Watched the Detroit CEO's (Waggoner of GM, Mulally of Ford, Nardelli of Chrysler, and Gettelfinger of UAW) on TV, in front of the Senate banking committee, begging for a bailout. They all talked, about how hard their companies had worked, how dreadful a bankruptcy would be, how just another $25 billion would save them, how much the union had given up.
None of them mentioned the $75 an hour, plush medical and cushy retirements the UAW workers enjoy, and how Toyota, Honda, and BMW pay $25 and hour less. No one mentioned the fact that Detroit's Caliber, Focus, and Cobalt don't sell as well, and don't sell for as much money as Corolla and Civic. Detroit's designs are less desirable, and it's reputation for quality has still not recovered. No one, not even the Congressmen running the hearing, dared to say a harsh word about brain dead management and overpaid workers, the real problem in Detroit.
This taxpayer was left with the impression that another $25 billion would just stave off the inevitable bankruptcy for a matter of months. The domestic car makers cannot survive with more expensive labor and less desirable products. Why waste $25 billion? Do the bankruptcy, get the labor costs down to what Toyota and Honda pay, lay off the suits, drop the poor selling models, dump the excess dealers, cancel the golden parachutes, and get some decent cars into production.
The reason the Detroit suits are begging for my money is simple. The banks won't lend to them any more 'cause the banks figure they are headed for Chapter 11, which means the loans don't get paid back. I think the banks have it right.
Wednesday, November 19, 2008
Monday, November 17, 2008
Has CAFE killed GM?
Lot's of folk, especially those who work for GM think so. They claim that to get the average fuel mileage up, GM produces scads of econo box cars that loose money. Less CAFE, GM could concentrate on Silverado pickup trucks and Chevy Surburbans which are profitable. Right.
Unfortunately, those little econo boxes make up the bulk of the cars on the road as I drive to work each day. That swirling mass of Rt 128 traffic is three quarters small sedans, like Corolla. The real volume sellers aren't pickups and SUV's, it's econo boxes. For GM to stay in business, it has to compete in the volume market, or go out of business. Unfortunately the GM suits still don't understand this, and so they whine about CAFE making them build the type of car that most people buy.
It may be that making money in the small car business is harder than building big cars. People won't pay as much for a small car as a big car. But small cars are nearly as expensive to manufacture as big ones. Small cars have roughly the same number of parts as big ones. These parts have to be made or purchased, and assembled. Small parts cost about the same as big ones, and it takes the same amount of labor to install them. So your profit margin on small cars is always going to be tight, but plenty of companies (Toyota, Honda, Subaru, Volkswagen for example) have shown that it can be done.
The Detroit companies have to offer small cars as desirable as Civic and Corolla at competitive prices. Or go out of business.
Unfortunately, those little econo boxes make up the bulk of the cars on the road as I drive to work each day. That swirling mass of Rt 128 traffic is three quarters small sedans, like Corolla. The real volume sellers aren't pickups and SUV's, it's econo boxes. For GM to stay in business, it has to compete in the volume market, or go out of business. Unfortunately the GM suits still don't understand this, and so they whine about CAFE making them build the type of car that most people buy.
It may be that making money in the small car business is harder than building big cars. People won't pay as much for a small car as a big car. But small cars are nearly as expensive to manufacture as big ones. Small cars have roughly the same number of parts as big ones. These parts have to be made or purchased, and assembled. Small parts cost about the same as big ones, and it takes the same amount of labor to install them. So your profit margin on small cars is always going to be tight, but plenty of companies (Toyota, Honda, Subaru, Volkswagen for example) have shown that it can be done.
The Detroit companies have to offer small cars as desirable as Civic and Corolla at competitive prices. Or go out of business.
Saturday, November 15, 2008
Sarah
This blog here says Sarah Palin nearly saved the McCain campaign. I was a front line party worker manning a store front HQ. Every single person who came in enthused about Sarah Palin as the greatest candidate ever. Every single one. We had two kinds of yard signs, "McCain only" left over from the primary, and "McCain-Pahlin". Everyone asked for the McCain-Palin signs. We ran thru four big cartons of McCain_Palin yard signs, whereas the mere two cartons of "McCain only" signs only moved out after we ran out of McCain-Palin signs.
I think choosing Palin was the smartest move McCain made in the whole campaign. It wasn't enough, but it was the right move.
I think choosing Palin was the smartest move McCain made in the whole campaign. It wasn't enough, but it was the right move.
Obama doesn't like guns much
The NRA sent this interesting quote around by email.
/quote
This week, it became clear that the new administration's anti-gun agenda even infects the process of staffing the administration. A widely disseminated questionnaire for those applying for administration jobs asks:
"(59) Do you or any members of your immediate family own a gun? If so, provide complete ownership and registration information. Has the registration ever lapsed? Please also describe how and by whom it is used and whether it has been the cause of any personal injuries or property damage."
/end quote
Hmm. Guess that disqualifies me from a job in the Obama administration. I have a few guns, all of which I've had for forty years or more, never registered them. Don't plan to either. Registration isn't required up here. Yet.
Friday, November 14, 2008
Paulson ubder the TARP
Jim Lehrer had Secretary of the Treasury Henry Paulson on his show last night. Lehrer's opens the discussion by saying "We have spent $350 billion on the Troubled Assets Recovery Program and nothing good has come of it. The stock market is crashing, unemployment is up and sales are down". Paulson didn't want to accept this and Lehrer gave him a good five minutes without interruption to make him case. Paulson claimed the the financial system was better and without the TARP money it would be worse, but never did he bring forth a single number to support his position. Hey we are talking about money here, and if nothing else, money can be counted. Paulson should have had figures, and graphs showing how the financial system has done since October. He didn't.
As my savings looses it value day by day, I find it hard to believe Paulson assertion that "the financial system" is getting better. Not unless he has some numbers to back up his arguments.
So then, Lehrer asks Paulson if the government should bail out GM. Good question. Paulson dodges it and makes a quibble that Congress didn't authorize a GM bailout in the TARP program.
Surely a guy like Paulson, ex Morgan Stanley CEO, has some opinion on the wisdom of handing billions of taxpayer dollars to a doomed company like GM. Why didn't he share them with us TV viewers? It's not like he needs the votes of UAW workers to get reelected.
As my savings looses it value day by day, I find it hard to believe Paulson assertion that "the financial system" is getting better. Not unless he has some numbers to back up his arguments.
So then, Lehrer asks Paulson if the government should bail out GM. Good question. Paulson dodges it and makes a quibble that Congress didn't authorize a GM bailout in the TARP program.
Surely a guy like Paulson, ex Morgan Stanley CEO, has some opinion on the wisdom of handing billions of taxpayer dollars to a doomed company like GM. Why didn't he share them with us TV viewers? It's not like he needs the votes of UAW workers to get reelected.
Thursday, November 13, 2008
Military Aircraft
Aviation Week carried a listing all the "current" warplanes in the world. That's 89 different aircraft manufactured in 15 different countries. Russia, England, France, Germany, India, Canada, Japan, S. Korea, China, Pakistan, Brazil, Italy, Sweden, and the US. The other 180 odd countries of the world are not advanced enough or large enough to manufacture warplanes. Helicopters are the most numerous (36 different types) followed by jet fighters (23). There are 9 jet and 5 turboprop trainers/light duty fighters. There are only 6 cargo planes and the rarest type is heavy bombers of which there are only three.
The oldest warplane is the venerable B-52 which first flew in 1952. The newest is the EADS Mako, which is so new as to still be in the definition phase (hasn't flown yet).
The oldest warplane is the venerable B-52 which first flew in 1952. The newest is the EADS Mako, which is so new as to still be in the definition phase (hasn't flown yet).
Sunday, November 9, 2008
MY wishlist
I want to fix the economy. Nothing hurts a man (or woman) more than getting laid off. Everyone would rather have a job, than all the social goodies under the sun (free health care, unemployment benefits, free college, food stamps, free child care, lower taxes, retraining, free retirement). With a job, you have the money to buy all the rest. Unemployed you have nothing. We do the most good for the most people when we make the economy grow and create jobs.
"It's the economy stupid." The economy ought to come ahead of everything else, global warming, conservation, Iraq, public transportation,welfare, and pro union legislation.
We need to fix the real economy, the part that produces real stuff that people willingly buy with money. That's farming, manufacturing, mining, logging, transportation, utilities, communications, and entertainment. Financial services, health care, lawyers, government, and education are not part of the productive economy, they just consume money and don't produce anything one can sell.
The real economy is run by companies and corporations. Helping the real economy means helping companies and corporations do well and produce more. Democrats have a reflexive desire to bash companies and corporations. It's been said that democrats love employment, it's employers they cannot stand.
If the incoming democratic administration can surpress their gut level desire to bash business, here is what might be done.
1. Reduce the cost of health care. This will only happen when the patients know the doctor's bills are coming out of their pockets. Right now insured patients don't care what it costs, 'cause its all paid for. We can subsidize the patients in various ways, but the patients ought to be paying the bills. We are putting 16% of GNP into health care, and companies are the ones who pay it. Sixteen cent of every dollar in sales goes to workers health care.
2. Reduce the corporate tax. Right now it's 35% of profits. Drop that to 17% which is what the average taxpayer pays out. Clarify the accounting rules to make it harder to hide profits by cooking the corporate books. Insist that any profit reported to investors, is taxed. Right now various accounting scams allow businesses to show high profits to investors (potential stock buyers) and low profits to the tax man. That oughta stop.
3. Let the free market allocate economic resources. Don't use taxes or subsidies to favor one industry or product over another. The present market crash was caused by a policy of favoring single family home ownership over renting. Don't subsidize oil production, ethanol production, domestic sugar production, farming, road building, and all those other cushy little deals. Don't fix prices, and don't limit competition by licensing things.
4. Keep in mind that we want higher production. Higher production is better than higher wages or higher business profits.
5. We need domestic energy. Sending $700 billion a year overseas just for fuel is an unbearable burden. Real energy comes from coal, oil, and uranium. Wind power goes off when the wind drops, solar power goes off when the sun sets. Real energy is energy available when you need it.
"It's the economy stupid." The economy ought to come ahead of everything else, global warming, conservation, Iraq, public transportation,welfare, and pro union legislation.
We need to fix the real economy, the part that produces real stuff that people willingly buy with money. That's farming, manufacturing, mining, logging, transportation, utilities, communications, and entertainment. Financial services, health care, lawyers, government, and education are not part of the productive economy, they just consume money and don't produce anything one can sell.
The real economy is run by companies and corporations. Helping the real economy means helping companies and corporations do well and produce more. Democrats have a reflexive desire to bash companies and corporations. It's been said that democrats love employment, it's employers they cannot stand.
If the incoming democratic administration can surpress their gut level desire to bash business, here is what might be done.
1. Reduce the cost of health care. This will only happen when the patients know the doctor's bills are coming out of their pockets. Right now insured patients don't care what it costs, 'cause its all paid for. We can subsidize the patients in various ways, but the patients ought to be paying the bills. We are putting 16% of GNP into health care, and companies are the ones who pay it. Sixteen cent of every dollar in sales goes to workers health care.
2. Reduce the corporate tax. Right now it's 35% of profits. Drop that to 17% which is what the average taxpayer pays out. Clarify the accounting rules to make it harder to hide profits by cooking the corporate books. Insist that any profit reported to investors, is taxed. Right now various accounting scams allow businesses to show high profits to investors (potential stock buyers) and low profits to the tax man. That oughta stop.
3. Let the free market allocate economic resources. Don't use taxes or subsidies to favor one industry or product over another. The present market crash was caused by a policy of favoring single family home ownership over renting. Don't subsidize oil production, ethanol production, domestic sugar production, farming, road building, and all those other cushy little deals. Don't fix prices, and don't limit competition by licensing things.
4. Keep in mind that we want higher production. Higher production is better than higher wages or higher business profits.
5. We need domestic energy. Sending $700 billion a year overseas just for fuel is an unbearable burden. Real energy comes from coal, oil, and uranium. Wind power goes off when the wind drops, solar power goes off when the sun sets. Real energy is energy available when you need it.
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