, and my folks had a ‘53 Studebaker – kinda small, but more or less a regular sized family car. But seems to me those Chevies and Fords of that era were plenty big for a family and were comfortable to ride – I just am at a loss of what the gas mileage was (see end of blog).

Of course I know they were heavy. They were actually all steel – you had something solid – instead of so much fiberglass.

I do recall that through unfortunate circumstances, an accident with the Studebaker (it survived), we wound up with a second car, a Plymouth station wagon, that began as a temporary replacement car and stayed on as a second car. It was comfortable, had more room, but not so good on gas mileage, I’m sure.

But it seems to me that the consumer ought to be in the driver’s seat when it comes to deciding what the car market should be. Individual car buyers will and should be able to decide what they want and what they need and what they can afford. As for fuel mileage and other environmental concerns, let’s take that on one at a time. We know from last summer’s big fuel spike what it takes for Americans to go for more fuel efficient vehicles and/or cut down on unnecessary driving. – of course we have an indication they will tend to turn the other way when fuel prices go the other way. But on fuel mileage, letting the market dictate seems to have a pretty powerful effect. As for other environmental concerns, such as the amount of pollutants cars put out, the market will not control that, the government does have to set some standards. But those standards have to be realistic and based on hard science and should not be based on some congressman’s idea of, say, pushing corn based ethanol (which really does no good for the environment) because he’s from Iowa.

And standards should be set by the federal government, not states, so that they are uniform across the nation. Once the automakers, to include foreign makers, know what the standards are, they will produce cars that meet those standards – they have no choice.

Something tells me that private enterprise in competition will likely do a better job of meeting consumer demand and meeting pollution standards, that is making cars people will and can buy and use to their best advantage, rather than a government one-size-fits all approach.

I think competition from foreign car makers, to include ones who assemble right here in the U.S., can be healthy for our own homegrown industry. But as long as the government is there to prop up industry, the corporate powers that be will not learn how to compete.

The government set a bad precedent back in 1979 when it propped up Chrysler with loan guarantees. “We’ll do better”, they promised at the time — what happened?

I can only hope we haven’t fallen for that same line again.

P.s.

As to what the gas mileage was on your average 1950s model family car, my oldest brother said his resident expert suggests about 15 to 22 mpg. I’ll bet we could produce cars just as roomy with slightly better or even far better mileage (partly because we use lighter weight materials nowadays) even using the existing internal combustion engine model, with just some slight tweaking. I’m sure we will evolve into another technology, but we need to consider does it really save energy and what unforseen effects might there be on the environment when all things are considered and what it will take to provide the infrastructure (you know, things like electrical outlets to plug your car into and how to make it all affordable).


If “local” news gathering can be outsourced to India and U.S. taxpayers must fund GM to produce cars in China — just what is OUR function???

May 29, 2009

I just read on the Editor and Publisher site that the Hartford Advocate newspaper (out of Connecticut), along with two other alternative newspapers connected with it, in what was first proposed as a joke and then became serious, has published at least one edition in which all or virtually all of its local news was done by outsourced writers – from INDIA!

On my first read of this item I did not get whether this was a one-time thing or a new way of doing things. This is not the first time something like this has been done. And in the case of the Advocate, it seems some of these writers are quite highly qualified, having written for the Guardian (out of England), the BBC, and the Times of India. Interestingly, the Advocate personnel said the whole thing was “not cheap”.  But at least one other U.S. newspaper tried (still is?) outsourcing local news because they could get the job done for a lot less money (really kind of like just accepting the news release written by city hall instead of doing your own reporting – but really the story for the local newspaper is not so much about what happened at the council meeting, but what led up to it and what is the result and so on – good reporting is not transcription). My own local newspaper is starting to use more submitted articles. Back in the old days, local newspapers often used so-called “stringers” who worked on a kind of low piece rate (or maybe for free for their own vanity – kind of like I’m doing here). Back to the oursourced writers from India. Of course they do all of this by phone, calling to the U.S. for interviews from the Indian subcontinent. It’s bad enough they’ve taken over medicine (at least where I live), but our local news reporting too!?

Reading this on top of learning by way of the web and some on cable news that General Motors plans to use taxpayer bailout dollars to make cars in China (and even import some of them back into the U.S.) leaves me to ask the question: just what is OUR function on this planet?

(Maybe we’re all supposed to join the Army. Then again, that could be outsourced — like the French Foreign Legion — not a bad idea.)

Going back and reading the E&P item again I saw that the Advocate is a weekly and the whole thing was done as a kind of spoof to prove a point (or not). They (the paper) explain it themselves and if I can get this link correct you can get that explanation at: http://www.hartfordadvocate.com/article.cfm?aid=13171

And if that didn’t work, just Google Hartford Advocate.

They also mentioned that they got the idea from news some time ago that a newspaper in Pasadena, Ca. decided to outsource some local coverage by doing such things as linking up their Indian correspondents via webcam to local city council meetings. Having attended far too many council meetings when I was a reporter (I actually liked them at first), I’d say that’s one job I’d almost not mind giving up.

Seriously. Besides all the obvious logistical, practical, ethical, even cost, considerations associated with outsourcing news coverage, doesn’t one have to ask at what point do we lose our personal identity?


Re-industrialization could save America; time can save Republicans…

May 2, 2009

While I am not a Republican and doubt I ever could be, I am thinking the GOP might find its salvation if it can just have some patience and it probably wouldn’t hurt if a few of its leaders didn’t feel they had to kowtow or at least walk on egg shells around the talk show blowhards that give it such a bad name. They already have accepted Bush Jr. as a bad memory, that’s a good first step on the road to salvation. And maybe they ought to talk Dick Cheney into going peacefully into retirement.

While I along with most folks hope the nation’s economic ills will improve soon, I think reality is that while there will likely be improvements in some areas there will also be much discontentment – cue the Republicans.

And maybe we don’t really want to use our tax dollars to guarantee warranties for domestic autos but at the same time cut aid to the needy (trouble is the Republicans probably don’t want to use tax money for warranties, but don’t mind cutting the aid).

While President Obama seems like he can’t lose right now, over time some of his program will wear thin – again cue the Republicans.

I didn’t jump on the bandwagon and try to assess President Obama’s first 100 days, but, belatedly now I’d say he certainly has faced the most pressure at one time of any president of the United States in my lifetime: the worst economic disaster since the Great Depression, ongoing wars in the Middle East and terrorists close to grabbing nuclear weapons in Pakistan, health care that is becoming costlier and less available to the populous, global warming (or at least some type of extreme environmental change), and a possible pandemic.

But for the most part he has come through with flying colors. He is calm, cool, and collected. He gives press conferences and to my ears his answers seem well thought ought and reasonable whether I agree with all of his points or not. He is able to use clear English sentences and is not given to goofy looks, malapropisms, or deer-caught-in-the-headlights moments. He did make an unfortunate reference to the mentally challenged a while back on the Jay Leno show while perhaps acting a little too glib and cool (maybe presidents don’t need to be on late night TV).

I agree with Arianna Huffington, for someone who has done such a good job so far on so many things it is dismaying that he is bungling in his bailouts, that is to say he should not be bailing out banks or big business.

I mean billions to Chrysler and what do we get? Bankruptcy. We could have had that without billions in taxpayer dollars. We want to preserve our domestic auto industry but to do it Chrysler has to make a deal with Fiat of Italy.

At least saving the auto industry has something to do with preserving jobs.

The big bank bailouts? All they seem to have to do with is throwing money down a rathole. I still say let the big banks fail. Something will take their place. Why doesn’t the government just cut out the middle man and loan money to businesses and individuals? (not forever – just in the short term.)

As we all know, there are thousands of relatively small banks around the U.S. that acted like traditional bankers, extremely cautious with their money and did not get into trouble. Why can’t there be newer large banks, if they are needed, to replace the thieves and greedy devils who got us into this mess in the first place?

President Obama says he does not want to keep running the car companies and that he does not have the power to get the banks to do what he wants, at least not right away.

I say quit trying to run the car companies Mr. President; you have way too much else to do. And you do have power over the big banks because they would not be in business were it not for the generous giveaway bailouts of taxpayer money begun by George W. Bush and continued by you. Tell them either do what you want or you cut off the money and demand what you have given them back (although the latter is problematic).

From now on out let’s stop this hideous bailout program for private enterprise. While the bailouts may seem by some a means to save private enterprise they are in fact the seeds of destruction for private enterprise.

And this may be the answer the Republicans are looking for. I think they need to calm down and stick to their supposed free market principles and let the cards fall where they may. Hyper inflation along with a continued stagnant economy seems likely to be in the offing (although I certainly hope not). Get your act together Republicans and come up with coherent and acceptable programs to counteract this disaster. Just saying no and calling the Democrats “socialists” will not suffice.

Make your program or proposed program known and when things get bad enough, the electorate will turn back toward you, realizing they didn’t want so much socialism after all.

And lest anyone get the wrong impression about what I personally think, I will say right here and now that both parties have accepted forms of socialism for decades and so do I. But eventually there is a limit, just like there is a limit to free-wheeling capitalism (we reached that limit round about last September).

The independence and flexibility true private enterprise presents is eroded by the artificial element bailouts present in what should be a natural market of supply and demand and success or failure dependent upon business expertise rather than the generous hand of Uncle Sam, who will not be able to be generous once the money is gone (China will not be able nor willing to support us forever).

Rather than fund Wall Street-type big bankers and auto makers and others who have failed to make good business decisions, the government should be rescuing, lending a helping hand, to those citizens in need – not necessarily on a lifetime permanent basis, but on an emergency basis. But the government coffers to enable government to come to the aid of the citizenry are being depleted by the profligate and shortsighted ways of the business elite who use their lobbying powers to extract as much out of Uncle Sam as they can before the well runs dry.

Of course the political power of the United Auto Workers has played a big part in getting President Obama to work so hard to salvage as much as he can of its memberships’ jobs too. Now the UAW is taking a 55 percent ownership stake in Chrysler. Hopefully at least that will give its members incentive to help operate a lean and mean machine that can survive tough competition without more government aid.

Saving jobs is a good thing, but how far can the government go? Will it step in to save your job?

What we need is something that probably cannot be done via politics, at least not directly. We need a new attitude among those in business that says that their mission, aside from the obvious one of making a profit, is to produce products and services for a sustainable economy that will keep our nation strong for our generation and the next generation and for all to come.

We’ve gone too long on the notion that quick profits and making money solely through speculative bubbles is the way to go. We need capitalism, but regulated capitalism. We do not want to smother ourselves in total socialism, which stifles the very soul of a nation and each human being.

Yes, we do need to energize the economy through new green energy sources, but we also need to re-introduce ourselves to the industrial sector as a whole. 

While researching for a separate transportation blog I do, I was dismayed to read that a big truck manufacturing executive predicted that partly due to the current recession and the lower returns his industry is seeing it will likely move all production to Mexico or elsewhere where labor is cheaper.

Personally I think that is an unpatriotic attitude on the part of industry. Any industry that moves out of the country and then tries to import its products back in, all the while enjoying the benefits of the American taxpayer, to include legal protections and free-world defense, should face a strong tariff for those goods.

I am not so sure that free trade is what it was cracked up to be. It seems kind of a lopsided deal to me. We are cutting our own throats in the process.

The socks, the work shoes, the jeans, the shirt, and the cap a truck driver wears and the rig that he drives could all be made in the United States. More people would have jobs and there would be more freight to haul. Right now fewer people have jobs and there is less freight to haul – although granted a large portion of what freight there is comes from overseas.

Our elites thought they were clever when they said we could be a service economy, shut down the smoke stacks and live clean and not get our hands dirty. We shipped our jobs overseas and now have a lot less to do here. And we will not be able to continue to pay ourselves to stand around and do nothing, even if we do go to more socialism.

World trade of course must continue to be part of the equation. But what we call “free trade” ought to be replaced by “fair trade”. Other nations heavily subsidize their industry and many do little to nothing for their citizens who must endure terrible working and living conditions. As for competing with modern industrial nations, that should not be a problem.

Re-industrializing alone will not solve the problem I realize. Germany, for instance, is a major industrialized nation and it is suffering from the worldwide recession and is facing major unemployment and for the first time in decades its industries and skilled workers are facing doubts about the future.

Unfortunately, boom and bust seem inherent in capitalism. We need to be ready for the boom.


Over supply, under demand for cars; let businesses and banks go bankrupt…

April 2, 2009

As I take my daily walk down the street I often see cars and trucks with for sale signs on them parked along the curb or in vacant lots.

I wonder why our government has seen fit to get into the business of selling new cars (the auto bailouts and the Treasury Department guarateeing warranties off all things) when so many are shedding the ones they have, but can no longer afford.

I am not at all sure there is much of a market for new cars. We may well have an over supply already. Of course a lot of people would likely prefer to have a new car but cannot afford one now with the recession (or depression).

It seems like the market place should determine the fate of the auto business.

As to all the new incentives, such as offers by the auto companies to make your payments should you lose your job, extended warranties, and equity protection, well that is maybe a good deal, but the buyer surely pays a hefty price at the other end of the contract. It is a big insurance policy. I would say that if you expect you might be losing your job, now is not the time to be purchasing a new car. As to the warranties and equity protection, if the American manufacturers had been making superior products, they would not be necessary. Maybe the era of planned obsolescence and making the big money in parts and repairs is coming to an end, hopefully.

And don’t get me started on the repair con jobs. I went to my foreign car dealer to get my door fixed and found out the guy wanted me to sign on the dotted line to just look at the problem (minimum half hour labor) and at the same time he is telling me that they likely would not be able to fix it. I refused to sign, so he looked at it for free and told me he could not fix it. I took it to a body shop and they fixed it in five minutes for free (I had done business with them previously). I’m no mechanic, to say the least, but I was a truck driver and knew from experience that adjusting a door that won’t open and close properly is usually about a five-minute job (unless there has been major damage). What I am trying to say here is that most of us go into auto repair places and get ripped off because we have little idea of what they are doing (to us).

But even though I have a negative attitude toward the car business – oh and one more story: many years ago I haggled with a car salesman who claimed he was going to give me a super deal on my trade in that no one else was willing to give. But when I suggested that he was simply tacking more dollars on to the other end of my contract he sheepishly admitted to it.

However, back to the auto business itself: it is important and I have no doubt it will survive. I think it could have done so without government help. It might mean different people running it, but where there is a demand for a product, certainly there is a viable business opportunity. As I have written previously, one of the big mistakes of the domestic manufacturers was to not be flexible enough to meet changing demands in the market place.

….Just read a blog by a respected economist – Pulitzer Prize winning one – who said what I and so many others have suggested. The bank bailouts are not working because the bankers have been just taking the money and paying themselves. I am referring to the big banks that took the bailouts. Okay, you want a source for that. I’ll break here and look it back up. Here it is: American economist Joseph Stiglitz, interviewed by the German magazine Der Spiegel. Just Google Der Spiegel and you can get the English language version.

Treasury secretary Timothy Geithner and many others contend that simply letting the major institutions go bankrupt would have been a disaster. On the other hand, many, many economists differ, saying that bankruptcy would be the answer.

My contention would be that governments should stay out of directly funding and/or running businesses, although providing some incentives might be wise. Where governments must act is in protecting the welfare of the population on an emergency basis, and businesses should support that. To do otherwise will risk chaos, in which everyone loses.