A Journalist gets it!

I found the following quote, in this article, from the photographer who managed to get a shot of on of the Mumbai terrorists:

"I told some policemen the gunmen had moved towards the rear of the station but they refused to follow them. What is the point if having policemen with guns if they refuse to use them? I only wish I had a gun rather than a camera."

Policemen who will not stop an armed gunman from slaughtering unarmed citizens... It makes my stomach turn.

Happy Thanksgiving

Just a few random thoughts.

Arrrrrrr!!!!!!!!!!!!

The Somali pirates have been thriving - capturing a Saudi oil tanker and a Russian cargo ship laden with military cargo amongst others. That takes balls by any measure. What is amazing is that they have been allowed to thrive. The reactionary nature of the nations patrolling the Indian Ocean have emboldened the Pirates who live in luxury in a Barbary state. Somalia has not been a truly sovereign nation for sometime. The meddling by foreign groups - including Clinton's abortion of an operation in the '90s - have created a poor, fractured country in a state of perpetual civil war. The international community, sadly, frowns on arming the crews for the defense of their ship. As an American I fins this fundamentally wrong. The pirates have no real fear of loss and this emboldens them. Only one way has been proven to stop piracy: sink their ships, hell their ports, and hang the captains. The US Navy was formed to battle the Barbary Pirates. The Marines Hymn enshrines the "...shores of Tripoli...". You must be more ruthless then them; history prove s this. Sink captured vessels to deny them ransom and cargo - though that gets expensive in a hurry. Shell/bomb safe havens - a perfect job for a BB - if we still used them. If you make piracy have a significant cost you will curtail it.

Obama's Appointments and Such...

I just have to laugh. The man worked his way up through the Chicago political machine. Patronage is an important component of that. If anyone really thought he would do things differently they are a diluted fool. Even the Huffington Post is crying about this. You are getting exactly what you voted for. Those of you on the left are only seeing the beginnings of what many on the right had predicted would be the shape of his administration. If you are unwillinhg to take a critical look at your canidate before an election; don't act surpised when he does thinks you don't expect or disagree with.

On a somewhat related note... something that I had noticed during the summer, but never mentioned (I wasn't in a writing mood much of the summer): Doesn't the Oboma 'Hope' graphic look a little like the common Che Guevara image? I think it does, and it is quite telling of his belief system.


Money...

Here is an interesting artical in the Finacial Times. Apparently the Germans get it. It is a real shame that politicas and class warfare have gotten in the way of solving problems.

The Auto Bail-out Plan Pt 3

Finally, the bail-out debate.

It has been said that: “ Nations fall when the population realizes it can vote it self money from the treasury.” This has been proven time and time again (Rome, the various Soviet states). It is being proven again with all of the social programs and pork that exist in the country, at every level (Social Security, California's perpetual budget woes). The first $700 billion dollars as created a clamor for companies, states, and cities to have the fed solve there own fiscal mis-management or just yelling 'gimmie' to anyone who'll listen. If the auto industry gets a bail out, when will the hand outs end? I am fundamentally opposed to a bail out as a solution for any situation. That being said, I do thing that things must happen to prevent a complete collapse of the American auto industry.

Will the auto makers go into bankruptcy? Will they survive? Who knows? What is fairly certain is that even if one fails the number of jobs that will be affected it almost inconceivable. The ripple of even one going down, will hurt suppliers, vendors, the towns that house plants, and so on down to the 7-11 that sells coffee and a paper to the workers in that plant.

From the AP article:

"The industry is so interdependent," Mulally said. "We're nearly 10 percent of the US GDP, and if one of the automobile manufacturers gets into serious trouble, it has just tremendous implications for the entire industry."

Will the country survive the loss of so many jobs? Yes. It will hurt for sure, but we'll weather that storm. It will almost certainly cause recession. The ailing auto industry as effected a recession in Michigan that has lasted for some time. As an aside: we know what won't help the economy if the worst happens. Just look!

Will the UAW? Possibly not, but that won't necessarily be a bad thing considering the state of unions in this country today. Even if the UAW survives; it will be severely weakened and hopefully will become a much more reasonable organization to deal with. Unions (the leadership, not necessarily the rank and file) have become a political entity and a bully with a focus on power and not a symbiotic relationship with the companies they work in. Just ask Colt. Unions do do a lot of good but it appears to most people looking in that that the worker is only a secondary concern.

As of Wednesday night the decision on what to be done has been delayed until December 2^nd. "Until they show us the plan, we cannot show them the money," said Speaker Nancy Pelosi, C-Calif. I think there are a few reasons for the delay. Ostensibly, the (Democratic) leadership in Congress do not believe they have bill that will pass both houses with adequate Republican support or would be acceptable to President Bush. I think there is a certain amount of grand standing – making the auto executives grovel for a couple more weeks. I know that the leadership would love to delay a vote until after the inauguration so that Obama can have a big feather in his cap early in his first term. I'm pretty sure that many in Congress have no idea what to do. Certainly, many (true) conservatives oppose the plan on principle, and that more than a few other congress-critters are reading the tea leaves before making a last minute decision. I am also quite certain that the proposal from Wagner and the other included a major reduction in their retirement and health care liabilities.

The following quote from the AP article is one of the things that frightens me the most:

'Automakers ran into more resistance from House lawmakers, who chastised the executives for fighting tougher fuel-efficiency standards in the past and questioned their use of private jets while at the same time seeking government handouts.

"My fear is that you're going to take this money and continue the same stupid decisions you've made for 25 years," said Rep. Michael Capuano, D-Mass. '

It is no secret that Pelosi and many on the left have been pushing for higher efficiency standards and other environmentalist regulations for years; some bordering on the absurd. This, despite the lack of consumer wholesale interest or the technological feasibility. As I mentioned before, they are, in part, a cause of the current mess. I, also, distinctly remember a few of these monkeys telling us that high gas prices are a good thing. The mentality of these people places an environmental agenda above the vitality of any American industry. What is really shameful is the disregard of the big three's improvements in this area. GM will have the Volt in 2010, has had cylinder deactivation since the '07 MY, and hybrids before that. Ford and Chrysler have made similar improvements to economy and emissions, but this progress has been over looked in favor of an agenda that is pushed with out regard for American industry or the needs and wants of the consumer.

I feel it incumbent of me to point out: that nearly no congressman or senator has any experience running a business - especially one as large and complex as GM and Ford et el. They have not shown a willingness to contain government spending. The federal government is a case study in mismanagement and always will be. These are the people who gave the Secretary of the Treasury the sole authority to dispense the $700 billion they alloted the to sure up the credit market, without control or oversight, and are now bitching that what money was spent didn't go were they thought it would or should go. I think that Paulson's little 'bait and switch' caused a swing to the other extreme and may lead any bill to have a lot of stings and earmarks attached to it as a result.

It is important to note that Obama has said very little on the issue since he was elected. He and his team may view it as a hot potato and not be willing to put their mark on it in fear of failure.

I do not think that direct government intervention will help. Especially considering the current leadership of Congress. Forcing the trade issue, reducing regulation, lowering taxes, and removing any law that forces the hiring of only union workers will help in the long run. The only way that believe the fed can offer immediate and substitutive assistance is by removing the burden caused by retirees. If congress would take over the pensions and health care of retired workers and allow the auto makers to renegotiate with the unions it would almost immediately put them into, or close to, the black and allow them be more competitive.

I do not like this option either since it make a large number of people a ward of the state and advances socialism a little further, but I see it as the best of a whole mess of bad options.

The Auto Bail-out Plan Pt 2

In my previous post I listed some of the American auto industries issues. It may look like focused too much on certain things, but keep in mind my prose style. I went into greater detail about some of the more subtle problems that I have observed and was a little lite on some of the more frequently discussed issues (unions, government regulation, etc.)

With all of the mentioned baggage; the big three were still viable and operating with an eye on a more prosperous future. It has been a long road improving their products and corporate cultures to change with the times. Unfortunately the lack loyalty and perception that American cars are over priced junk will take a generation to erase. Toyota and other Asian did not build its reputation overnight and have done a superior job of improving their products over the last twenty years. I also can not overstate the unfair trade practices that have damaged the domestic makers ability to compete in their own markets. Similarly, the $1500-$3000 added to the cost of every car would put any company at a decided disadvantage.

The last two straws should be pretty obvious to anyone, paying attention, to the last year and a half. First the very sudden and very large increase in the price of oil and finished petroleum products (fuel) Their were many factors that caused this sudden shock to the market. I'll simply list them, without too much detail, since this is not the scope of this entry: Weakness in the US dollar limiting our buying power, speculation, production disruption (hurricanes, etc.), instability in the middle east, and a increasing demand that pushed our domestic refining capacity to the limit. As a side note: we haven't built any new refiners in this country for over 20 years.

This sudden increase put a major dent in the domestic's one good and profitable seller: full-sized trucks. Truck buyers are amongst the most loyal customers and only recently have the Japanese come out with a product the can directly compete with a F-series, Silverado, or Ram. The big three have been slow in shifting production to meet the demand for more fuel efficient vehicles. To be fair, they are fairly conservative and were probably waiting to see just how long this price increase would last. Additionally, large companies do not shift gears quickly, especially if they have onerous union obligations. The week dollar and higher transport costs did help the makers buy making it more expensive to import products from over seas – though the climate didn't last long enough to offer lasting aid.

The credit fiasco is what really put Detroit in a bind. All of a sudden people were not buying car at all and the entire new car market tanked over 30%. This was especially bad for Ford, GM, and Chrysler due to all over the overhead and legacy costs they have. They have to sell a much larger number of cars in order meet the obligations. They had been selling enough to barely meet these costs and pay for current costs; treading water for nearly a decade while loosing market share to outside competition.

The Auto Bail-out Plan Pt 1

Speaker Nancy Pelosi (C-San Francisco) outlined the Democrat's plan to bail out the ailing auto industry with $25 billion dollars. I’ve heard the number two million to describe the number of jobs that will be effected if all thee of the big three fail. That number tempers my fundamental dislike of government bailouts.

Talk of a bail out for Detroit has been circling the press and Washington for some time, so I figured I’d weigh in… not that my opinion will change anything. I was just going to write my opinion of the current proposal, but I realized that It may be important to cover why we are here in the first place.

Let me first outline the reasons why the US auto companies were hurting in the first place. I’ve worked in the auto industry for over eight years. In those eight years I have driven, worked on, or otherwise worked with an incredible number of cars. I’ve dealt directly with GM and to a much lesser extent several other companies and every kind of dealer you can think of. I make these observations from direct experience. The vast majority of my experience is with Chevrolet and by extension GM; most of my examples will be GM’s issues as a result.

For starters the big three produced a lot of junk from the mid-70s through the mid-90s when they began to improve their products to compete with foreign competition. Foreign manufactures produced more fuel efficient cars with decent 4-bangers that ran seemingly forever. Honda and Toyota for cylinders ran smooth and had decent power for there size. American makers only introduced automatic transmissions with more than four speeds in just the last couple of years while many of the foreign makes have had five and six speeds for a number of years now. They lacked quality control for a number of years while German makers maintained and the Japanese greatly improved. At the very least the perceived quality of American cars was seen as inferior. The lack of quality is often gleamed from the low-rent, cheap interiors in most cars, even up market Cadillacs and Lincolns. Big pieces of cheap, hard, squeaky plastic; really cheap leather; crappy radios; and really poor fit will not help to sell cars.

Bad product decisions and inability to fix reoccurring problems is a major problem. This is an issue with any large, bureaucratic corporation. The GM created the Cimmoron and God killed a 100 baby seals for that abortion of a car. The 4-6-8s and gas-motors-made-diesels of the eighties are examples of good ideas poorly implemented and severely damaged public perception of these technologies. Steering shafts in GM products that had a “slip-stick” condition are a very recent example of GM’s inability, or un-willingness, to fix a major customer complaint. The introduction of a new intermediate steering shaft 9 years after the problem cropped up is a tacit admission that the twenty-some TSBs they produced to solve the problem didn’t and that they were just being cheap at the expense of customer satisfaction. I could spend days listing examples, but I have better things to do with my time. The upshot is: Bean counters run these companies, and it shows. They also have an amazing ability to kill off products once they’ve gotten them right or start to attract customers – see Dodge Neon or the ‘94-’96 Impala SS

The above two issues, coupled with increased competition and the influx cheap cars from Korea means that buyer are less brand loyal than they ever were. Ford and GM were slow to realize that. They were also slow to adapt to new markets such as the sport tuner crowd that introduced younger buyers to Nissan, Honda and Toyota the same way the Mustang and Nova did for them in the 60s. They are today’s buyers and they don’t buy American. The increasing popularity of rear drive luxury and sport sedans from Europe also caught them off guard as Detroit continued producing front drive cars with willowy suspensions for people who’s next big purchase will be casket (think a DeVille or Town Car vs. a BMW 7-series).

General inefficiency doesn’t help. Any large business is going to gave its problems, but for the auto-industry it is systemic and long reaching. As an example Chrysler has two oil filter that fit 90% of Chrysler engines in 90% of applications - I can think of over 10 oil filters for GMs that fit cars made in the last few years.

Bad business decisions haven’t helped. I will say that no one can see the future and it is very easy to play Monday morning quarter back with any move, but I distinctly remember reading in several sources (WSJ, the Economist, et al.) expressing their doubts in both situations. I write, specifically of the Chrysler-Daimler “merger” and Jack Nasser burning through Ford’s capital to buy as many luxury brands as possible. It is important to note that both Ford and Chrysler gleamed tech., expertise, and other benefits from these moves. Jaguar and Aston Martin were saved by Ford, by fixing its glaring quality problems, and Ford gained a great deal by sharing platforms with Mazda and Volvo. Chrysler’s merger with Daimler made the 300/Charger/Challenger cars what they are today. The ultimate result of the failure of Daimler-Chrysler and Fords spending spree has left them in much weaker finical shape than they would other wise been in. GM has been some what more conservative, but has made a few brand misjudgments and some other internal problems that have weakened its ability of efficiently function. The GMAC sale, however, to Cerberus Capitol Management (which also owns Chrysler Corp.) just before the credit crunch looks like pure genius (and great luck?); probably saving GM from burning through its capitol sooner.

C.A.F.E. standards and other regulations that are overly stringent, that prevent innovation, and limit the ability of current technology to mature in a natural way. These standards are one of the reason why I can't buy a 3-series with a diesel and why VW and Mercedes stopped importing there high efficiency diesels. I'm all for buying American, but there is something to be said for a car that gets 40-50 mpg without the over complexity of a hybrid.

Finally and possibly the biggest thing that hurts them are the unions. The UAW has a strangle hold on the American auto industry and has been squeezing the life out of it for some time. The big three’s pension, heath care, and fixed pay-roll costs have been analyzed at length for years and going in to it here would be redundant.

This is not a complete listing or analysis of Detroit’s faults, but it is just to illustrate some of the depth and complexity of the problems facing them. Many of the faults have been corrected as of late, but is may be a case of to little to late and the perception issues will take a generation to erase. I do understand the reasons why they stayed with the 4-pd autos, for example, and some of the other more conservative engineering decisions – they work and if it ain’t broke don’t fix it. Unfortunately they became content with "good enough" and were diluted enough to think that brand loyalty would make consumers continue to buy their products in the face of pressure from Asian and European makers.



The big three were hit (somewhat) un-expectedly by the very sudden rise in gas prices. This put a major damper on the sales of trucks and SUV which have been, at least in Ford and GM’s case, the most profitable segments. This buy it self is not the end of the world since they had been moving to improve small and mid-sized cars and had brought out many new and much improved models and could actually compete with foreign offerings. Then Fanny Mae/Freddy Mac collapsed bringing Wall Street, the credit market and the economy to a grinding halt and as a result auto sales dropped between 30-40% virtually over night. No business can scale production that rapidly, but for GM, Ford and Chrysler the problem is worse because they must sell a minimum number of cars to meet union and pension obligations. They also have massive fixed cost that haven’t gone away and have, in fact, increased.


Next: Part II: the Bail-Out


Update:

I forgot to mention foreign protectionism. Europe isn't an issue since Ford and GM manufacture cars in Europe for Europe and make a decent profit as a result - the issue is Asia. Japan has had protectionist policies for decades that effectively lock every non-Japanese maker out of the market while Japan is able to sell as many cars in the US as they can make. I' all for free trade, but free trade is a two way street and the current arrangement is just wrong. The policy makers in this country need to grow a spine and force this issue. Opening markets to US goods is AN ADMINISTRATION'S DAMN JOB! GM does make a great deal of money in China, however the Chinese government gets a massive chunk of the profits from that. To be perfectly frank, the only reason the Chinese allowed GM to set up an operation the size they have, with the control they have, is to gleam as much mass production knowledge, manufacturing information, and tech as they can get.

I was thing about changing the title; Latin may be a little pretentious. Besides, it implies that I have anything really important to say Or that right better than my broken prose.

A few observations on the new government, etc....

Rule? I wasn't aware the PotUS had the same powers as the President of Venezuela.








Mahmoud Ahmadinejad wrote a letter congratulating Obama on his victory. I believe he is the first president to receive such a letter. It is good to know that the president of Iran likes him.

Office of the President-Elect? I wasn't aware that such a position officially existed as an office. It smacks of arrogance. He has yet to be sworn in yet and already he is trying to effect policy changes. At least he has finally stated his goals on Change.gov; unfortunately much of what he wants to do has been rejected at the ballot box, is borderline unconstitutional, or just plain socialism.

"Obama to use executive orders for immediate impact" (see the video above)

I would suspect this includes, based on this article and his various speeches, a moratorium or sever limitations on domestic oil production and exploration (way to help our energy independence, gas prices and the economy).

He also pushes a "big-bang" approach to helping the economy. Increasing the size of government will do nothing to help the economy in the long run and will accomplish nothing except bloating the already strained federal budget, limit economic freedom, and have negative effect on taxes. (See the Cater, LBJ, and FDR administrations for proof).

"The alliance between Britain and the U.S. -- and more broadly between Europe and the U.S. -- can and must provide leadership, not in order to make the rules ourselves, but to lead the global effort to build a stronger and more just international order," an excerpt from the speech says.

"My message is that we must be: internationalist not protectionist; interventionist not neutral; progressive not reactive; and forward looking not frozen by events. We can seize the moment and in doing so build a truly global society."

The election of Obama and the economic troubles have brought renewed vigor to the "one world" types (if that that term doesn't make me look like a paranoid wack-o I don't know what will). I can't remember the last time that I read an article that was so overt. Really, the concept isn't all that bad until you realize that its biggest proponents are socialists and power mongers. Besides, multiple governments can be argued as a good thing; the interests of different countries act as a check on the ambitions of others. If the Un is an example; I truly fear what that world government would look like. Here is another article from Bloomberg that sound much more reasonable; putting forth ideas such as lowering taxes that I can agree with. In fact I read an article last week that described how European efforts, lowering takes and instituting a flat tax, had helped the economy and lowered unemployment. He says this as the nanny stae of Briton moves closer to the world of 1984.

Louis Farrakhan warned that Obama's victory might spark racial tensions. One: I have a better view of American than you and I doubt that much of anything will happen just because he is black. A depression, or other policy decisions are another matter entirely. Second: Farrakhan, the civil rights leaders (as they are today), persons like Rev. Wright, and many democrats have sewed the seeds of racial and economic division for years for their own political and power gains. any violence for those reasons can be blamed on them. Third, this is the man who thinks the Bush administration had the levees in st="on"New Orleans blown up, and claims to have spoken to aliens on a mountain top in Mexico - why does anyone listen to this man any more?

Biden was booded at an Eagles game. For the life of me I'm not quite sure why. Really Philly sports fans aren't as bad as the media makes them out to be.

Gorbachev calls on Obama to carry out 'perestroika' in the U.S.

While his policies did, in part, help to bring down the command economy and by extension the Soviet system; it also caused economic turmoil and created the mess that Russia is today. This is not a person (nor should any Communist, really) that should be talking about economic policy. Since he did say it, I wonder if he was using it as a generic term for economic reform, or if he is diluted enough to think that what he enacted worked well enough to be copied in to a COMPLEATLY DIFFERENT SYSTEM.

Finally the US automakers are in serious trouble due to mis-management, the production of relive junk from the mid 70s through the late 90s, government regulation and pay out of union benefits and wages. For the first time the Democrats want to "help" the auto industry in a substantive way in the form of a massive bailout that I really don't support on principle. They must have come to the realization that the wholesale collapse of such a large industry (and the US has few of those anymore) would have a ripple effect through the whole economy. That or they realized that if and when they go under it will most likely be in the next 4-8 yeas and large mass of unemployed union peopsheeple may not vote democrat in the next round of elections.

Just a few ramblings as I sit here and contemplate my future unemployment.