One of GM's problems is too damn many lookalike brands. According to Fox, GM currently makes 64 different brands of cars and light trucks. GM plans to cut the brand count down to 36 over the next four years. What GM has been doing is selling the same car under different brand names. This is counter productive. When you sell the same vehicle under the Chevy and under the Caddy name, buyers get the idea that there is no difference between Caddy and Chevy. Bad idea. Pretty soon they demand Caddies at Chevy prices.
Besides, selling the same car under different names runs up the cost (you have to do the documentation over) and dilutes the advertising. Better to run more ads for the same product than advertise the same car under 4 or 5 different names.
Right now the market supports about 12 different car types, sedans, pickup trucks, SUV's/minivans, and sports cars. Offer each of these in small, medium and big, and you have 12 car types. GM ought to drop all the brands that are just duplicates, and then pick the best selling 12 brands and drop all the rest. It would save money and improve sales. And do it now, not over the next four years. Give the 12 survivor cars some of the good old brand names.
Wednesday, February 18, 2009
The view from the airlines boardroom
Quotes from an Aviation Week Editorial written by Gorden Bethune, retired chairman and CEO Continental Airlines.
"It's embarrassing for Transportation Dept ideologues to push slot auctions as the solution to congestion and flight delays. "
Sorry. It isn't embarrassing, its realistic. No airport can handle more than 60 flights an hour. When more than 60 flights an hour are scheduled in or out, your plane will be late, or diverted to another airport. It's that simple. We need a fair system to assign airlines to slots. An auction sounds fair to me.
"Government must finance the FAA and ATC modernization equitable, not on the backs of ticket prices".
Why not pay for aviation facilities out of a tax on airline tickets? Again, sounds fair to me.
"It's embarrassing for Transportation Dept ideologues to push slot auctions as the solution to congestion and flight delays. "
Sorry. It isn't embarrassing, its realistic. No airport can handle more than 60 flights an hour. When more than 60 flights an hour are scheduled in or out, your plane will be late, or diverted to another airport. It's that simple. We need a fair system to assign airlines to slots. An auction sounds fair to me.
"Government must finance the FAA and ATC modernization equitable, not on the backs of ticket prices".
Why not pay for aviation facilities out of a tax on airline tickets? Again, sounds fair to me.
"Neither a borrower nor a lender be"
Over at the Scratching Post there is a post, talking about liar loans and how it is the responsibility of the borrower not to lie to get one. Maybe. In my book the banker is supposed to safeguard depositors funds by not making loans to people who won't be able to pay them back. We place our money in the bank, with the expectation of it being there when we need it. A banker's first responsibility is to safeguard other people's money, not throw it to the four winds.
People are fallible. Offer a nice house to people and most of them will take it, even if they cannot afford it. The temptation is just too much. And that's what liar's loans (mortgages with no proof of income) are, pure temptation. I like to think that I could resist such a temptation, but let's be real. Most people, myself included, will yield to a strong enough temptation.
Why did the banks make sub prime and liar's loans and alt A loans? Because it was risk free for the bank. The banks sold these dodgy mortgages to the bigger suckers in the market, especially to Fannie and Freddie, but later on even to Wall St brokerage houses. The current Great Depression II happened when the suckers wised up or went broke (Fannie and Freddy), leaving the banks stuck with junk.
We need banking reform to prevent this from happening again.
People are fallible. Offer a nice house to people and most of them will take it, even if they cannot afford it. The temptation is just too much. And that's what liar's loans (mortgages with no proof of income) are, pure temptation. I like to think that I could resist such a temptation, but let's be real. Most people, myself included, will yield to a strong enough temptation.
Why did the banks make sub prime and liar's loans and alt A loans? Because it was risk free for the bank. The banks sold these dodgy mortgages to the bigger suckers in the market, especially to Fannie and Freddie, but later on even to Wall St brokerage houses. The current Great Depression II happened when the suckers wised up or went broke (Fannie and Freddy), leaving the banks stuck with junk.
We need banking reform to prevent this from happening again.
Saturday, February 14, 2009
Bi Partisanship
Watched "Washington Week" with Gwen Ifill last night. They spent most of the half hour discussing "bipartisanship" over the porkulus bill that passed the Senate a couple of hours before the show went on. Little discussion of the bill's contents, or the likelihood of it staving off Great Depression II, the talk was all about "bipartisanship". The panel seemed to feel that, despite all but three "Republicans" voting against the bill, bipartisanship was live and well, and somehow desirable.
Me, I feel this bill wastes money that ought to go to job creation on pay offs to political cronies. Only 11 percent of the money will be spent in 2009 when it is needed, and only a third of it funds job creating activities. The Republicans, rightfully, voted against it en masse, so the result is clearly the Obama/Democrat bill.
That's partisan, and we need that kind of partisanship right now. The voters deserve to have a choice at election time. They have one now, you like the porkulus bill, vote democratic, you don't like porkulus, vote republican.
Me, I feel this bill wastes money that ought to go to job creation on pay offs to political cronies. Only 11 percent of the money will be spent in 2009 when it is needed, and only a third of it funds job creating activities. The Republicans, rightfully, voted against it en masse, so the result is clearly the Obama/Democrat bill.
That's partisan, and we need that kind of partisanship right now. The voters deserve to have a choice at election time. They have one now, you like the porkulus bill, vote democratic, you don't like porkulus, vote republican.
The Dam Busters
Turner Classic movies played this delightful WWII period piece the other day. I hadn't seen it since childhood. The movie was made in England, right after the war. The story is one of those incredible how-did-they-ever-pull-it-off tales. Dams are the hardest of hard targets, being solid piles of concrete, off of which ordinary bombs merely bounce. Brilliant aeronautical engineer Barnes Wallis comes up with an absolutely weird plan to crack the dams, with a bomb light enough to be carried by existing aircraft. Somehow Wallis convinces the RAF to take him seriously and devote the considerable resources needed to execute. It was a all British show, no American assistance on this one.
The movie is full of lovely British details. The doors of the Austin staff cars slam with a tinny clang quite unlike the bank vault "kachunk" of Detroit iron. Wallis's cottage has a ledge around the living room to give room for a collection of decorative bottles and vases. My grandmother's house in Montreal had the same ledge and the same bottles. The flying photos are all done with real aircraft (the movie was made early enough that the WWII aircraft were still in service) rather than models or CGI trickery. Shots of four engined bombers skimming across the water at only 60 feet altitude, or taking off in formation, are impressive.
Great flick.
The movie is full of lovely British details. The doors of the Austin staff cars slam with a tinny clang quite unlike the bank vault "kachunk" of Detroit iron. Wallis's cottage has a ledge around the living room to give room for a collection of decorative bottles and vases. My grandmother's house in Montreal had the same ledge and the same bottles. The flying photos are all done with real aircraft (the movie was made early enough that the WWII aircraft were still in service) rather than models or CGI trickery. Shots of four engined bombers skimming across the water at only 60 feet altitude, or taking off in formation, are impressive.
Great flick.
Thursday, February 12, 2009
What do Republicans believe in? Part II
In addition to free enterprize, Republicans believe in sound money and secure banks. Today's Great Depression II was kicked off by bonehead lending courtesy of Fannie Mae and Freddy Mac. Federal deposit insurance from Great Depression I secured the banks against total failure, but, given seventy years to do it, the ever ingenious bankers have invented whole new ways of loosing money. To limit the damage these morons can do, the FDIC ought to crack down/regulate the riskiest of these schemes.
Firstly, we need to subject all the banks to the same set of regulations and regulators. Right now we have real banks, credit unions, stock brokers, investment banks, thrifts, brokerage houses, savings and loans, "Government Sponsored Entities" (aka Fannie and Freddie), money market funds, insurance companies, and God knows what else. Each little group has their own regulations and their own regulator. The stock broker's regulator, the SEC, is totally worthless as far as consumer protection goes. The others are probably little better. Step one is to treat all these "financial service organizations" (aka banks) the same. Write one set of regulations and have one Federal bureau to enforce them. Make sure the regulators and enforcers are accountants not lawyers.
Second, regulate the risks that taxpayer insured banks are allowed to run. Anyone who wants to run bigger risks, doesn't get insurance, and cannot call itself a bank. Forbid any dealing in secondary mortgages. No mortgage backed securities, no selling mortgages to brokerage houses or other suckers. No credit default swaps (aka bond insurance). No buying/selling of commodity futures.
Third, tighten up procedures. Each loan requires a signed statement from the responsible officer explaining how the borrower will be able to make the payments. If the loan goes sour, fingers can be pointed. Each security purchase to have a similar statement explaining why the responsible officer thinks the security will pay off when due.
Then we can do some fun stuff. No corporate aircraft. Bonuses and dividends to be paid ONLY out of profits. No profit, no bonus, no dividend. Require bank to retain cash reserves equal to 10 percent of all outstanding loans, just in case some of the loans don't get paid back.
Firstly, we need to subject all the banks to the same set of regulations and regulators. Right now we have real banks, credit unions, stock brokers, investment banks, thrifts, brokerage houses, savings and loans, "Government Sponsored Entities" (aka Fannie and Freddie), money market funds, insurance companies, and God knows what else. Each little group has their own regulations and their own regulator. The stock broker's regulator, the SEC, is totally worthless as far as consumer protection goes. The others are probably little better. Step one is to treat all these "financial service organizations" (aka banks) the same. Write one set of regulations and have one Federal bureau to enforce them. Make sure the regulators and enforcers are accountants not lawyers.
Second, regulate the risks that taxpayer insured banks are allowed to run. Anyone who wants to run bigger risks, doesn't get insurance, and cannot call itself a bank. Forbid any dealing in secondary mortgages. No mortgage backed securities, no selling mortgages to brokerage houses or other suckers. No credit default swaps (aka bond insurance). No buying/selling of commodity futures.
Third, tighten up procedures. Each loan requires a signed statement from the responsible officer explaining how the borrower will be able to make the payments. If the loan goes sour, fingers can be pointed. Each security purchase to have a similar statement explaining why the responsible officer thinks the security will pay off when due.
Then we can do some fun stuff. No corporate aircraft. Bonuses and dividends to be paid ONLY out of profits. No profit, no bonus, no dividend. Require bank to retain cash reserves equal to 10 percent of all outstanding loans, just in case some of the loans don't get paid back.
Tuesday, February 10, 2009
Water Projects, Franconia NH
The state Department of environmental services has been on Franconia's case about water quality. The water is somewhat acid, which eats the pipes and fills the water with zinc and iron corroded off said pipes. Plus the water pressure is lower than they would like. They fear that under heavy demand, say a fire, water pressure would drop below zero and suck ground water and sewage back into the drinking water. The current Franconia water system dates back to the 1930's, and so replacement now, after 70 years, is not totally unreasonable.
Franconia's budget meeting last night revealed the plans and costs to us citizens. They plan to install a big 350,000 gallon storage tank up on Cole Hill road, and replace the water mains from the new tank thru out the downtown area. We are talking about a 12 inch water main here. The project will cost $3.8 million. One million to be contributed by the state, the rest borrowed on a 30 year 2.75% loan from the state. Annual payments of $64,000 are required to service the debt. Town water bills will rise 23% to pay for this AND the town real estate tax will go up $0.18 per thousand, so everyone has the opportunity to contribute, even if they don't use town water.
If approved at Town Meeting in March, detailed engineering will start. Bids will go out 1 August, and accepted 15 September. Construction is expected to start immediately after bid acceptance. The project is supposed to finish by December 2010.
Franconia's budget meeting last night revealed the plans and costs to us citizens. They plan to install a big 350,000 gallon storage tank up on Cole Hill road, and replace the water mains from the new tank thru out the downtown area. We are talking about a 12 inch water main here. The project will cost $3.8 million. One million to be contributed by the state, the rest borrowed on a 30 year 2.75% loan from the state. Annual payments of $64,000 are required to service the debt. Town water bills will rise 23% to pay for this AND the town real estate tax will go up $0.18 per thousand, so everyone has the opportunity to contribute, even if they don't use town water.
If approved at Town Meeting in March, detailed engineering will start. Bids will go out 1 August, and accepted 15 September. Construction is expected to start immediately after bid acceptance. The project is supposed to finish by December 2010.
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