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bob ward
01-08-2009, 04:48 AM
I'm not the author, but its funny and there may be a grain of truth here.


A Modern Parable.


A Japanese company (Toyota) and an American company (Ford Motors) decided to have a canoe race on the Missouri River Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion.

They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 2 area steering superintendents and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 2 people rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners and free pens for the rowers. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses. The pension program was trimmed to 'equal the competition' and some of the resultant savings were channeled into morale boosting programs and teamwork posters.

The next year the Japanese won by two miles.

Humiliated, the American management laid-off one rower, halted development of a new canoe, sold all the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses.

The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles,) so he was laid off for unacceptable performance, all canoe equipment was sold and the next year's racing team was out-sourced to India .

Sadly, the End.

Your Old Dog
01-08-2009, 05:27 AM
I think there's more then a grain of truth, more like a bag of it. Interesting read!

Weston Bye
01-08-2009, 06:05 AM
The parable neglected to mention the comittee man, the jobs bank, and the malingerers (all never touching a paddle) that were contractually obligated to be part of the crew, or the boatload of retirees being towed behind.

JCHannum
01-08-2009, 10:38 AM
The parable neglected to mention the comittee man, the jobs bank, and the malingerers (all never touching a paddle) that were contractually obligated to be part of the crew, or the boatload of retirees being towed behind.

As well as both houses of Congress mandating the canoe meet current energy requirements, safety design and CAFE standards.

sansbury
01-08-2009, 11:50 AM
As well as both houses of Congress mandating the canoe meet current energy requirements, safety design and CAFE standards.

All of which apply to the Germans and Japanese canoe teams as well.

Interesting tidbit. CAFE applies to everyone equally. The Japanese comply because they build really popular small cars, the Big 3 comply by building @#$!box compacts destined for Hertz lots, while the Germans build gas-hog sports sedans that don't comply. CAFE provides that manufacturers who don't comply pay a tax of around $150/car, which the Germans pay and build what they like.

If you read the news stories, the Big 3 say compliance with CAFE costs billions, which add up to hundreds per car sold when you average it out. The reason they don't just pay the penalty like the Germans do is political--they don't want to be seen as "being in violation of the law" for fear of shareholder lawsuits or falling out of favor with Congress. But the notion that they are 'forced to build cars to meet CAFE' is at the very least leaving out some important details.

DR
01-08-2009, 12:22 PM
Anybody see the chart of Toyota's profits?

Steadily rising exponential curve until 2008. Then a sudden drop to losses almost equaling 2007 profits.

One thing you could conclude from that chart is it's the economy, not the particular management style that's killing car companies.

hawgwrench
01-08-2009, 12:45 PM
think your right DR....but isnt it also a case of banking on next months money for this months bills?...I believe its called living on credit,and we all do it ...just not on the scale that big industry has been....maybe the Fed will post a website where we can download Bailout Forms to e-file...seems to be no stopping point and I could use little extra right about now....

sansbury
01-08-2009, 01:23 PM
Anybody see the chart of Toyota's profits?

Steadily rising exponential curve until 2008. Then a sudden drop to losses almost equaling 2007 profits.

One thing you could conclude from that chart is it's the economy, not the particular management style that's killing car companies.

But you don't see Toyota telling the Japanese government that without a magic $20 billion loan they will be out of business in 2 months.

It's an awful economy for car companies, no question. But 2001-2003 was a terrible economy for software/IT companies, and no one came to bail us out. Rightly so. Too many companies were full of overpaid staff led by incompetent managers. The good companies left were able to pick up the good people and good assets and become stronger.

The only way to save US manufacturing is to get rid of these white elephants. FWIW, I think management needs to be flushed just as much as labor. No way that will happen by continuing to bail them out. Management will continue to trim/offshore labor while making sure to set themselves up for bailout #3 when those measures still aren't enough. The companies will shift their priority from doing what's needed to build successful cars to doing what's needed to keep getting our tax dollars.

Liger Zero
01-08-2009, 01:30 PM
Hm, replace car companies with Kodak or Xerox and you have the situation around here. Interesting.

Tinkerer
01-08-2009, 01:55 PM
The companies will shift their priority from doing what's needed to build successful cars to doing what's needed to keep getting our tax dollars.
I agree with this... they'll most likely have a VP of Begging. :rolleyes:

Liger Zero
01-08-2009, 03:00 PM
I agree with this... they'll most likely have a VP of Begging. :rolleyes:

No no.

Vice President Of Non-Sales Income Acquisition And Special One-Time Charge Application And Distribution.

andy_b
01-08-2009, 06:51 PM
No no.

Vice President Of Non-Sales Income Acquisition And Special One-Time Charge Application And Distribution.

yeah, that's more like it.
i saw today that Larry Flynt is asking for a bailout because his DVD sales are way down. i am serious.

the thing that gets me is that here the govt is propping up these companies because they are "too big to fail", yet 30 years ago they fought to break up AT&T which arguably created the entire internet, electronics and communications industries with the innovation coming out of Bell Labs. what would help the U.S. economy more, a bunch of bailed out banks or a company that actually invented the transistor, the cell phone, the laptop computer, the MP3 player, UNIX, etc.? seems to me that the government has some misplaced ideas of what a valuable company is.

andy b.

Liger Zero
01-08-2009, 07:11 PM
Value is measured in terms of campaign contributions, direct or indirect. Also by the ability of said company to lobby.

Value in the eyes of the government has nothing to do with the ability of a company to provide a good, a service, research or this innovation. All the government cares about is getting re-elected. NOTHING else matters. NOTHING. Everything is done in terms of "how is this going to look at election time."

New York State has a strict policy of not siding with workers in a given dispute because of the precedent set by one of our attorney generals way back. He took a major casting company to task for safety violations and the company told him that hey guess what you force the issue we'll lay off everyone (1,000 plus jobs) and leave the state. Guess what? Said casting company goes along killing people and exposing them to toxic stuff because they know all they have to do is rattle the bars and the government backs right off. This goes for safety, wage-and-hour disputes, you name it. I was told I can't recover the wages I'm owed by an employer because said employer claims paying me would cause them to have to lay off 10 other workers and shut down. That's right folks! Right from the mouth of the Department Of Labor, in WRITING no less!

That's the government. The ONLY thing the Government cares for is the GOVERNMENT. Not us.

Frank Ford
01-08-2009, 07:21 PM
All the government cares about is getting re-elected. NOTHING else matters.

Well, I can't quite buy that. I believe there are some (however few) elected officials who really do have a vocation to lead, and their constituents' interests at heart.

I hope we just elected one as President.





Just about old enough to be your grandfather, and still not talking like MY grandfather. . .

Liger Zero
01-08-2009, 07:52 PM
Well, I can't quite buy that. I believe there are some (however few) elected officials who really do have a vocation to lead, and their constituents' interests at heart.

I hope we just elected one as President.



Yeah, that would be nice. I'm still hoping that they'll prove me wrong and actually DO something about creating actual economic GROWTH not forcing companies to hire workers they don't need. Create GROWTH and the jobs will follow. Create JOBS and you create more problems.




Just about old enough to be your grandfather, and still not talking like MY grandfather. . .

Mid-30ish here, I've had a rough time due to the area I live in and my own bullheadedness. Partly me, partly my environment. I've tried changing myself around, now it's time to move out of this economic quagmire to somewhere that actually knows what GROWTH is.

lazlo
01-08-2009, 08:09 PM
The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles,) so he was laid off for unacceptable performance, all canoe equipment was sold and the next year's racing team was out-sourced to India.

...and the company filed for billions of dollars of Federal bailout funds, out of which the CEO and the top 100 execs took millions of dollars of severance bonuses.

So where's the problem? :D

RancherBill
01-08-2009, 09:59 PM
Well, I can't quite buy that. I believe there are some (however few) elected officials who really do have a vocation to lead, and their constituents' interests at heart.

That is what I believe the Canadian and US governments did in coming up with a package to prevent a huge blow to an already weak economy.

The discussion has been framed as a "bailout" for the Big 3. This is incorrect on several points.

It is a bailout for GM. Chrysler tags along. Ford does not need any money. They wanted an available line of credit only if needed given the "credit crunch". Many companies are having trouble getting money.

The Big 3 are not the only ones losing money. "Toyota Expecting First Losses In 70 Years" (http://www.npr.org/templates/story/story.php?storyId=98591942). "Toyota's Production Cutbacks May Herald Need to Shutter Plants " (http://www.bloomberg.com/apps/news?pid=20601087&sid=a6L6cYOwn8oE&refer=home) I can put more links to European auto makers, but, the long and short of it is that this industry is being hit very hard by the fallout from sub-prime mortgages.

Ford has been focusing on restructuring for the last decade. They have in my mind made great advances. For example, in Canada, they closed the Mercury brand because it did not make sense to have dual brands selling the same car. They are not there, but, I don't think anybody is in the world.

Chrysler is the ugly sister. They almost went down in the 80s and Iaccoco got them back on track. When he left, they were rudderless. Mercedes got them for a steal. Mercedes realised the big problems within the company and virtually gave the company to Cerberus. All the money and engineering of Mercedes couldn't fix the problem with Chrysler and I honestly think that in a few years they should be put out of their misery. Cerberus has a ton of money and want some free money.

GM is the big problem. They are not a car company anymore they are a financial conglomerate. They have many many divisions. They are not a big car maker, they are a big financial company that owns many small car companies. They dole out money to the divisions, not based on need or strategy, but rather, financial criteria. As an example, their electric car program took a back seat to putting chrome on military trucks. Talk about shooting themselves in the strategic foot. The fix for GM cannot be mandated by the government. Shareholders have to give the board the mandate to dell off / close / whatever a number of their divisions.

Rant OFF.

lazlo
01-08-2009, 10:11 PM
That is what I believe the Canadian and US governments did in coming up with a package to prevent a huge blow to an already weak economy.

The discussion has been framed as a "bailout" for the Big 3. This is incorrect on several points.

Good point. According to the Congressional Budget Office, the US government made commitments worth a total of $8.5 trillion in the 2008 bailouts.

According to Bloomberg, that's more than all major U.S. wars (including the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, World War II, Korea, Vietnam, Iraq and Afghanistan, but not the invasion of Panama or the Kosovo War): which cost a total of $7.2 trillion in inflation-adjusted 2008 dollars.

http://www.cnsnews.com/public/content/article.aspx?RsrcID=40964

So the $25 billion we gave the big three in September, and the $20 billion we gave them in December, is just a drop in the bucket compared to the AIG, Bear Stearns, et al bailouts...

Lew Hartswick
01-08-2009, 10:32 PM
...but isnt it also a case of banking on next months money for this months bills?...I believe its called living on credit,and we all do it ....
Speak for yourself. I don't and havent (with the exception of the
first two houses and the first 4 cars I've owned) for 76 years
bought anything on credit.
That is what is wrong with this society. :-(
...lew...

oldtiffie
01-08-2009, 10:45 PM
A lot of this "USA debt" and spending, bail-outs etc. where deficits are involved seems to pre-suppose that countries and businesses (usually but not always) outside the US will keep buying those USA Government IOU's and not have the interest rates charges by those lenders increase.

This may not go on for long as some - China and Japan mainly - are both seriously considering reducing their current and future exposures to US debt as well as increasing the interest charged. This will have a huge "knock-on" effect.

The US - and others - can't expect to be endlessly borrowing (pillaging) other people's savings for-ever.

There are going to be some huge "re-thinks" as regards many Government "benefits" what with the debt and long-term interest payments, lower employment and profits etc. etc. The aging "Boomer" and other generations are going to be quite a problem.

Sooner or later, taxes are going to be raised.

It all has to be (re?)paid by someone sooner or later when the "Pied Piper comes to Town".

Some people in the (not too distant) future are not going to thank a lot us of here for the "baggage" we will have left them with.

I can't see what good quoting "Oh my gosh" big figures will do.

The parable is pretty well reflected in this discussion in that a lot seem to be just like those "Executives" in the OP's parable in that they are looking to maximise their own outcomes and minimise their own risks and exposures at the expense of others without really doing or saying much that will improve the over-all situation for most other people at all.

andy_b
01-08-2009, 10:45 PM
That's the government. The ONLY thing the Government cares for is the GOVERNMENT. Not us.

believe me, i fully understand the concept. :) too bad the average voter doesn't seem to have a clue.

and i like that comment about the shareholders making the companies answer to them. considering most companies' shares are held by large financial institutions, i believe the companies are doing EXACTLY what their shareholders want.

andy b.

oldtiffie
01-08-2009, 11:05 PM
You've got it Andy.

Some seem to think that Share-holder elections are like (most) political elections - one person, one vote irrespective of wealth.

Not so.

Its one share - one vote. So those with the most shares have the most votes and therefore most or all of the "say". Further, they can "proxy" their shares/votes to the "Chairman" (usually) either to vote as they direct to or at the Chairman's discretion as to whether he uses those votes or not and what he uses them to vote for (or against) so single or small share-holders are just a nuisance really.

So far as I am aware, a "Share-holders" motion, even if passed, is not necessarily "binding" on the Board who usually just "note" (and ignore) it.

Elections to Boards are usually a formality at Annual General Meetings as they are pre-arranged with major share-holders and are pretty well "stitched-up" (as are minor Share-holders) when it comes to votes and decisions.

Candidates for political election are "pre-selected" by "others" such as party Officials and "interested parties" (other politicians, Lobbyists, "donors") etc. so that its all pretty well "cut and dried" before you even open your ballot Paper. So who do you think that many politicians are beholden to when you go to see them for "help".

In business ands politics the "Golden Rule" applies:
"Thems what got the gold makes the Rules".

So - what's new? And do you think YOU will change it?

I sure do hope you are right.

Teenage_Machinist
01-08-2009, 11:12 PM
Let us have more discourse, let us have yet another voice from the better land across the sea!


I bet Ishamura has something to say about this.




While many a government leader cares for us, too few do. Those who aspire to great power cannot be trusted. We shall see a new rise of Lenin if my predictions fail not, and Rockefeller's Bane will awaken and bring down the mega Microsoft and GM.

sansbury
01-09-2009, 12:01 AM
That is what I believe the Canadian and US governments did in coming up with a package to prevent a huge blow to an already weak economy.

Well, I'm hoping the cure doesn't turn out to be worse than the disease. Right now that cure seems to be to shovel money from the people who made smart choices to those who made dumb ones. And Obama hasn't even gotten to put his stamp on it yet. I'm sure he has all kinds of ideas.


It is a bailout for GM. Chrysler tags along. Ford does not need any money. They wanted an available line of credit only if needed given the "credit crunch". Many companies are having trouble getting money.

It started with GM, but it will end with a lot more companies. If the government saves one car company from chapter 11, odds are they'll end up saving the others too eventually.


The Big 3 are not the only ones losing money.

No, but I don't see Toyota or BMW begging for my tax dollars to stay alive.


Shareholders have to give the board the mandate to sell off / close / whatever a number of their divisions.

I wonder if common shareholders have any meaningful power. Between the banks and institutions that hold senior and secured debt, and the UAW, it's not clear that the BoD gets to make too many real decisions on its own. That's why they need to get flushed through a real restructuring based on return to profitable operation. That's exactly what Chapter 11 is for.

I'll bet before the year is out we see them back with the begging bowl again. By the time we're done with this trillion-dollar stimulus the news won't even bother to cover the story involving anything less than $50-$100 billion. 5, 10 billion here and there won't be noticed.

RancherBill
01-09-2009, 12:18 AM
Good point. According to the Congressional Budget Office, the US government made commitments worth a total of $8.5 trillion in the 2008 bailouts.

According to Bloomberg, that's more than all major U.S. wars (including the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, World War II, Korea, Vietnam, Iraq and Afghanistan, but not the invasion of Panama or the Kosovo War): which cost a total of $7.2 trillion in inflation-adjusted 2008 dollars.

http://www.cnsnews.com/public/content/article.aspx?RsrcID=40964

So the $25 billion we gave the big three in September, and the $20 billion we gave them in December, is just a drop in the bucket compared to the AIG, Bear Stearns, et al bailouts...

You just don't get it.

The US was on the precipice of a depression that would make the the "Great Depression" look small in comparison. Read the posts in other threads about people being laid off. Imagine if GM went down, it would take Ford who is relatively healthy. In addition, it would severely hurt Toyota, Honda and others in North America that rely on the inter-related supply network. THen watch the banks that are already on death watch when they have huge numbers of defaults on mortgages and loans. The banks would become even tighter and it would pull some stars like Caterpillar down. There would be no government or company that could put the pieces back together again.

The world today is not the simple agrarian world of the thirties. It is so interrelated and complex that there is no way to prevent a meltdown. There are always comments about I have my financial house in order, but, the reality is that we live in a FIRE world. Tofler talked about the waves of development in the 70s. We are here today in what he called the service economy. FIRE run the world - Finance, Investment and Real Estate. Manufacturing are not the driving force in the economy. FIRE demands growth and manufacturing makes the stuff that FIRE wants. Manufacturing as King is a 30s concept.

We are here today because stupid, greedy, corrupt, politicians allowed the passage of relaxed financial rules to serve the interests of FIRE. It worked well until their scheme collapsed with the "sub prime" crisis. Then FIRE did it again with zooming oil prices.

The economy takes two giant hits and then the media plays up bringing you the latest news on all the crisis' and suddenly consumers run for cover.

The economy does not need a third strike or it'll be really out.

BTW I haven't checked my facts, but, you have probably made more money in your life time than the US governments spent in the first of it's existence - It's called inflation.

Rant OFF

lazlo
01-09-2009, 12:43 AM
You just don't get it.

The US was on the precipice of a depression that would make the the "Great Depression" look small in comparison. Read the posts in other threads about people being laid off.

The problem is that the taxpayer bailout money is not fixing the problem. It's going to executive bonuses and pork barrel.

The bailout package was a $400 Billion bailout, with $300 Billion in Pork added as a bi-partisan "sweetener" (what a freaking euphemism!) to get both houses of Congress to pass it.

Has there been even the slightest bit of improvement to the economy since October when the bill was passed? No. That (taxpayer) money, which was then issued as T-Bills (borrowed) from the Chinese, Russians, and Arabs, went into a black hole: the investment banks took the money, went to spas with it (seriously), paid themselves huge executive performance bonuses (cause they deserved it, you know!), and hoarded the rest. The credit system is still log-jammed.


BTW I haven't checked my facts, but, you have probably made more money in your life time than the US governments spent in the first of it's existence - It's called inflation.

Those figures from Bloomberg news service are corrected for inflation.

lazlo
01-09-2009, 12:49 AM
http://tinyurl.com/693u4f

It turns out that the nine banks about to be getting a total equity capital injection of $125 billion, courtesy of Phase I of The Bailout Plan, had reserved $108 billion during the first nine months of 2008 in order to pay for compensation and bonuses:

http://oversight.house.gov/documents/20081028142632.pdf

gmatov
01-09-2009, 01:39 AM
"No, but I don't see Toyota or BMW begging for my tax dollars to stay alive."

That is actually funny, if you delete BMW and look at all the money that MITI has put into the Japanese industry over the last 50 years or so.

Kairetsu and the like, the Japanese "miracle", put more money into building up their industry than any moneys we have put into manufacturing (Directly, not via tax breaks) except for the build ups for WWI and II. And of course, all the money we have given Halliburton and their ilk in the last 7 years.

Consumer Reports, of course, will never give any American car any points at all, ANY Japanese car is better than any USA made car, though there are at LEAST as many US made cars with about the same fuel economy and performance and reliability of the Japanese cars.

Repairs on a Japanese car? Go to a garage and see how many of them are being repaired, and the shell shocked look on the faces of the owners when they are handed their bills.

Why, if the Japanese mfgs don't have the "automatic" 1500 buck advantage, because of the "legacy cost" of all them retirees and dependents, are they not taking ALL the sales from the US makers. 30 thou American car SHOULD be a 28,500 Japanese car, just because of the "legacy cost" that they don't have to pay.

"Legacy cost" should be going wayyyy up after report in today's paper, that US corps are 409 BILLION bucks short in pension funding. Stock prices are up, as they have been for 5 or 6 years, they pocketed the monies that were part of the Autoworker's wage package. "We're WAY overfunded!!!"

Stock prices are down, as they have been for the last 6 months, they have become way underwater. There was a 60 billion surplus at the end of 2007. I'd figure that to be pension funds have lost 469 BILLION bucks in the last year.

Now, this is not your 401 that is underwater, like mine is. My "defined benefit pension" is secure. The funds were designated and paid INTO the Fund. Somehow, it seems that the USWA must have been less trusting of the Company than the UAW. "No, you WILL pay the funds INTO the Fund. NOT tell us that the stocks market is so high that you don't HAVE to put any more money into it."

Wonder what the car companies are claiming is their "legacy cost" per car, or per hour, now that their pension and benefit funds are so far underwater?

4 or 5 thou?

"Right now that cure seems to be to shovel money from the people who made smart choices to those who made dumb ones. And Obama hasn't even gotten to put his stamp on it yet. I'm sure he has all kinds of ideas."

Who made those "smart choices"? Them who decided to be born rich, or to get super rich and hire a hired gun, Bush and Co, to cut their taxes at the expense of the less well to do? Did you get any breaks from the Bush tax cuts?
If so, picayune, compared to those of the rich. 500,000 average for the top .1% of the population in this country. Bush tax cuts were estimated at 900 billion per year. On Day One, Obama COULD, possibly, rescind the, and we are already on A road to recovery.

Complete idiots are pushing for lowering even more the cap gains tax. They want NO Cap Gains tax. Millions trading stock, no tax. 15 thou full time at McD's, you pay taxes. Fair? Sure, to some of the Neocons here and at other sites.

"WEEEE don't wanna pay NOTHIIINNNGGGG!" You want to take all you can get, schools, police protection, roads, all of the infrastructure, but sure as hell, YOU shouldn't have to pay any part of THAT!! YOU'RE above all that.

I don't know if you know it, but even YOU guys are in for a world of hurtin'. This is going to get worse, for us peons than it is now. Million- and multimillionaires are not losing their homes. Low class assholes like us, with a mortgage are getting the shaft. (Actually, I have never had a mortgage, but my 3 kids do, and I fear for them. I paid every penny out of my pocket for every increment of the self building of my house.) I owe not one penny to anyone in the world, barring the tax collector, annually.

Cheers,

George

RancherBill
01-09-2009, 02:04 AM
Has there been even the slightest bit of improvement to the economy since October when the bill was passed? No. That (taxpayer) money, which was then issued as T-Bills (borrowed) from the Chinese, Russians, and Arabs, went into a black hole: the investment banks took the money, went to spas with it (seriously), paid themselves huge executive performance bonuses (cause they deserved it, you know!), and hoarded the rest. The credit system is still log-jammed.
.

Yes there has been an improvement. The disastrous slide has slowed.

I want to go back to the FIRE rant. The "I" in FIRE is what got us into this mess. STOCK BROKERS wanted to clean up their image and started calling themselves "Investment Bankers". Virtually, all banks got involved getting and investment banking division. It was the natural thing to do given the "big bucks" that they were generating. It was an industry where it was becoming less regulated. Schemes within schemes were devised and aided and abetted by stupid / incompetent / corrupt legislators. They let the stock brokers go wild. "We don need no stinkin regulations" was their cry we are Investment BANKERS.

This bag of manure that they created threatened to take down the cornerstones of the economy - the REAL BANKS. They were propped up, but, the ripples from this mess are still causing hardship.

It is disturbing that there are still bonuses to be paid. I honestly believe that this issue must be addressed in first in the criminal system and put some of these shylock stock brokers in jail and then to civilly recoup the losses.

They are two issues, the recovery from the damage they have wrought and secondly to ensure that they do not prosper from their actions.

The braying TV people like Lou Dobbs take an complex multifaceted issue and boil it down to something that everybody can hate for whatever their personal reason.

chief
01-09-2009, 03:33 AM
We can debate the causes all day but one fact remains. Obama and congress
aren't about to fix any of it. You can't spend your way out of debt. The whole bailout was a scam.
Let the big three go under, stop handing mortgages to people who can't repay and stop giving "tax rebates" to people who don't pay taxes.

oldtiffie
01-09-2009, 05:13 AM
That's probably the inevitable end Chief - but everybody is dodging it.

Add to that - reduce benefits, raise taxes, pay off debt. Unless and until debt, interest and budget shortfall (where expenditure exceeds income) are eliminated there will be be no real or quick solution.

I will be interested to see who "buys" that "Government paper" and at what terms and at what interest - or if it is all bought at all.

Its going to be a long hard road back - if we ever get back to where we were.

Or if we want to, need to or should do.

I can see the equivalent of the "Austerity Program" that the Brits (UK) and lots of Europe had imposed during and post WW2 coming on.
http://en.wikipedia.org/wiki/Austerity_regime

We only had a "small taste" of it here - and it was very "not nice".

hawgwrench
01-09-2009, 09:21 AM
Speak for yourself. I don't and havent (with the exception of the
first two houses and the first 4 cars I've owned) for 76 years
bought anything on credit.
That is what is wrong with this society. :-(
...lew...
thats essentially what I'm saying Lew...the whole country has based its existence on a "I'll make a payment next month" attitude...from businesses as large as GM all the way down to garden variety underlings like myself...seems as tho nobody remembers that a risk goes along with banking on tomorrow,because theres no promise of tomorrow.....now tomorrow and the day after are down the toilet,and next week/month aint looking real good...and for many folks the risk turned out bad...so it falls on ME,YOU and every other taxpayer to cover bad luck....at 76 years old,is it fair to ask you to come outta pocket to help me because of bad judgement or bad luck?...no...I dont think it is...you worked and bought your home and car,probably raised a family and paid YOUR dues then...you've done your time....if I extend myself why should resposibility fall in your lap if my luck turns bad?....theres no promise in the credit game and more importantly theres no safety net (not for me and you anyway)....we place our bet and roll our dice....seems the same rules dont apply if your business is big enough,then you can tap uncle sams shoulder and ask for a hand up(out)....

sansbury
01-09-2009, 12:08 PM
You just don't get it.
<snip>
We are here today because stupid, greedy, corrupt, politicians allowed the passage of relaxed financial rules to serve the interests of FIRE.
<snip>
The economy takes two giant hits and then the media plays up bringing you the latest news on all the crisis' and suddenly consumers run for cover.

The economy does not need a third strike or it'll be really out.


Those same stupid greedy corrupt politicians and financial brain surgeons who got us into this mess are the ones selling the need for the bailout. And let's not forget that GM has been a dog of a company for about twenty years.

I own a small business and not only have I not laid anyone off yet, I'm making one person an offer today and may do another later this month. Add up all the guys out there like me and we are doing a lot more for this economy than the Big 3. Where do I sign up for some magic money?

RancherBill
01-09-2009, 12:13 PM
You can't spend your way out of debt. The whole bailout was a scam.
Let the big three go under, stop handing mortgages to people who can't repay and stop giving "tax rebates" to people who don't pay taxes.

Nobody has ever said you can spend your way out of debt. You might have seen or heard something from all the "Babbling Commentators" on the internet or TV, but, nobody that has taken Economics 101 will say that.

They have said you can spend your way out of recession / depression. There then may be a statement that once things are growing that the debt can repaid.

barts
01-09-2009, 12:41 PM
Nobody has ever said you can spend your way out of debt. You might have seen or heard something from all the "Babbling Commentators" on the internet or TV, but, nobody that has taken Economics 101 will say that.

They have said you can spend your way out of recession / depression. There then may be a statement that once things are growing that the debt can repaid.

Another real tragedy is that our still-resident idiot put this country into severe debt by giving all his friends (his base) tax cuts and starting a completely unnecessary war. This doesn't make Obama's job any easier, since the government's role should be to save deficit spending for financial emergencies . Imagine if Bush had to come to the American taxpayer like a teenager asking for an allowance - "I want to invade Iraq; can I have a hundred billion dollars?" and "I want to stay in Iraq; can I have another 100 billion?". Bush is supposed to have an MBA, and have business experience... how many Boards of Directors would permit a project to continue that was as overbudget as Iraq?

You're right, Bill; we have to spend our way out of this. Attempts to institute fiscal discipline during a financial crisis is what made the Depression worse.

Liger Zero
01-09-2009, 01:07 PM
The only way out of this situation is to bring manufacturing back onshore.

My DTV converter consists of four chips on a board with about a dozen support items like capacitors and whatnot (all SMTs so I really can't tell), five connectors on the edge and a three-piece injection-molded case.

The case could be molded here in town at the injection molding company I used to work at. It's just thin ABS.

I know the electronics company can build boards far more complex than this and they do so routinely.

Assembly could be handled either there or at the molding company or outsourced to the ARC-group that does adults-with-disability work.

In my town ALONE we could be making converter boxes and giving Americans JOBS and creating GROWTH... yet I'm sure the company that designed this box never even considered making it here in the USA.

Tinkerer
01-09-2009, 01:37 PM
Bush is supposed to have an MBA, and have business experience... how many Boards of Directors would permit a project to continue that was as overbudget as Iraq?

You're right, Bill; we have to spend our way out of this. Attempts to institute fiscal discipline during a financial crisis is what made the Depression worse.
Hmmm Lehman's... Goldman Sacks... Merrill Lynch... WahMu... Country Wide. Just to name a few.

I do not and did not believe in all the handouts that have and will be given out. Just because a whole lot of folks wanted to live way above their means and the financial crooks that handed out the paper to fatten their phony books. For instance I was picking up some parts at the junk yard to keep my jeep rolling... as I was in the office the guy in there was betching about how he got phucked over on his house. " He say he bought a 30 thousand dollar home a few years back and had foreclosed on him and he was mad... cause he is still was on the hook for 90 grand... and it was the bankers fault. Seems after some time he got a letter about refinancing and he did... matter of fact he did it a few times in as many years... each time getting further in the hole... and has nothing to show for it and it was their fault. I piped up and said you contacted them signed the paper each time... I do not think they held a gun to your head. You spent the moneys lived it up and now it all their fault... ok :rolleyes:.

And now I can't get a decent interest rate on my nest egg. With all the NEW Handouts coming in the next four years how will it be better. We need to tighten the belt not throw it in the corner.

lazlo
01-09-2009, 02:06 PM
I do not and did not believe in all the handouts that have and will be given out. Just because a whole lot of folks wanted to live way above their means and the financial crooks that handed out the paper to fatten their phony books.

I agree whole-heartedly with that statement. I think it's completely irresponsible to give tax cuts to anyone when we've been spending money like a teenage Valley Girl. And to make matters worse, we're borrowing that money from countries that don't have our best interests in mind.

Bush's GAO (accounting) Chief of Staff, who just retired, said that our National Debt now works out to $450,000 per household (!)

Rush Limbaugh's rallying cry has been "you can't tax yourself into prosperity", but I'm suggesting just letting Bush's tax cuts expire, so everyone is just paying the normal tax tables, not increase taxes for the wealthy.

By the same reasoning, I don't think we can afford to give tax cuts to the middle and lower income brackets either.

But the part that saddens me most is that the combined income from all US taxpayer pales in comparison to the trillions in handouts congress is giving to the disgraced execs on Wall Street.

oldtiffie
01-09-2009, 06:10 PM
Looking backward and indulging in self-pity and retrospection is not going to achieve anything as regards getting any of that money back or penalising any who are are perceived to have done anything wrong.

Provided that what ever was done was either legal or not illegal, then any penalty will require retrospective legislation. That is not a good way to go as it opens too many opportunities for it to be used as sufficient, even if highly questionable, precedent for other things and other people perhaps with questionable or ulterior motives.

Once the Genie is out of the box or bottle there is no putting it back.

That you don't like something doesn't make it wrong or illegal. Similarly, that you don't like someone does not necessarily make him a criminal or a felon.

There are three options: going backward; standing still; and going forward. Please yourself as the solution in large part will be in your own attitude and in your own hands.

I don't know if we are at the beginning of the end or the end of the beginning or anywhere in between. I suspect that a lot of others will be no better informed nor wiser either.

But all the self-interest makes the perpetrators not much, if any, better than the Executives in the OP's parable.

lazlo
01-09-2009, 06:34 PM
Tiff, I'm guessing you don't follow American politics: the bailouts are continuing into 2009, and the second half of the $700 Billion TARP bailout from last September hasn't been allocated yet.

President Elect Obama is proposing to pull the second half of the TARP money from Wall Street, and re-route a good portion to forclosure relief. Obama is also proposing a new $800 Billion stimulus package that's being debated in Congress.

Bush's $400 Billion stimulus package didn't work -- the GAO says most people hoarded it, and less than 20% went back into the economy.

So a lot of folks, including myself, don't see how spending another $800 Billion on the Chinese credit card is going to fix our economy.

saltmine
01-09-2009, 06:42 PM
I agree with this... they'll most likely have a VP of Begging. :rolleyes:


Funny...The Japanese manufacturers literally copied EVERYTHING from the US Auto makers.

The Toyota Land cruiser is one good example. During World War two, the Japanese Army discovered an abandoned Chevrolet 1/2 ton bomb handling truck on one of the islands they captured. It was disassembled, crated, and shipped back to Japan. Toyota got the job of reverse engineering it, and soon came up with the "Land Cruiser" which the Japanese Army used for many years as a command/scout vehicle. Eventually it made it's way, virtually unchanged, into the US. The only noteworthy change they made, aside from a 12 volt electrical system, was to install a full pressure oiling system on the 'ol Tijuana three-port....Yeah, the Chevy six-cylinder had babbited engine bearings with oil dippers on all of the rods....a babbit pounder.

In the '60's Nissan Motor company (Datsun) brought a real nice sports car to our shores....Named the "Fair Lady" (typical Japanese) it was sold by Datsun dealers across the USA. Most people don't know that the majority of the car was a "nut-and-bolt" copy of the English Morris Garage Model B sports car (MGB). Even the Kihen carburators were a mirror copy of the Amal concentric carburators used on the MGB...Unfortunately, somewhere along the line, a blueprint got turned over or printed backward....The MGB had a spiral cut groove in the crankshaft designed to keep the oil inside the engine (no rear seal)...The Japanese copied it, machining the spiral cut backward....All of the early "Fair Ladies" leaked a prodigious amount of oil....Until somebody substituted an MG crankshaft in the Datsun block......no more oil leaks....

Of course, later on, they replaced the spiral groove with a proper oil seal.

The Chinese are great copycats, too. When the US Army left a couple of Caterpillar crawler tractors and a GMC 2 1/2 ton truck in China while building runways for B-29's, the chinese copied them...right down to the last nut and bolt...
Today, you can see brand new 1911 Caterpillar tractors rolling off the production line at the "Red Tractor Factory" in China.....They also manufacture a vaguely familiar 2 1/2 ton truck....similar to the Soviet "Ural" truck...

chief
01-09-2009, 06:52 PM
Bill/Barts,
I stand by my statement. The government produces nothing therefore it cannot turn a profit except by taxing people who in turn become poorer.
I think you may be spending too much time listening to Krugman.
FDR did not pull the economy out of the depression,ww2 did.
It's my money, I earned it, I have no obiligation to support welfare junkies,
illegal aliens, foreign government or a trade union. If ou beleive this attitude to be wrong please posted a copy of the cancelled check wher you have turned over you lifr savings to the government, or a statement from your employer stating that you have volunterly taken a pay cut with the understanding that the money to go to bailing out the government.
You are using the same logic that caused the subprime failure, throw money around and hope we get a return on it.

chief
01-09-2009, 07:03 PM
Lazlo,

"Rush Limbaugh's rallying cry has been "you can't tax yourself into prosperity", but I'm suggesting just letting Bush's tax cuts expire, so everyone is just paying the normal tax tables, not increase taxes for the wealthy."
I thinky need to do some serious research beyond HUFFPO and KOS. You also need to get over you class envy hang up.

http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes

http://www.prospect.org/cs/articles?article=tax_baselessness

http://www.dallasnews.com/sharedcontent/dws/bus/columnists/sburns/stories/DN-burns_04bus.ART.State.Edition1.4603045.html

http://www.walletpop.com/blog/2008/01/25/half-of-american-households-pay-no-income-taxes/

Weston Bye
01-09-2009, 07:26 PM
Seems that we were about to change over to DTV. Now I heard (from Limbaugh) that Obama is calling for a delay in the changeover. There is politics involved that I don't want to go into about Obama's call.

I do, however observe that the government, in their wisdom, is compelling us to scrap usable televisions and purchase new ones (or converter boxes) at precisely the time when many can't afford them. And none of them made here at home either. Our government is giving us a program that benefits anyone but us.

Teenage_Machinist
01-09-2009, 07:31 PM
So ended the glorious reign of one we have given many names. We have called him most recently Lenin, and he became corrupt and foul and his kingdom taken over by the cruel communist party which had also helped his perilous rise.

And so we cursed him, but with hope we do not curse his idea.


It was in fact the much sainted and cruely cursed FDR who did lift the US. Yet before our rise was yet complete the second cruel war came and then our parties became defined as they are now by the rich and poor against the middle and the destitute.

Marx was wrong and I curse his ideas except for the one simple and that is the endless struggle between the rich and the poor, and if the poor can act in their own interest selfishley they may gain their birthright as Humans among the Men Of the West, South, East, or Southeast which is to be on level ground and not crushed as pilliars or had rocks dropped on them.

oldtiffie
01-09-2009, 07:31 PM
Tiff, I'm guessing you don't follow American politics: the bailouts are continuing into 2009, and the second half of the $700 Billion TARP bailout from last September hasn't been allocated yet.

President Elect Obama is proposing to pull the second half of the TARP money from Wall Street, and re-route a good portion to forclosure relief. Obama is also proposing a new $800 Billion stimulus package that's being debated in Congress.

Bush's $400 Billion stimulus package didn't work -- the GAO says most people hoarded it, and less than 20% went back into the economy.

So a lot of folks, including myself, don't see how spending another $800 Billion on the Chinese credit card is going to fix our economy.

Wrong - almost.

I do read about US politics but whether I can follow them is another matter and I suspect that I am not alone in that regard.

Credit, in all of its manifestations, when it first became available to the general public was known here as - putting it on the never-never ie never paid off. It was seen than as what is known now as a revolving line of credit.

But credit, as with many things is a risk, and like all risk, needs to be well-managed.

Equally, credit comes at a cost and there will inevitably be a day of reckoning and reconciliation ie a settlement, liquidation or extensions under adverse conditions.

Throwing Government paper around like a drunken sailor (I have relevant experience there - lots) or a one-armed paper-hanger (imagine it) will end in tears and/or with a thud.

Its odd that all those who were on the merry-go-round thought it was fun day every day and that the merry-go-round and the music and good times would never end.

And end it did - for some.

Unless this largesse and cranking up the printing presses is brought to a stop, the whole shooting-match will come to a halt.

I suspect that some Governments are - if you like - Pay Day borrowers - who are borrowing from Financiers and Bankers that many may not be too pleased with. The Government is just another mortgagee - and guess who is going and standing as Guarantor and providing the collateral?

Yup - dead right.

I suspect that many (so-called) rights and benefits are going to be severely limited if not eliminated and that taxes willhave to rise to fund the borrowings at least.

At this stage, many borrowing countries are asset-rich and cash-poor. Those assets are looking poorer all the time.

I would think that the borrowing countries will be hard-put to put up trade barriers and tariffs against the lenders.

I would also think that the lender countries would be less than pleased too if the borrower countries tried to take or fund military action against the lender country or it allies or its national interests.

Also, money is a very powerful bait and all too easily addicted to. It is also a very powerful national strategic and tactical tool and weapon. Think about it.

Its a big hole we are in with a big digger - but we won't stop digging.

The bigger problem is that in the event that things do get better - comparatively but nor necessarily absolutely - that old habits will re-appear and be indulged in again in the same old ways.

sansbury
01-09-2009, 07:44 PM
Funny...The Japanese manufacturers literally copied EVERYTHING from the US Auto makers.

The US car industry didn't fall because the Japanese copied it, it fell because it got fat, dumb, and happy, and stopped doing things worth ripping off.

Old Henry Ford didn't invent the car either--he just figured out how to sell a whole lot more of them than anyone before ever imagined. There's still plenty of guys like him out there, but it's been decades since they worked in Detroit.

lazlo
01-09-2009, 08:27 PM
I do read about US politics but whether I can follow them is another matter and I suspect that I am not alone in that regard.

I didn't read most of that 'Tiff, but you keep whining that we're whining about the credit and investment bank crisis because there's nothing we can about it. But the crisis continues...

oldtiffie
01-09-2009, 09:01 PM
Lazlo.

I can't speak for anyone else, but I am sure not whining unless you are using a different lexicon to me.

Perhaps we should use the song of the seven dwarfs which goes (sort of):

..................

Hi ho, hi ho

I owe, I owe

Its off to work we go

I owe, I owe I owe

Hi ho, hi ho, hi ho
........................

wierdscience
01-09-2009, 09:22 PM
President Elect Obama is proposing to pull the second half of the TARP money from Wall Street, and re-route a good portion to forclosure relief.

About that foreclosure relief,I am wondering just who would get that relief.

Would it be the person who has almost paid off their mortage on their one house?

Or would it be like some people I know who aren't going to loose the house they live in,but rather the 5 or 6 spec houses they built hoping to get rich quick?

Rich Carlstedt
01-09-2009, 10:42 PM
You know guys, i wrote a long reason letter, and then just blew it away.
This is very simple.
It's called "Glass-Stegall"
After the great depression, Congress said they never wanted to ever endure a financial situation like that again and to guard against it, created the G-S act above that prevented banks from doing anything but banking.
Along comes Congress 10 years ago and repeals the law.
There in lay the seeds. we forgot a history lesson---on purpose !
So if you think Congress and Government can solve this--good luck

Our tax code sucks.
We allow companies to carry huge liabilities without reporting them (Pensions)
Guess what, the Government does the same thing. The government un-listed debt is horrendous. Here in Wisconsin we have Billions in State pension liabilty.
That was the joke a few years ago when some people were swindled into thinking the US budget was balanced. It wasn't, because no mention is made of future pension costs. The 1500 dollars a car is not even close to the real GM costs. Its just current bucks.
To make it fair, when a company gives you a pension, make it fully payable in that year, it other words, its a taxable event then.
You pay the taxes on your share NOW and the company has no future liabilty until next year when your do another "credit.
That way it's current and nobody owes anything, ahhhh but that means a autoworker will make over 100 K a year..can't have that

oldtiffie
01-09-2009, 11:18 PM
Same here Rich - more or less.

There is a lot of Government unfunded liability such as defined-benefit pensions and forward commitments to programs that extend beyond the current budget. They are a debt or commitment or obligation - call it what you will. They have not been budgeted in the current year against tax income, but against future anticipated tax revenue. Some of these are huge and the more so if you include all the levels of Government and Agencies that are similar and for which the tax-payer is liable.

A lot of this was suspect and regarded as smoke and mirrors in the good times. Its a whole lot worse now with revenues way down and getting lower and expenditures big and getting bigger.

It is very similar to the hidden and off-balance-sheet losses and obligations that much or Wall Street and a lot of others had.

There are some very courageous moves that need to be made very shortly or there is going to be a lot more unraveling.

Many people are not trained to respond responsibly when told "No" and having to go without.

It will get a whole lot worse as soon as people, even with normally good credit credentials, are refused credit or have it limited and interest rates are lifted as well. The banks and lenders will be a whole lot more conservative and a whole lot less entrepreneurial than they have been.

Similarly, business will be reluctant to extend or offer credit as freely as many have come to expect almost as a right. Business is more likely to reduce rather than extend terms of payment and they will chase debts or liquidate or take such other recourse as is available to them much quicker than they otherwise might have.

[Edit]
But as the OP topic a parable, I thought that I'd say that the "Good shepherd" might get a tough time lately and that everyone had streaked off to get in on the freebies at the site of the Loaves and Fishes.

But it seems that we have been cleaned out - again - by the Prodigal Son/s who have been wolves in sheeps clothing etc. etc. and we've been "taken" again - but this time it seems to be all our own work.

Perhaps instead of parables we need miracles - big ones and lots of them pretty damn quick.

And here endeth the Lesson.

[End edit]

RancherBill
01-09-2009, 11:37 PM
I stand by my statement. The government produces nothing therefore it cannot turn a profit except by taxing people who in turn become poorer
I don't think anybody has said the government makes a profit.

It's my money, I earned it, I have no obiligation to support welfare junkies, illegal aliens, foreign government or a trade union. If ou beleive this attitude to be wrong please posted a copy of the cancelled check wher you have turned over you lifr savings to the government, or a statement from your employer stating that you have volunterly taken a pay cut with the understanding that the money to go to bailing out the government.
You are using the same logic that caused the subprime failure, throw money around and hope we get a return on it.

I find this kind of argument medieval. The patient is sick and what we need is a good blood letting. The world has progressed and there are antibiotics that work better.

Hey let's go grab some torches and burn the castle down. Let's not worry about the villagers.

The world has changed in many ways.

barts
01-10-2009, 02:12 AM
So a lot of folks, including myself, don't see how spending another $800 Billion on the Chinese credit card is going to fix our economy.

The government needs to spend money to projects that put people to work, and that will help the country make money when private investment starts up again.

I'd like to see us push for higher speed broadband (I live in Silicon Valley; why can't I get 50 Mb to my house?), high speed rail, making solar thermal plants in the southwest, rebuilding the crumbling national parks, restoring wetlands, etc.

When people are out of work, they need a job, or at least new job training, not handouts.

barts
01-10-2009, 02:41 AM
Bill/Barts,
I stand by my statement. The government produces nothing therefore it cannot turn a profit except by taxing people who in turn become poorer.
I think you may be spending too much time listening to Krugman.
FDR did not pull the economy out of the depression,ww2 did.
It's my money, I earned it, I have no obiligation to support welfare junkies,
illegal aliens, foreign government or a trade union. If ou beleive this attitude to be wrong please posted a copy of the cancelled check wher you have turned over you lifr savings to the government, or a statement from your employer stating that you have volunterly taken a pay cut with the understanding that the money to go to bailing out the government.


The government is us, chief. It's not some shapeless boogeyman. If FDR hadn't instituted the New Deal, I don't think democracy would have survived in this country; we'd have had a rebellion at 40+% unemployment and no matter who won, the Allies would have had a hard time winning WW2.


... welfare junkies, illegal aliens, foreign government or a trade union...


I realize that a lot of people don't like to support "those kinds of people"; but that's just parroting the lines of those that want to pit the less fortunate against each other while they laugh all the way to the bank. Remember, the goal of the Republican party is to protect the privileged (their true base), and when you hear the Southern senators trying to kill off the UAW, just remember who brought you the minimum wage, the forty hour week, weekends and all the other things so many people take for granted.
This country is about a fair shake, and a fair deal - not "I got mine jack..."

I pay a lot of taxes, Bill, and the only ones I really begrudge are those that support our idiot in chief's Iraq adventure. I sure don't mind helping our less fortunate neighbors out; I figure that since I'm better off I can lift a bit more of the load. I figure that what comes around goes around... and when you see what's happened to income distribution since the 1970s, you realize that it's time for those that have made out like bandits over the last 30 years to put their collective financial shoulders to the wheel, and help rebuild this country, and in so doing, put a lot of people back to work. We all benefit from roads, airports, trains, the Internet, all the infrastructure that makes modern civilization and commerce possible.

Government is us. If you don't think government can help, well, that's saying we cannot help ourselves.... of course, if you'd only learned about government from the Bungler in Chief, I can't really blame you for being skeptical.

- Bart

lazlo
01-10-2009, 08:48 AM
About that foreclosure relief,I am wondering just who would get that relief.

The way I understand the foreclosure relief, it's an attempt to prop-up the remaining balloon mortgages that haven't foreclosed yet.

I don't really like either alternative: we can either spend the remaining $350 Billion paying the assholes who drove Wall Street (and the World Economy) into the toilet with fraudulent mortgage-back securities, or we can spend the $350 billion paying the idiots who took out mortgages they couldn't afford.

Neither is "fair" to the taxpayers who are responsible about their finances, but from a practical standpoint, anything we can do to staunch the foreclosures (which kills the real estate market in the surround areas) is probably a better strategy.

lazlo
01-10-2009, 08:55 AM
After the great depression, Congress said they never wanted to ever endure a financial situation like that again and to guard against it, created the G-S act above that prevented banks from doing anything but banking.

Along comes Congress 10 years ago and repeals the law.

There in lay the seeds. we forgot a history lesson---on purpose !
So if you think Congress and Government can solve this--good luck

Our tax code sucks.

We allow companies to carry huge liabilities without reporting them (Pensions)
Guess what, the Government does the same thing. The government un-listed debt is horrendous. Here in Wisconsin we have Billions in State pension liabilty.
That was the joke a few years ago when some people were swindled into thinking the US budget was balanced. It wasn't, because no mention is made of future pension costs.

Rick, well said!

If you're not familiar with the G-S act Rick is describing, it's the "Credit Default Swaps" that JTiers mentioned awhile back that was really the core problem on this whole dive: it's literally off-track betting on mortgage securities, but it's not regulated. It amplified the 1929 stock market crash, and was banned as a form of gambling for nearly 100 years. For some reason, Greenspan campaigned to legalize it 10 years ago, and Lehman Brothers, AIG, et al became "bookies", trafficking in these off-track bets as to whether a particular mortgage fund would default. The problem was, since it's unregulated, when the "winners" betting that the mortgage securities would default, the "bookies" weren't required to hold enough cash to cover all the bets, to make matters worse, the bookies took out bets on their own securities.

We're living the consequences now...

RancherBill
01-10-2009, 09:27 AM
It's called "Glass-Stegall"
After the great depression, Congress said they never wanted to ever endure a financial situation like that again and to guard against it, created the G-S act above that prevented banks from doing anything but banking.
Along comes Congress 10 years ago and repeals the law.
There in lay the seeds. we forgot a history lesson---on purpose !


Exactly,

The stock brokers, oops Investment Bankers, went to the stupid / incompetent / corrupt politicians and had them repeal these laws that were an impediment to fast and furious questionable investment banking.

"We don't need no stinking regulations - we're investment bankers! "

J Tiers
01-10-2009, 01:08 PM
The only way out of this situation is to bring manufacturing back onshore.

My DTV converter consists of four chips on a board with about a dozen support items like capacitors and whatnot (all SMTs so I really can't tell), five connectors on the edge and a three-piece injection-molded case.

The case could be molded here in town at the injection molding company I used to work at. It's just thin ABS.

I know the electronics company can build boards far more complex than this and they do so routinely.

Assembly could be handled either there or at the molding company or outsourced to the ARC-group that does adults-with-disability work.

In my town ALONE we could be making converter boxes and giving Americans JOBS and creating GROWTH... yet I'm sure the company that designed this box never even considered making it here in the USA.

That last line says it all. It is almost CERTAINLY true.

And the reason is several-fold.

1) In china you can buy all the parts AND pay for assembly, for less money than the parts cost here. Heck, the MATERIALS until recently cost more here than the entire product did in china.

2) "everyone knows" the above.

3) The manufacturers KNEW that if they made it here at higher cost, the other fine US citizens who hate the US and build their products elsewhere would clean their clock... There wouldn't be but a dozen of theirs sold, and that would be after the going-out-of-business sale, after Big lots bought the distressed merchandise and put them out at steep discount.


This whole economic collapse deal is purely a bit pre-mature. it may be WONDERFUL that it has happened now, or it may stink. We don't know yet.

We absolutely cannot allow GM et al to go bust. The total damage from that would essentially mean manufacturing in the US would cease. Suppliers, including steel, tooling, chemicals, etc would not be able to continue.

This is ALREADY happening, as auto parts makers are dropping like flies with a DOWNTURN, not a complete failure and cessation of auto manufacturng.

it is already hurting the FOREIGN manufacturers with plants here..... They can't get US made parts, the suppliers are folding left and right as it is. So what about when they close the plants and go back to Japan? Ford won't survice it eitehr, they will be dragged down, OR they will be forced to go to china and close plants here.

A sweeping statement that "we should let the big 3 fold, they deserve it" does not see the realities of how fast YOU would be fired in that eventuality.

The economic collapse was going to happen anyway, since you cannot vacuum money out of a nation forever without eventually sucking up the last dollar bill.

As another point..... we should not spend one dime on this big infrastructure deal..... we shouldn't have spent anything on the big banks either.

The government does not have the money. it would be different if the government was solidly in the black with reserves..... But it's already in hock, and simply cannot afford to pay anyone anything. We'll have to dig out on our own.

The government, which is supposed to be US, not a disembodied entity, cannot bail out everyone. At that point we could just keep our money, istead of everyone putting in $10 and getting back $6.

The entire principle is to have SOME who have money, and transfer some of that via taxing, to those who are destitute. The rest of taxes is the cost of having a government, supposedly.

If EVERYONE needs a bailout, where is the SOURCE of money?

Yah, the rich...... The rich generally never give a dime out to others, they are too interested in getting more by some fancy scheme.... we've HAD the fancy schemes, and don't need any more.

Printing?.... That doesn't exactly enhance the value, it just spreads the same value out over more pieces of paper... each one is worth proportionally less.

So long as we don't MAKE anything here but drug addicts, gangstas, lawsuits, restrictive covenants, and more restrictive laws, we cannot survive and had better be taken over by Venezuela.