Counterterrorism in India: Inept, Corrupt, Callous

Flunking the Intelligence Test

Excerpts:

The hostage takers in Mumbai didn't need to wonder how large an armed rescue team the Indian government was sending, or when to anticipate its arrival. They had only to click on the nearest TV set, and there was the federal home minister, Shivraj Patil, obliviously telling viewers that 200 commandos had taken off on the two-hour flight from New Delhi at 2:30 a.m.

...

About an hour before the shooting started, villagers on the shore in South Mumbai saw a group of 10 young strangers climbing out of an inflatable raft. The incident was reported to local police, who did nothing.

...

[at an attacked hospital]: The state's antiterrorism chief and two other top police officials arrived at the scene with a posse of cops who were armed with antiquated .303 rifles. Seemingly unaware of any danger, the three men stood unprotected on the firing line, where they were quickly mowed down by sudden bursts of automatic gunfire.

...

Horrified police officers in Mumbai saw their vehicles hijacked by terrorists who showed intimate knowledge of the city's streets and the layouts of the huge hotels they captured. In contrast, the police displayed no familiarity with the layouts of those buildings. The commandos who flew in from New Delhi had to waste precious time getting hotel staff members to sketch out the layouts of their workplaces.

...
Today MAC [Multi-Agency Center] consists of a tiny staff using a bare-bones computer system with no real-time links to state police or other intelligence sources.

Comment: Many lessons to be learned from Mumbia attack!

Tesla: Federal funds?

Only the Rich Can Afford It. Should Taxpayers Back It?

Excerpts:

THE Tesla Roadster is an electric car that goes fast, looks sensational and excites envy. The seductive appearance, however, obscures some inconvenient truths: its all-electric technology remains woefully immature and don’t-even-ask expensive. If enough billionaires step forward to inject additional capital to keep the doors of its manufacturer, Tesla Motors, open, I’m happy for all parties.

If investors pass up the opportunity, however, why should taxpayers fork over the capital that Tesla needs? The Roadster is not much more than a functioning concept car that sells for $109,000. The company is requesting $400 million in low-interest federal loans as part of the $25 billion loan package for the auto industry passed by Congress last year.

The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act? Can you conceive any way that federal dollars could be put at greater risk — and for no equity in return, keep in mind — to benefit fewer people?

Tesla Motors, a privately held company based in San Carlos, Calif., has spent almost all of the $145 million in capital it has raised to date. It says it will soon receive another round of $40 million from its private investors to sustain operations.

In the start-up ecosystem of Silicon Valley these would be respectably large numbers, but in the automotive world, fully developing an entirely new line of technology can easily run $1 billion. That is what General Motors’ first attempt at an electric vehicle, the EV1, was estimated to have cost to develop in the 1990s.

Tesla says it cannot move forward on plans to bring out a second-generation car, a less expensive sedan seating five, without federal funds.

...

...for Tesla, batteries are based on chemistry and have nothing to do with Moore’s Law. Lawrence H. Dubois, chief technology officer at ATMI, a semiconductor industry supplier, said, “With batteries, you can’t just squeeze more energy into a smaller and smaller space the way you can squeeze more transistors.”

Elon Musk, the chief executive of Tesla, said his company would benefit from what he called “a weak Moore’s Law,” referring to the 8 percent annual improvements in the price performance of lithium-ion batteries. But 8 percent, compounded, would bring too few benefits, too late to Tesla: it would take nine years to halve the price of its battery pack.

Comment: My answer to this question: "Only the Rich Can Afford It. Should Taxpayers Back It?". NO! The way to raise capital is through IPO's, stock offerings, venture capital, bonds, and commercial loans.

Mumbai: Timeline of NSG response

Comment: NSG = National Security Guard

Why did NSG take 9 hrs to get there?

Excerpt:

By the time they start their operation, it is 7am — in other words, nine-and-a-half hours after the terror strike.

Many lives might have been saved had this delay not happened. The obvious question is why is the NSG stationed only in Delhi. When Indian cities are vulnerable to terror attacks, why is there no commando force like the NSG, or its units, in every city?

Timeline Emerges Amid Security Changes in India

Excerpt:

• 9:30 p.m. Wednesday: The terrorists strike Mumbai. Chief Minister Vilasrao Deshmukh is in Kerala. He is briefed about the attack. By the time he grasps the enormity of the situation, 90 minutes have gone by.
  
• 11 p.m.: Mr. Deshmukh calls Home Minister Shivraj Patil - who has now resigned from his post - and asks for NSG commandos. “How many men?” Patil asks. “200,” Mr. Deshmukh says. Mr. Patil calls NSG chief J.K. Dutt and tells him to send 200 battle-ready commandos to Mumbai.
  
• 11 p.m. to 2 a.m. Thursday: Most of the NSG men have to be roused from sleep. They don their uniforms, strap on safety gear and collect ammo and firearms. It is discovered that the plane that can take 200 men, the IL 76, is not in Delhi but Chandigarh. Someone wakes up the IL 76 pilot, the plane refueled. It finally arrives in Delhi.
  
• 5 a.m. The commandos land at Mumbai airport. By the time they board the waiting buses, it is 5:25 a.m.
  
• 6 a.m. The buses reach the designated place in south Mumbai where the commandos are briefed, divided into different groups and sent out on their mission.
  
• 7 a.m. They start their operation about nine-and-a-half hours after the terror strike.
  

Comment: This seems like a slow response!

Is Pakistan is the root of the problem?

Patrick Cockburn: Pakistan is the root of the problem

Excerpt:

It is self-defeating hypocrisy for the West to lecture the Indian government now about not over-reacting and not automatically blaming the Pakistani government or some part of its security apparatus for Mumbai. The way in which the Pakistani military has allowed Kashmiri and Pakistani militants free range in Pakistan created the milieu from which the attacks this week came. It may be that the monster the ISI created is no long under its control, but it is ultimately responsible for what has happened.

The real political background to Mumbai is succinctly summed up by Ahmed Rashid in his excellent book Descent into Chaos: How the War against Islamic Extremism Is Being Lost in Pakistan, Afghanistan and Central Asia. In Pakistan, he writes, "a nuclear-armed military and an intelligence service that have sponsored Islamic extremism as an intrinsic part of their foreign policy for nearly four decades have found it extremely difficult to give up their self-destructive and double-dealing policies".

Comment: I'm not sure the answer to the question is yes. I invite comments.

Wish I had a gun rather than a camera

Mumbai photographer: I wish I'd had a gun, not a camera. Armed police would not fire back

Excerpts:

The gunmen were terrifyingly professional, making sure at least one of them was able to fire their rifle while the other reloaded. By the time he managed to capture the killer on camera, Mr D'Souza had already seen two gunmen calmly stroll across the station concourse shooting both civilians and policemen, many of whom, he said, were armed but did not fire back. "I first saw the gunmen outside the station," Mr D'Souza said. "With their rucksacks and Western clothes they looked like backpackers, not terrorists, but they were very heavily armed and clearly knew how to use their rifles.

..

[there] were the masses of armed police hiding in the area who simply refused to shoot back. "There were armed policemen hiding all around the station but none of them did anything," he said. "At one point, I ran up to them and told them to use their weapons. I said, 'Shoot them, they're sitting ducks!' but they just didn't shoot back."

As the gunmen fired at policemen taking cover across the street, Mr D'Souza realised a train was pulling into the station unaware of the horror within. "I couldn't believe it. We rushed to the platform and told everyone to head towards the back of the station. Those who were older and couldn't run, we told them to stay put."

The militants returned inside the station and headed towards a rear exit towards Chowpatty Beach. Mr D'Souza added: "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."

Comment: View article for photos of killers.

GM: Pre-packaged Bankruptcy option

Pre-packaged Bankruptcy Is GM's Only Option

Excerpt:

... a traditional Chapter 11 filing could quickly slide into Chapter 7 bankruptcy if GM (or Chrysler or Ford (F) a few months down the road) can't find anyone to lend them the money to keep operations running. That's why Barron's advocates a "pre-packaged bankruptcy" - in which a company enters bankruptcy protection with almost all of its financing in place - in this case backed by the government for a year or so. "In that time, and under the protection of the court, GM could begin to restructure its business with a much higher probability of long-term survival," Mark Bane, co-head of bankruptcy operations at the law firm of Ropes & Gray, says.

Comment: I've also heard this called a GSB (Government Sponsored Bankruptcy).

UGA, Lock in Low Gas Prices

Lock in Low Gas Prices

Excerpt:

Oil has declined nearly 66% from its peak closing price of $145.29 on July 3rd to its closing low of $49.62 on November 20th. With gas prices down significantly since then, drivers no longer dread filling up at the pumps like they did just a couple of months ago.

We recently came across a good article highlighting a simple way to lock in low gas prices. The US Gasoline Fund (UGA) is an ETF that tracks the price of gasoline futures in the US. If you want to go to the pump and not even care what gas prices are, you can buy the same dollar amount of UGA that you would normally spend on gas each year based on the current price of gas. If gas prices go up and you're paying more at the pump, your UGA will also be going up by a similar amount. If gas prices go down, your UGA will also go down, but you'll be paying less at the pump as well.

Comment: Yahoo Finance: UGA.

From quirky mental accounting to real-income living

The Challenge of Living Within One’s Means

Excerpt:

...the shift to real-income living demands not only new spending habits, but also a wholly different way of thinking about money.

“Every time we ended up overextended, we used to refinance our house,” Ms. Jones, a software engineer in Scotts Valley, Calif., acknowledged. “The house would creep up in value, and every five years or so we’d take out another $50,000, and pay off whatever we needed to.”

She and her husband never felt that they were getting into debt, Ms. Jones said, because a kind of magical thinking prevailed: “You owed more, but then your house was worth more,” she said. “So you didn’t really have debt because you could always sell your house — and poof! — all previous sins would be erased.”

For years, the Joneses sensed that something was wrong. Their expenses kept spiraling out of control and their checking account was chronically overdrawn. But as the economy began to tremble — and the couple realized that they wanted to right their finances before their 11-year-old daughter entered college — they decided to change course. “There was this constant, underlying anxiety about money,” Ms. Jones said. “It was ridiculous — I knew we should be able to live on what we were earning.”

But switching to a lifestyle based on your actual income is more challenging than it seems, especially if you’ve been relying on credit as an income supplement. The maxim to “tighten your belt” implies that self-discipline is the solution, but our financial brains aren’t so easily tamed.

Many people rely on a quirky system of mental accounting when making financial choices, according to economists who study spending. If you saved $30 when buying a sweater, for example, you might talk yourself into buying shoes, with the rationale that you have an extra $30.

The use of credit tends to make people’s financial reasoning even more flawed, according to Dilip Soman, a professor of marketing at the Rotman School of Management, University of Toronto. “I find that people who are used to paying for expenses by credit card tend to create an ad hoc ‘credit card bill’ mental account,” Professor Soman said in an e-mail message.

“If the credit account vanishes, people are now forced to make cuts into their lifestyle, because their budgeted spending money supply has now shrunk,” he said, even though that supply shouldn’t have been included in their accounting from the start.

Comment: Something my parent's generation did naturally - "real-income living"

Shopping frenzy

Wal-Mart Employee Trampled to Death by Customers

Excerpt:

A Wal-Mart employee in suburban New York was trampled to death by a crush of shoppers who tore down the front doors and thronged into the store early Friday morning, turning the annual rite of post-Thanksgiving bargain hunting into a Hobbesian frenzy.

At 4:55 a.m., just five minutes before the doors were set to open, a crowd of 2,000 anxious shoppers started pushing, shoving and piling against the locked sliding glass doors of the Wal-Mart in Valley Stream, N.Y., Nassau County police said. The shoppers broke the doors off their hinges and surged in, toppling a 34-year-old temporary employee who had been waiting with other workers in the store’s entryway.

People did not stop to help the employee as he lay on the ground, and they pushed against other Wal-Mart workers who were trying to aid the man. The crowd kept running into the store even after the police arrived, jostling and pushing officers who were trying to perform CPR, the police said.

“They were like a stampede,” said Nassau Det. Lt. Michael Fleming. “Hundreds of people walked past him, over him or around him.”

The employee, who was not identified, was taken from the Wal-Mart to nearby Franklin Hospital, where he was pronounced dead at 6:03 a.m., the police said. His exact cause of death has not been determined. The police said that three other shoppers were injured and a 28-year-old woman who was eight months pregnant was taken to the hospital for observation.

One shopper, Kimberly Cribbs, said she was standing near the back of the crowd at around 5 a.m. on Friday when people started rushing into the store. She said several people were knocked to the ground, and parents had to grab their children by the hand to keep them from being caught in the crush.

Comment: They kept storming in even as people gave aid! Hard to believe.

Drunkenness leads to "humiliation afterward"

Comment: I don't post this to be sensational, but because of: 1.) The Minneapolis connection (where I live and where this is in the news) and 2.) because it illustrates how stupid drunkenness can make a person.

Hawk fan says bathroom sex scandal "ruined my life"

Excerpt:

Feldman, who describes herself as a light drinker, drank wine at the home of family friends before the football game.

She said she doesn’t remember how much she drank, but the party’s hosts refilled her glass each time it was low “so I’m sure I drank a lot.”

Feldman said her husband later told her he’d tried to talk her out of the game because she was intoxicated.

“He said I didn’t realize it was that bad,” she said.

Feldman said her husband accompanied her to the game, but their friends stayed home.

She said she remembers sitting in the stands one moment and the next “being slammed around by a cop and screaming.”

“Apparently I was panicked and very uncooperative,” she said.

Feldman said she “ran away” from her husband the Metrodome after the incident.

Comment: Apparently her husband "has been supportive". Sad story and definitely not funny.

Updated: Woman in Metrodome sex incident says she was victim

While police say a high-profile indecent conduct case in the Minneapolis Metrodome Saturday is closed, a Carroll woman involved in it told the Daily Times Herald she believes she was a victim of foul play rather than a willing collaborator.

Lois K. Feldman, 38, of Carroll, and Ross M. Walsh, 26, of Linden, were ticketed for indecent conduct after they were reportedly caught engaging in sexual activity in a Metrodome men's restroom handicapped stall during the University of Minnesota Golden Gophers game with the Iowa Hawkeyes. More than a dozen people in the restroom were cheering Feldman and Walsh by the time authorities arrived, a University of Minnesota Police report says.

Feldman acknowledged drinking heavily before the game and says she doesn't remember being in the bathroom.

"I would never ever do that," Feldman said. "My kids are my life. I go to church every Sunday."

Information obtained in police reports and during an interview with University of Minnesota Police Chief Greg Hestness revealed no suggestion or evidence that the incident was anything but consensual on the part of both Walsh and Feldman.

But Feldman tells the Daily Times Herald she may have been drugged or otherwise victimized.

"Everybody thinks something got put in my drink," Feldman said.

Baking, banking and two big lies

Baking, banking and two big lies


Comment: No excerpts but worthwhile read.

The "Deccan Mujahedeen" - Who are they?

Sophisticated Attacks, but Al Qaeda Link Disputed

Excerpts:

This time, the assault was “uniquely disturbing”, said Sajjan Gohel, a security expert in London, because it seemed directed at foreigners, involved hostage-taking and was aimed at multiple “soft, symbolic targets.” The attacks “aimed to create maximum terror and human carnage and damage the economy,” he said in a telephone interview.

...

An e-mail message to Indian media outlets that claimed responsibility for the bloody attacks in Mumbai on Wednesday night said the militants were from the Deccan Mujahedeen. Almost universally, experts and intelligence officials said that name was unknown.

Deccan is a neighborhood of the Indian city of Hyderabad. The word also describes the middle and south of India, which is dominated by the Deccan Plateau. Mujahedeen is the commonly used Arabic word for holy fighters. But the combination of the two, said Mr. Gohel in London, is a “front name. This group is nonexistent.”

Some global terrorism experts with experience in South Asia said that, based on the tactics used in the attacks, the group was probably not linked to Al Qaeda — although that assertion was challenged by other analysts.

“It’s even unclear whether it’s a real group or not,” said Bruce Hoffman, a professor at the School of Foreign Service at Georgetown University and the author of the book “Inside Terrorism.”

That theory was echoed by an Indian security official who spoke in return for anonymity because he was not authorized to be identified and who said the name suggested ties to a group called Indian Mujahedeen, which has been implicated in a string of bombing attacks in India killing around 200 people this year alone.

On Sept. 15, an e-mail published in Indian newspapers and said to have been sent by representatives of Indian Muhajedeen threatened potential “deadly attacks” in Mumbai. The message warned counter-terrorism officials in the city that “you are already on our hit-list and this time very, very seriously.”

Several high-ranking law enforcement officials, including the chief of the antiterrorism squad and a commissioner of police, were reported killed.

Comment: Interesting - possible link to "Pakistani intelligence". I'm personally surprised that India and Pakistan haven't gone nuclear on each other. A CNN analyst commented this morning that this "lands like a dull thud" on the desk of President-Elect Obama.

Proud people don't say thanks

3 Truths to Induce Thanksgiving

Excerpt:

Proud people can't be grateful. So here are three very humbling truths for the sake of your thankfulness.

1. Nature teaches us that an infinitely marvelous, eternally powerful being created us and all we have. Therefore we are his creatures. He owns us. Our life, our breath, and everything we have is a gift. Our duty is simply to be thankful to him from our heart and to cherish his glory.
   
2. All of us have fallen short of this duty. We have not consistently prized the diamond of God's glory with an affection anywhere near its value. Instead, we've exchanged it again and again for the cracked marbles that in our great "wisdom" we have determined are more valuable.
   
3. God, in his great mercy, sent his Son to suffer the judgment of people who are broken and contrite in spirit and who trust in him.
   

Proud people don't say thanks, but people who believe these three truths do. We are utterly dependent; we are depraved sinners; and we are redeemed and forgiven through contrite faith.

If this penetrates our hearts today, we will be emptied of pride and filled with thankfulness to God.

Comment: My heart is burdened today by the violence in Mumbai. I'm thankful for a sovereign God who sent His Son, my Savior!

Polar bears unmotivated by tawdry marketing gimmick

Zoo solves mystery of celibate polar bears

Excerpt:

Puzzled zookeepers in northern Japan have discovered the reason why their attempts to mate two polar bears kept failing: Both are female.

Comment: I had that problem with hamsters once. But then again I was 9! (My own feeble attempt to draw traffic to my blog by a tawdry marketing gimmick!)

Urbano Colectivo

Inbursa buys up to $150m in Citi shares

Excerpt:

Inbursa, the bank owned by Carlos Slim, the Mexican billionaire, has bought up to $150m in Citigroup shares over the past week as the US financial group’s stock plunged in value.

Inbursa, Mexico’s sixth largest bank, began buying the stock as prices fell on Wednesday last week, and continued the next day when they punctured the $5 mark. The bank’s brokerage arm is believed to have bought as many as 29m Citigroup shares for about $150m.

Comment: "Urbano Colectivo" is my translation of CitiGroup into Spanish

Huguenots: Long before the Pilgrims

A French Connection

Excerpt:

TO commemorate the arrival of the first pilgrims to America’s shores, a June date would be far more appropriate, accompanied perhaps by coq au vin and a nice Bordeaux. After all, the first European arrivals seeking religious freedom in the “New World” were French. And they beat their English counterparts by 50 years. That French settlers bested the Mayflower Pilgrims may surprise Americans raised on our foundational myth, but the record is clear.

Long before the Pilgrims sailed in 1620, another group of dissident Christians sought a haven in which to worship freely. These French Calvinists, or Huguenots, hoped to escape the sectarian fighting between Catholics and Protestants that had bloodied France since 1560.

Landing in balmy Florida in June of 1564, at what a French explorer had earlier named the River of May (now the St. Johns River near Jacksonville), the French émigrés promptly held a service of “thanksgiving.” Carrying the seeds of a new colony, they also brought cannons to fortify the small, wooden enclosure they named Fort Caroline, in honor of their king, Charles IX.

In short order, these French pilgrims built houses, a mill and bakery, and apparently even managed to press some grapes into a few casks of wine. At first, relationships with the local Timucuans were friendly, and some of the French settlers took native wives and soon acquired the habit of smoking a certain local “herb.” Food, wine, women — and tobacco by the sea, no less. A veritable Gallic paradise.

Except, that is, to the Spanish, who had other visions for the New World. In 1565, King Philip II of Spain issued orders to “hang and burn the Lutherans” (then a Spanish catchall term for Protestants) and dispatched Adm. Pedro Menéndez to wipe out these French heretics who had taken up residence on land claimed by the Spanish — and who also had an annoying habit of attacking Spanish treasure ships as they sailed by.

Leading this holy war with a crusader’s fervor, Menéndez established St. Augustine and ordered what local boosters claim is the first parish Mass celebrated in the future United States. Then he engineered a murderous assault on Fort Caroline, in which most of the French settlers were massacred. Menéndez had many of the survivors strung up under a sign that read, “I do this not as to Frenchmen but as to heretics.” A few weeks later, he ordered the execution of more than 300 French shipwreck survivors at a site just south of St. Augustine, now marked by an inconspicuous national monument called Fort Matanzas, from the Spanish word for “slaughters.”

Comment: The entire Op-Ed piece from the NYTimes is worthwhile. Further details available here and here.

Encouraging consumers to be deeper into debt

The Worst Is Yet To Come: Anonymous Banker Weighs In On The Coming Credit Card Debacle

Excerpts:

Over my career, I have seen thousands of consumers that have credit card lines in excess of their annual salaries. Some are sinking under their burden. Some have been fiscally responsible and have minimal amounts outstanding. My 21-year-old daughter, who’s in college, gets pre-approved offers all the time. She has no ability to repay debt, yet the offers flow in just the same. We all know how these lines are accumulated. The banks, in their infinite stupidity, keep upping credit lines because the customer pays the minimum payments on time. My daughter’s credit line started at $1,000 and has been increased over the last two years to $4,400. She has no increased earnings to support this. But the banks do it without asking. And without being asked. The banks reel in the consumer, charge interest rates higher than those charged by the mob, increase lines without the consumer asking and without their consent, and lure them into overextending. And we can count on the banks to act surprised when they aren’t paid back. Shame on them.

...

As a banker, let me describe what we do wrong when we accept and review an application for a credit card. First, we don’t verify income. The first ‘C’ of credit: Capacity to repay, is completely ignored by the banks, just as it was in when they approved subprime mortgages.

...

I’ve been reviewing many of the banks annual reports over the last month and there is no question that the default rates are on the rise. If Congress doesn’t act today, the bankers will have their hats in their hand before we know it, and doing another a tap dance before the Senate Banking Committee, and asking to be bailed out once again with our tax dollars. Sad, but true.

Comment: That "C" is important ... "Capacity to repay". People are being enslaved by debt. Our government (tax policies) punishes (disincents) savers and investors.

A Bachelor's in Borrowing

A Bachelor's in Borrowing

Excerpt:

As Americans curb their spending and battle to keep up with credit cards and mortgages, another type of debt is starting to overtake people: student loans. Although the U.S. has experienced economic downturns before, never has one converged with such high levels of student debt.

Total borrowing for school has more than doubled to $85 billion in the 2007-2008 school year from $41 billion 10 years earlier, adjusted for inflation, according to the College Board, the research and testing concern. The percentage of private loans, which generally carry less-generous terms, has ballooned to 23% from 7%. Meanwhile, subsidized federal aid has remained relatively flat at about $42.8 billion per year.

Comment: Schools activity encourage new student borrowing!

Car deals

Terri's Consumer Blog: Car Deals

Excerpt:

This weekend we’ve been reporting that six Denny Hecker dealerships closed. A third of Hecker’s employees are now out of work. It’s a tough time for many industries, but car dealerships are struggling to entice people to buy.


So I spoke with Phil Reed of Edmunds.com today to get his perspective. He said while this is bad news for the industry, it can be good news for consumers.


“Now is a great time to buy a car, especially if you can pay cash or have good credit. If you have a credit score of 700 you will have no problem securing a loan. If it’s more like 600 or below, you’ll need a bigger down payment,” said Reed.

Digital conversion ... it's simple!

Comment: Even your Grandmother can do it!

"Eventually"

Reaganomics Finally Trickles Down To Area Man

Excerpt:

Twenty-six years after Ronald Reagan first set his controversial fiscal policies into motion, the deceased president's massive tax cuts for the ultrarich at last trickled all the way down to deliver their bounty, in the form of a $10 bonus, to Hazelwood, MO car-wash attendant Frank Kellener.

"Back when Reagan was in charge, I didn't think much of him," Kellener, 57, said, holding up two five-dollar bills nearly three decades in the making. "But who would have thought that in 2007 I'd have this extra $10 in my pocket? He may not have lived to see it, but I'm sure President Reagan is up in heaven smiling down on me right now."

Leading economists say Kellener's unexpected windfall provides the first irrefutable proof of the effectiveness of Reagan's so-called supply-side economics, and shows that the former president had "incredible, far-reaching foresight."

"When the tax burden on the upper income brackets is lifted, the rich and not-rich alike all benefit," said Arthur Laffer, who was a former member of Reagan's Economic Policy Advisory Board. "Eventually."

Comment: Humor ... the Onion (need I say more!)

National debt charts

The gross national debt compared to GDP

An Analysis of the Presidents Who Are Responsible for the Borrowing

National Debt Clocks and Savings Clocks

Comment: The Bushes have been big spenders! Charts don't include bailout bucks from October and November.

A tawdry marketing gimmick

Dan Burrell: The Latest in Pastoral Challenges — 7 Days of Sex

Excerpt:

I personally find this kind of trendy, flavor-of-the-month, pop-psychology type of “religion” distasteful and immensely irritating. To me, this fits in with other “trends” in emergent-driven churches like wearing too much gel in one’s hair, wearing shirt tails out, giving away shot glasses with the church name on them out in bars, shocking signs (Flamingo Road Church recently had a huge banner on their building asking people to “Flip Someone the Bird” this Thanksgiving. It was part of a Thanksgiving food drive. Please excuse me while I roll my eyes.), Starbucks franchises in the lobbies, one-word church names and worship franchising. None of these, on their own are intrinsically evil or always unBiblical — it’s just that if I were an unsaved person watching all these gyrations to get me to give them some attention, I’d be laughing hysterically at the antics and the seeming desperation. In fact, I do laugh hysterically at it sometimes. Other times, I just throw up a little bit in my mouth.

Comment: God’s creation has managed to propagate without bill-boards, campaigns, and pulpit messages.

‘7 days of sex’ is a cheap marketing gimmick. I personally would not be comfortable worshiping with the kind of fools drawn into this.

HT: Dan Burrell

Have you watched the debt clock?

Comment: It was about 7 Trillion when I added the debt clock to my blog.

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit

Excerpt:

he U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

More information here.

Big Steel survived and thrived after bankruptcy

Is Steel’s Revival a Model for Detroit?

Excerpts:

... The old saying, “As steel goes, so goes the nation,” was as much a threat as a boast.

...

... steel’s savior was not the government bailouts it ardently sought but exactly what it so long tried to avoid: bankruptcy. Only when the companies failed were they successfully slimmed down and retooled into smaller but profitable ventures. As debate continues over what, if anything, should be done for G.M., Ford and Chrysler, the steel industry may offer a model.

The steel and auto industries are both capital-intensive enterprises that peaked a half-century ago and have been intermittently embattled ever since. Both secured peace with their unions by vastly expanding benefits, a bargain that eventually hobbled them. Both had entrenched layers of management that believed — despite all evidence — they could wish away change.

...
Over the decades the companies had shed employees to stay afloat. Soon retirees greatly outnumbered the actual workers. At Bethlehem, the ratio was six retirees for every worker. All these retirees had good pensions and good health care plans, which they thought were guaranteed. But these costs were a tremendous weight on the companies.

Bankruptcy changed the rules, allowing the steel makers to unload billions of dollars in pension obligations onto the government’s Pension Benefit Guaranty Corporation and to cut more than 200,000 workers from their supposedly guaranteed medical care.

...

Steel’s turn-around was dramatic. The 17 leading companies went from a combined loss of $1.1 billion in 2003 to an after-tax profit of $6.6 billion in 2004, according to an analysis done for an industry trade group. Ross sold International Steel to the Indian entrepreneur Lakshmi Mittal for $4.5 billion in 2005, earning a tremendous return.

...

In a G.M. bankruptcy, the number of product lines would be reduced, the management replaced and the investors wiped out. The enormous costs of its retirees could be off-loaded. It would be painful, just as it was with steel, but in the end someone could come in and pick up the pieces. Perhaps it would be one of the foreign carmakers, looking to expand. Perhaps it would be a distressed assets specialist, like Wilbur Ross.

Comment: A model for Detroit!

Citigroup: Risk management missteps

Citigroup Saw No Red Flags Even as It Made Bolder Bets

Excerpt:

In September 2007, with Wall Street confronting a crisis caused by too many souring mortgages, Citigroup executives gathered in a wood-paneled library to assess their own well-being.

There, Citigroup’s chief executive, Charles O. Prince III, learned for the first time that the bank owned about $43 billion in mortgage-related assets. He asked Thomas G. Maheras, who oversaw trading at the bank, whether everything was O.K.

Mr. Maheras told his boss that no big losses were looming, according to people briefed on the meeting who would speak only on the condition that they not be named.

For months, Mr. Maheras’s reassurances to others at Citigroup had quieted internal concerns about the bank’s vulnerabilities. But this time, a risk-management team was dispatched to more rigorously examine Citigroup’s huge mortgage-related holdings. They were too late, however: within several weeks, Citigroup would announce billions of dollars in losses.

Normally, a big bank would never allow the word of just one executive to carry so much weight. Instead, it would have its risk managers aggressively look over any shoulder and guard against trading or lending excesses.

But many Citigroup insiders say the bank’s risk managers never investigated deeply enough. Because of longstanding ties that clouded their judgment, the very people charged with overseeing deal makers eager to increase short-term earnings — and executives’ multimillion-dollar bonuses — failed to rein them in, these insiders say.

Comment: Internal controls, auditing, and fiscal transparency are essential!

Leaky water

Plumber’s Job on a Giant’s Scale: Fixing New York’s Drinking Straw

Excerpt:

All tunnels leak, but this one is a sieve. For most of the last two decades, the Rondout-West Branch tunnel — 45 miles long, 13.5 feet wide, up to 1,200 feet below ground and responsible for ferrying half of New York City’s water supply from reservoirs in the Catskill Mountains — has been leaking some 20 million gallons a day. Except recently, when on some days it has lost up to 36 million gallons.

Comment: Worthwhile read if you are interesting in civil engineering projects

Autos: The empty rhetoric of the Democrats

George Will: In Detroit, Failure's a Done Deal

Excerpts:

The answer? Do nothing that will delay bankrupt companies from filing for bankruptcy protection, so that improvident labor contracts can be unraveled, allowing the companies to try to devise plausible business models. Instead, advocates of a "rescue" propose extending to Detroit the government's business model for the nation — redistributing wealth from the successful to the failed, an implausible formula for prosperity.

...

Congress could help the Detroit Three by allowing them, when meeting CAFE (corporate average fuel economy) standards imposed by Congress, to count fuel-efficient cars they import from their overseas factories. Congressional Democrats oppose that because those imports are not made by members of the United Auto Workers. Those Democrats, their rhetoric notwithstanding, really care most about the union. "Saving the planet" comes second and last comes the health of the auto companies.


Some opponents of bankruptcy stress that it might terminate health-care coverage enjoyed by UAW retirees who are too young for Medicare. Think about that. If people want to retire before 65, or 35 for that matter, that is their business. But there is no public interest in protecting the luxury of retirement in the prime of life just because in palmy days a private contract between a union and a corporation established it as an entitlement for all seasons.

Comment: Again the CAFE standards!

Citigroup issues are not new

Woes at Citigroup Began With Failed Bid for Wachovia

Excerpts:

As the global financial crisis drove Wachovia toward collapse, the government frantically engineered their marriage. At a bargain price of $1 a share, Vikram S. Pandit, Citigroup’s chief executive, was happy to oblige: The deal would have greatly enhanced Citi’s retail banking presence and added more stable consumer deposits to a balance sheet staggered by billions in write-downs on bad mortgage loans and related securities.

But like so many other things for Citigroup over the last several years, it fell apart. Less than a week later, Wells Fargo, the powerful San Francisco-based bank, swooped in with a higher offer. Citi was left in the lurch, without a business that was vital to its future.

...

Many analysts argue that the globe-spanning conglomerate, largely built by Sanford I. Weill, had never really worked as a cohesive unit. Different divisions have consistently battled, and promised synergies between units have rarely emerged.

“They never spent the time, the money or the energy to integrate all of the businesses,” said Meredith Whitney, analyst at Oppenheimer. “And so the credit card business speaks Mandarin while the mortgage business speaks Cantonese. It’s not a functional family. And because it’s not a functional family, it’s extraordinarily expensive to operate all the separate businesses, and you don’t get any of the advantages.”

Many of these problems were masked during the credit boom this decade. But with the financial crisis in full swing, the bank’s failure to unite its empire has become more exposed than ever.

“A lot of the issues facing Citigroup are not new issues, they have simply grown greater in severity,” said Michael Mayo, an analyst at Deutsche Bank.

Comment: The failed to integrate their business lines and thus could not leverage their synergies.

11 Challenged ballots

Challenged ballots: You be the judge


Comment: Check this out!

Drop GM and C from DJIA

Kick GM out of the Dow...now!

Excerpt:

General Motors has a market capitalization of less than $2 billion. The stock, which now trades for a little under $3 a share, hit a 70-year low of $1.70 on Thursday morning before recovering a bit.

Normally, when a blue-chip company sinks to such depths of despair, it gets tossed from the S&P 500. But not only is GM (GM, Fortune 500) still a member of that index, it remains a component of the granddaddy of market barometers: the venerable Dow Jones Industrial average.

Why? Or in the words of mid-'90s self-help guru Susan Powter, "Stop the insanity!" The editors of The Wall Street Journal and Dow Jones Indexes, who decide who's in and who's out of the Dow, soon have to come to grips with reality and remove GM from the DJIA.

Comment: WFC should replace C. DJIA components

Half the news fit to print

California Asks Court to Weigh Ban on Gay Marriage

Excerpts:

The California attorney general asked the State Supreme Court on Monday to review the constitutionality of Proposition 8, the voter initiative passed two weeks ago that bans same-sex marriage.

The central argument in the recently filed lawsuits is that Proposition 8 is a significant enough revision to the State Constitution to require approval by the Legislature.

Supporters of the proposition, led by the group Protect Marriage, reject that argument, suggesting in legal papers filed Monday on behalf of five California residents that “when using the initiative process to amend the Constitution, the people exercise their sovereign power of self-government.”

What The Times Forgot to Mention about California’s Marriage Amendment

Excerpt:

Here’s what the paper that makes all the news fit its agenda forgot to mention:

• Same-sex marriage was never part of the California Constitution. It was forced on the state in May, by an edict of the same court now being asked to rule on the legality of Prop. 8.
  
• Despite massive opposition by the mainstream media (The New York Times included), the initiative passed by a vote of 52% to 48%.
  
• In 2000, 61% of California voters approved Prop 22, a statute limiting marriage to a man and a woman. The Court swept this aside with its mandate, necessitating the amendment.
  
• With the passage of ballot questions in California, Arizona and Florida this year, voters in 30 states have enacted constitutional bans on gay marriage, by an average vote of 68%.
  
• Those demonstrations by opponents of Proposition 8 the paper mentioned in passing are often aimed at the Mormon (Church of Jesus Christ of Latter-day Saints) and Catholic Churches and are frequently violent. In San Francisco last Friday, the police had to intervene to save a group of Christians who were set-upon by homosexual militants. In Palm Springs, an elderly woman holding a pro-Prop 8 sign was physically assaulted and had a cross ripped from her hands and trampled by the mob.
  

Comment: The title of this blog is a comments of the NY Times motto "All the News That's Fit to Print"

Man tries to pay bill with spider drawing

Man tries to pay bill with spider drawing


Comment: Didn't work for him and won't work for you! They did send it back to him!

Franken challenges this ballot

One challenge headed to the state so far in Plymouth


Excerpt:

The bubble beside Norm Coleman’s name appeared to have both an X and a squiggle in it, but the Al Franken campaign wants the state Canvassing Board to rule on whether it should count. That’s the only challenge in the special envelope in Plymouth so far, according to Sandy Engdahl, the city clerk and the official running the city recount.

The Canada geese milling on the grounds and parking lot of Plymouth City Hall were oblivious to the gaggle of election officials and observers inside. The drone of “Franken” and “Coleman” was accompanied by the swishing of paper in Medicine Lake Room A. Early on, Engdahl had to admonish some candidate representatives from trying to tell her counters how to count. Clearly, she said, the recount watchers are “very passionate,” but she has to remind them of everyone’s roles in this civic drama.

Eight of the 24 precincts had been counted by 1:45 p.m., and the only challenged ballot, in Engdahl’s view, was clearly a vote for Coleman. Nevertheless, the Franken campaign was allowed to seek a second opinion.

Comment: How a Franken representative might think this is not a Coleman vote is beyond me!

Wagoner is GM’s best salesman - and that's not saying much!

Mean Street: Why Everyone Hates GM: Pity the poor one million General Motors shareholders.

Excerpt:

the inconvenient facts of decades of declining Big Three market share and grotesque overcapacity. Only in the World of Wagoner could the industry be making “tremendous progress.”

If pressed for time, skip to the hearing’s third hour when Democratic Sen. Bob Menendez uncovers the “big lie” of a Detroit bailout. The $25 billion number is a fudge. It would only plug the hole for a few months. Mendendez was blunt. Detroit will soon be back hat in hand.

And Menendez is a sympathetic voice. Ouch. Next comes, Bob Corker, Republican from Tennessee and a no nonsense businessman. He is brutal. “GM is spiraling downward.” Chrysler has “barely a heartbeat.” “Which of the three should survive and which shouldn’t?”

Corker dares to point out what everybody knows but nobody will say. The entire American car industry is already bankrupt. One and maybe two companies will have to go. Industrial triage is inevitable. That’s the way business works.

Corker’s brilliant maneuver is to have the “impartial” Gettelfinger — whose UAW has fleeced all three — rank them by viability. Gettelfinger’s answer: Ford, then Chrysler, then last, GM.

Minutes later, Wagoner’s detached statesmanlike composure finally gives way. His face grows red. His voice rises. It’s clear just how desperate GM has become.

Chrysler CEO Bob Nardelli and Ford boss Alan Mullaly at least know how to grovel properly. Of course, they don’t carry the emotional baggage of a longtime Motowner like Wagoner.

Nardelli has been at Chrysler for just over a year. He knows Chrysler’s days are numbered and looks like a man who just wants out. Every time he has the floor, he reminds lawmakers of Chrysler’s “fragile” position. Oddly, for someone who took home hundreds of millions in a disastrous stint as Home Depot’s CEO, Nardelli can still elicit sympathy. That’s good salesmanship. He should be on a Chrysler lot.

As for Mullally, he makes it clear numerous times that Ford doesn’t even have to be in Washington asking for money. It’s the troubled, ne’er -do-well Rick Wagoner at the end of the table that’s bringing him there. “I’m here because GM is here,” Mullaly intones with aw-shucks brotherly love.

That, of course, is disingenuous. Mulally concedes that by 2010, without an upturn in the U.S. economy, even Ford will run out of money. Nor does he mention that Ford’s share price closed the day at less than two bucks.

Luckily for the Big Three, the Detroit bailout will be resurrected early next year when a new Congress and Barack Obama are sworn in.

Mulally and Nardelli will have a few months to brush up on their performances.

Wagoner may not be as lucky. His board can put up with a failure to turn a profit, but it probably won’t stand for his failure to bring money back from Washington. If this is GM’s best salesman, no wonder the company can’t move cars.

Comment: Interesting: UAW's triage

... the “impartial” Gettelfinger — whose UAW has fleeced all three — rank[ed] them by viability. Gettelfinger’s answer: Ford, then Chrysler, then last, GM.

Also interesting that these guys didn't corporate jet pool together. Three corporate jets flew them there. Ford's CEO private jets back and forth to Seattle every weekend!

Big Three auto CEOs flew private jets to ask for taxpayer money

"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."

He added, "couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."

Mitt Romney: Let Detroit Go Bankrupt

Let Detroit Go Bankrupt

Excerpt:

I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

Comment: I agree with Mitt. Some Republicans see him as again flip/flopping: Already, Mitt?

Mac Hammond wins round # 1

Brooklyn Park megachurch smites IRS in info showdown

Excerpt:

A U.S. district magistrate judge's recommendation, issued Tuesday, sides with the Living Word Christian Center. The church had argued that it didn't have to provide detailed financial information focusing on the compensation of its founder and senior pastor, James (Mac) Hammond, requested by the IRS.

Earlier this year, the IRS petitioned the U.S. District Court to force the church to answer its demand for information. The church argued that the request wasn't made by a "high-ranking official" as required by law, and the magistrate judge agreed.

A U.S. District Court judge will decide whether to follow that recommendation.

Comment: I'm one who favors complete financial transparency. I think Churches should have to file 990 forms with the IRS like other non-profits. See previous Mac Hammond posts

Al-Qaida racist!

Al-Qaida No. 2 Insults Obama With Racial Epithet

Excerpt:

In al-Qaida's first response to Obama's victory, al-Zawahri also called the president-elect — along with secretaries of state Colin Powell and Condoleezza Rice — "house negroes."

Speaking in Arabic, al-Zawahri uses the term "abeed al-beit," which literally translates as "house slaves." But al-Qaida supplied English subtitles of his speech that included the translation as "house negroes."

Comment: They obviously have not read How to Win Friends and Influence People

The Big 3 should become the Big 2!

BofA CEO: There are '1 too many' Detroit 3 members

Excerpt:

Two of the struggling Detroit Three automakers should combine and prove to the government they are worthy of a $25 billion rescue package being considered for them, Bank of America Chief Executive Kenneth Lewis said Tuesday.

"There are one too many" automakers, Lewis said, adding that he would require consolidation if he was deciding on a bailout.

"I think the American people are suspect of just giving more money and buying more time," Lewis told reporters after a speech to the Detroit Economic Club. "They want to see that the companies have in fact changed and the strategies have changed."

Comment: There are too many brands. Eg. Ford does not need a Mercury. GM does not need GMC, Pontiac, or Saab, or Saturn (or Hummer). There are too many dealers as well.

Hitler rants: real estate, 401K, etc.

Comment: Hitler parody. Funny stuff

GM: Why chapter 11 is the solution & its Gigantic hybrid

A Bridge Loan? U.S. Should Guide G.M. in a Chapter 11

Excerpts:

G.M is using money so quickly that a $10 billion infusion made today would disappear by February. That is why taxpayers shouldn’t fork over a cent, at least until shareholders are wiped out, management is tossed out and the industry is completely reorganized.

But there is a fix. Call it a government-sponsored bankruptcy, a G.S.B., if you will. It might sound a bit like an oxymoron, but it is an idea that has been quietly making the rounds in Washington. It makes a lot of sense.

Here’s how it could work:

First, let’s recognize that G.M. doesn’t need life support. What it needs is Chapter 11. The bankruptcy process is not a bad thing — indeed, it should be embraced. Bankruptcy allows companies to do tough things they could never do in the normal course of business. It has helped many companies turn themselves around and come out even stronger.

Bankruptcy would give G.M. enormous leverage with its debt holders — and, perhaps more important, with the U.A.W., whose gold-plated benefits are one reason G.M. is no longer competitive. A bankruptcy filing would also give G.M. the cover to close plants, rid itself of unprofitable brands and shed dealerships. In fact, unless G.M. files for bankruptcy, state laws would make it prohibitively expensive to shut dealerships.

So, first, the government would force G.M into a prepackaged bankruptcy now — even before policy makers may think it needs to be. As an inducement, the government would allow the merger with Chrysler to go forward. (There’s a lot of resistance to saving Chrysler too, but we need to look at the industry as a whole. And don’t worry: Cerberus, the private equity firm that owns Chrysler, would have its equity wiped out too.)

The merger should reduce costs by as much as $7 billion. But that’s not the tough stuff. The harder decisions are these: Both companies would have to jettison brands — lots of them. In the case of G.M., frankly, the only ones worth saving are Cadillac, Chevy and Buick. (Buick? Yes. Despite its lackluster sales and fuddy-duddy image in the United States, it’s a huge seller in China.)

That means Saturn, Pontiac, GMC and Saab would all disappear. Deutsche Bank estimates that reducing G.M.’s brands from eight to three would bring down the company’s cost base by $5 billion annually. If you’re able to shut the dealerships too, lop off another $4 billion. Chrysler is an even sadder situation: the only brand with any value is Jeep. Its Dodge Ram truck lineup could be merged with Chevy, which would also pick up pieces of the GMC business. And Chrysler’s minivan business could be combined into the Chevy brand as well.

In all, the 35 plants of G.M. and Chrysler would probably be cut by half.

Then the auto workers, whose benefits are off the charts.

G.M. currently employs about 8,000 people who actually don’t come to work. Those who do go to work are paid about $10 to $20 an hour more than people who do the same job building cars in the United States for foreign makers like Toyota. At G.M., as of 2007, the average worker was paid about $70 an hour, including health care and pension costs.

That Rick Wagoner, chief executive of G.M., can say with a straight face that he still deserves to run this company is laughable. It would be impossible for him to put in place the serious changes that need to be made because he carries too much baggage. He’d have to undo years of his own neglect.

After all that is agreed, and only then, the government should come in with what’s known as debtor-in-possession financing to help the company through the bankruptcy process. Ideally, the government would be a “seed investor” and others would join it.

The goal should not be to keep these companies from filing Chapter 11, but from filing for Chapter 7 — which would mean liquidation.

With the debt market virtually closed, this is the time the government can come in and try to help. But to jump in front of the train now, without the requisite changes made to the industry first — which we all know can’t be done without Chapter 11 — would be foolish.

Behind the Wheel | 2009 Cadillac Escalade Hybrid: My Hybrid Is Bigger Than Your Hybrid

Excerpt:

I managed to eke out 22.3 miles a gallon on one highway-biased trip, and about 20 m.p.g. over all. The hybrid system’s benefit is most pronounced in urban driving, where Cadillac claims a 50 percent improvement in fuel economy. (The gas-only Escalade is rated 12 m.p.g. in town, 18 on the highway, with all-wheel drive.)

Bizarrely, the Environmental Protection Agency does not provide mileage estimates for the four-wheel-drive Escalade Hybrid because its weight vaults it into the category of heavy-duty trucks, which need not be rated.

This is like McDonald’s adding a low-fat burger that has no calorie count because the F.D.A. says it’s too big to be classified as food.

...
The total as-tested tab was $75,330, although you get a $2,200 federal hybrid tax credit unavailable to the wastrel who instead buys a Honda Fit.

Comment: The US should provide tax credits (if we do at all) for people to buy small cars! I doubt I know one person who could afford the Cadillac Giganticus

GM vs Toyota labor costs

Comment: Below is a link from NPS that compares GM to Toyota. The data is not current (c 2005), but highlights one of the real issues with GM - the high cost of labor.

NPR: GM vs. Toyota: By the Numbers

Excerpts:

Profitability per Vehicle

GM: Loses $2,331 per vehicle
Toyota: Makes $1,488 per vehicle


Production Time per Vehicle

GM: 34.3 hours, 2.5% improvement since 2003
Toyota: 27.9 hours, 5.5% improvement since 2003


Average Hourly Salary for Non-Skilled, Assembly Line Worker

GM: $31.35/hour (NOTE: Includes idle workers still on payroll.)
Toyota: $27/hour (NOTE: Includes year-end bonus.)


Average Labor Cost per U.S. Hourly Worker

GM: $73.73
Toyota: $48

Comment: Unless GM (and Ford and Chrysler) AND the U.A.W. deal with labor costs, no amount of bailout money will help them.

The South is Detroit's automotive rival

Comment: an interesting perspective that I had not previously considered.

An emerging Southern view of the Detroit bailout

Excerpts:

The jet-black, $37,500 Borrego sports utility vehicle showed up in the governor’s Capitol parking spot last month, a gift to the state from the South Korean car maker - which is now building a $1.2 billion plant in west Georgia.

...

In its own way, the governor’s new ride may be as meaningful as the demolition of the Ford plant in Hapeville, or the abandonment of the General Motors plant in Doraville.

For behind the philosophical back-and-forth over government intervention, scheduled to begin Monday in the U.S. Senate, is a cut-throat, economic reality: the South has ambitions of becoming Detroit’s rival.

And a federal dollar that artificially props up manufacturing on the northern end of I-75 is a dollar that hinders the creation of new economic models downstream, some Southern politicians maintain.

Last week, Gov. Mark Sanford of South Carolina argued that the refusal of the federal government to bail out the Pittsburgh-based steel industry in the 1970s ultimately led to the establishment of new steel mills in the South. Which permitted the birth of a new facet of the auto industry - highly automated, mostly non-union, and foreign-owned.

“There wouldn’t be a BMW in South Carolina or a whole host of other auto industries scattered across the South, because we would have just kept them all in Detroit,” the Republican said.

Georgia’s Kia plant is scheduled to open next November, employing as many as 2,500 workers. The site is located within U.S. Rep. Lynn Westmoreland’s 3rd District. Westmoreland, like other House Republicans, voted against the $700 Wall Street bailout.

He’ll vote against a Detroit rescue as well - on the grounds that it would create a slanted field of play for the workers he’ll soon represent.

Recession half way over?

Forecasters: U.S. in 14 month recession

Excerpt:

... the U.S. economy entered a recession in April and that it will last 14 months, which would make it one of the longest recessions since the Great Depression of the 1930s.

Comment: Doesn't sound too bad!

"It's a recession when your neighbor loses his job; it's a depression when you lose your own." Harry S Truman

"Recession is when your neighbor loses his job. Depression is when you lose yours. And recovery is when Jimmy Carter loses his." Ronald Reagan

Another Reagan quote (that would apply it seems to GM, Ford and Chrysler): "Government's view of the economy could be summed up in a few short phrases If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it"

Yet another that would apply to President-Elect Obama's plans (for large government): "Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other."

The U.A.W.: the enemy of turning around the Big Three

Comment: The Big Three is more like the Big One (GM), the Half Pint (Ford), and the Dwarf (Chrysler).

Seeking Aid, Automakers Have a Friend in the U.A.W.

Excerpts:

Ron Gettelfinger, president of the United Automobile Workers union says:

“It’s not just G.M. going bankrupt, ... It’s all the rest of the industry that goes with it. Two of the three companies would go under, and there’s a high probability all three would go.”

The problem (high wages relative to Honda, Nissan, Toyota - even in the US where these "foreign" makers have plants!):

Mr. Gettelfinger expects the union to be labeled part of Detroit’s problems, and to defend its $27-an-hour wages and top-of-the-line health care benefits and pensions.

...

... union rules that provide workers with 95 percent of their wages while on layoff and other job-security provisions.

The Future of the U.A.W. is at stake.

“The future of the U.A.W. will be determined over the next two weeks,” said Gary N. Chaison, a professor of labor relations at Clark University. “If G.M. goes bankrupt or doesn’t get a bailout, it’s just going to be a shadow of what it was 50 years ago.”

Why the Democrats care so much (and the Republicans so little!):

The U.A.W. was instrumental in the pivotal victories in Michigan and Ohio by Barack Obama in the presidential election, and two union loyalists in Michigan, Gov. Jennifer M. Granholm and former Representative David E. Bonior, are members of Mr. Obama’s economic advisory team.

Why bankruptcy of GM is better than a bailout:

A carmaker’s bankruptcy would abrogate workers’ contracts

Final comment: A bailout of GM would not solve the seminal problems: high labor costs, rigid Union rules, and bad management.

GM's "ripple" video

Multiple views on Detroit bailout

If Detroit Falls, Foreign Makers Could Be Buffer

Excerpts:

many industry experts say the big foreign makers are established enough to take control of the industry and its vast supplier network more quickly than is widely understood.

“You would have an auto industry in the United States more like that of Mexico and Canada: foreign-owned,” said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich., which describes itself as a nonprofit organization that has “strong relationships with industry, government agencies, universities, research institutes, labor organizations” and other groups with an interest in the auto business.

The transition to that new equilibrium would surely be painful. The big American companies employ about 240,000 workers, and their suppliers an additional 2.3 million, amounting to nearly 2 percent of the nation’s work force.

The outright failure of General Motors would eliminate the biggest auto employer and more than 100,000 manufacturing jobs. That is roughly the number of jobs already lost this year at the nation’s automakers and their suppliers.

...

the new kings of the auto industry would presumably be Toyota, Honda, Nissan, Volkswagen, Ford, Mercedes-Benz, BMW and Hyundai-Kia. (Volkswagen has not yet opened a plant in the United States, and BMW and Hyundai each have one plant.)

Like the Big Three, they would together dominate manufacturing in the United States, becoming big customers for steel, aluminum, plastics, glass, machine tools, computer chips and rubber.

UAW head says that unions aren't to blame for Detroit's problems

Excerpt:

Rather than admit that the UAW's plum labor agreements and contentious negotiations have contributed to the current gloomy situation, the United Auto Workers head man says that the economic downturn is to blame for everything, and that Congress should approve loans to the auto industry, saying "We cannot afford to...see this industry collapse."

An America without manufacturing becomes a starkly divided society

Excerpt:

I am a black child of the Deep South who watched legions of neighbors and relatives flee economic apartheid in pursuit of opportunity in the automobile factories of Michigan and Ohio and in the steel plants of Pennsylvania and Indiana.

Those black men and women often were assigned the dirtiest, most dangerous, least desirable jobs in those factories. But if whites happened to be working alongside them, they tended to be paid equally for the same tasks. There was hope for the future in that treatment, a quantum of dignity.

That hope and dignity eventually became codified in contracts between the car companies and the United Auto Workers union, as it did between other manufacturing entities and their labor organizations.

But, alas, hope and dignity were corrupted by greed on both sides -- on the part of unions that always wanted more, and on the part of domestic car companies, which became more interested in building Wall Street portfolios than they were in turning out cars and trucks of superior quality.

People make mistakes. But redemption is found in the good that they do, and the domestic automobile industry has done a lot of tangible good for this nation.

The American Three -- General Motors, Ford and Chrysler -- largely have been responsible for the development of a black middle class in this country. Many children of factory workers followed their parents onto automobile assembly lines. But many others went to colleges and universities, medical and technical schools, thanks to good UAW salaries and educational benefits.

Comment: Interjecting race into the auto bailout issue. Keep race out of it!

G.O.P. Senators Oppose Auto Bailout

Excerpts:

Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit automakers, calling the U.S. industry a “dinosaur” whose “day of reckoning” is coming. Their opposition raises serious doubts about whether the plan will pass in this week’s postelection session.

...

Senators Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry’s demise.

“Companies fail every day and others take their place. I think this is a road we should not go down,” said Mr. Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

“They’re not building the right products,” he said. “They’ve got good workers, but I don’t believe they’ve got good management. They don’t innovate. They’re a dinosaur in a sense.”

Mr. Kyl, the Senate’s second-ranking Republican, added, “Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning.”

Comments: Good to see the GOP offer some common sense. Recent "innovations" of the big three: Hummer, the new Camaro, the new Dodge Challenger, the Chevrolet Avalanche. My own conclusion: let GM file for chapter 11. Let them innovate through restructuring.

Petters: red flags unheeded

Petters Co.: Many watchers, but no one watching

Excerpts:

Among the red flags that went unseen or unheeded: fake inventory statements, dummied invoices, millions of dollars wired to an office next to an Excelsior car wash, suspicious bank account activity and Petters himself, a flamboyant executive trailing decades of lawsuits over bad debts.

But apparently authorities suspected nothing until a Petters executive, Deanna Coleman, approached federal investigators in September to accuse her longtime boss of fraud and to cut herself a deal.

...

Petters Company Inc., the investment arm central to the alleged fraud, was run by a small group operating separately from the Petters Group Worldwide holding company. But they shared the same building in Minnetonka, and Tom Petters was their sole director. Both companies were placed into a receivership last month after a federal judge found probable cause to believe that more than $3 billion had been bilked from investors.


...

What is known is that key Petters companies appear to have been operating without the most basic of business documents -- the certified financial statement, or annual outside audit. A certified financial statement is prepared by an outside public accounting firm. It's considered a basic stamp of credibility. Privately owned businesses aren't required to have them, but financial professionals insist that no prudent investor or lender would do business with a company lacking them.

...

The professional rules of conduct governing both in-house accountants and lawyers don't require them to go outside the company to report illegal activity if they see it. The rules simply require them to report wrongdoing up the internal chain of command. Nonetheless, Neil Hamilton, who teaches legal ethics at the University of St. Thomas law school, said accountants and lawyers have a fiduciary duty to the public.

Comment: Board members of private organizations (churches, non-profits, and private businesses) should demand full auditing of all financial records. For churches: full audited financial statements (income and expense and balance sheet) should be provided members; For non-profits: full audited financial statements (income and expense and balance sheet) should be provided to supporters / donors; etc.

Jim DeMint: They corrupted the brand

GOP senator: McCain betrayed Republican principles

Excerpts:

"We have to be honest, and there's a lot of blame to go around, but I have to mention George Bush, and I have to mention Ted Stevens, and I'm afraid I even have to mention John McCain," he said.

...

1. "McCain, who is proponent of campaign finance reform that weakened party organizations and basically put George Soros in the driver's seat," DeMint said. "His proposal for amnesty for illegals. His support of global warming, cap-and-trade programs that will put another burden on our economy. And of course, his embrace of the bailout right before the election was probably the nail in our coffin this last election. And he has been an opponent of drilling in ANWR, at a time when energy is so important. It really didn't fit the label, but he was our package."
   
2. [on Bush] ... "corrupted the party brand by expanding the size of government and engaging in wasteful government spending"
   
3. [on Stevens] ... DeMint said he would introduce a Senate resolution next week to boot Stevens out of the Republican caucus
   

Comment: I think he is right!

Auto bailout: Pelosi's non-starter

Pelosi outlines aid package for US automakers

Excerpt:

Pelosi said the plan would call for "immediate, targeted assistance" and must include several principles, including the restructuring of the companies "to ensure their long-term economic viability," new fuel-efficiency standards, and the development of advanced vehicles.

She said it would include "even stronger limits on executive compensation and assurances to protect the taxpayer." House aides said the legislation was still being developed and a specific funding level had not yet been reached.

Pelosi did not mention any plans for the UAW to make any concessions as part of the legislation. UAW president Ron Gettelfinger told reporters earlier Saturday the problem is not the union's contract with the auto companies.

"The focus has to be on the economy as a whole as opposed to a UAW contract," Gettelfinger said. The union has said it made several concessions in its 2007 labor agreement, setting lower pay for new hires and placing retiree health care liability into a trust run by the UAW.

Comment: Unless labor is addressed ... it isn't a solution at all. Don't expect Nancy Pelosi to address labor. I hope that Bush does nothing and lays this mess on Obama!

Where are PanAm, ITT and Montgomery Ward?

Bailout to Nowhere

Excerpt:

Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction — with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.

...

Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?

Comment: Where are PanAm, ITT and Montgomery Ward? GONE! Remember the Frank Borman quote. Borman was formerly the CEO of Eastern Airlines (also GONE!)

Putting the Iraq war in perspective

Marine motorcycle deaths top their Iraq combat fatalities

Excerpt:

Motorcycle accidents have killed more Marines in the past 12 months than enemy fire in Iraq, a rate that's so alarming, it has prompted top brass to call a meeting to address the issue, officials say.

Twenty-five Marines have died in motorcycle crashes since November -- all but one of them involving sport bikes that can reach speeds of well over 100 mph, according to Marine officials. In that same period, 20 Marines have been killed in action in Iraq.

The 25 deaths are the highest motorcycle death toll ever for the Marine Corps.

Gen. James Amos, the assistant commandant of the Marine Corps, told CNN that commanders are trying to drill down on what "we need to do to help our Marines survive on these sport bikes."

Comment: Recommended to me by my son, who served in the USMC for 6 years including 1 tour in Iraq. From Roger, "I think this puts the war in Iraq into perspective."

Path to growth: ""free markets and free people"

The Surest Path Back to Prosperity

Excerpts:

This crisis did not develop overnight, and it's not going to be solved overnight. There's going to be difficult days ahead.

...

History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market. We saw this in the case of Fannie Mae and Freddie Mac.

Because these firms were chartered by the U.S. Congress, many believed they were backed by the full faith and credit of the U. S. government. Investors put huge amounts of money into Fannie and Freddie, which they used to build up irresponsibly large portfolios of mortgage-backed securities. When the housing market declined, these securities, of course, plummeted in value. It took a taxpayer-funded rescue to keep Fannie and Freddie from collapsing in a way that would have devastated the global financial system. There is a clear lesson: Our aim should not be more government -- it should be smarter government.

All this leads to the most important principle that should guide our work: While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people.

Iceland: "Voices of caution ... were drowned out"

Iceland: What It's Like to Live in a World Without Money

Excerpts:

There is no daytime TV in Iceland. Parents are at work and children at school, so the test card, that feature of a bygone age, is the only thing aired. For the transmitters to be switched on in mid-afternoon and a sombre-looking Geir Haarde, the prime minister, to appear behind a desk, a national flag at his side, it had to be serious – and it was. The country was on the verge of bankruptcy; the government was taking control of the banks and was going to assume far-reaching powers to secure the safety of the nation and its savers.

As I watched, I felt a detached sympathy for those poor people living on a blighted island – until it dawned on me that I was one of them. Recent events had savaged my net worth by 60 per cent and pushed up my cost of living by more than 20 per cent. Iceland’s plight was mine, too. What I failed to appreciate at the time was the emotion of this unprecedented television address, particularly in the way it finished:

“Fellow countrymen ... If there was ever a time when the Icelandic nation needed to stand together and show fortitude in the face of adversity, then this is the moment. I urge you all to guard that which is most important in the life of every one of us, to protect those values which will survive the storm now beginning. I urge families to talk together and not to allow anxiety to get the upper hand, even though the outlook is grim for many. We need to explain to our children that the world is not on the edge of a precipice, and we all need to find an inner courage to look to the future ... Thus with Icelandic optimism, fortitude and solidarity as weapons, we will ride out the storm.

...

Picture a pig trying to balance on a mouse’s back and you’ll get some idea of the scale of the problem. In a mere seven years since bank deregulation and privatisation, Iceland’s financial institutions had managed to rack up $75bn of foreign debt. In his address to the nation, Haarde put the problem in perspective by referring to the $700bn financial rescue package in America: “The huge measures introduced by the US authorities to rescue their banking system represent just under 5 per cent of the US GDP. The total economic debt of the Icelandic banks, however, is many times the GDP of Iceland.”

And here is the nub. Iceland’s banks borrowed more than $250,000 for every man, woman and child in Iceland, and placed an impossible burden on the modest reserves of the central bank in the event of default. And default they have.

Voices of caution – there were many in Iceland – were drowned out by a media that became fixated on the nation’s emergence from drab pupa to gaudy butterfly

Comment: Iceland today could be the US in a decade!