Friday, November 12, 2010

What Would Have Happened to GM….

…If the Government Had Not Stepped In?
I have my own theory. But applying the rules of commerce and survival of the fittest concepts lead me to believe GM would be a quite different animal today. So let’s travel down the path of speculation.
Piece By Piece It Should Have Been Liquidated
GM was in terrible shape. Heavy at the top and strained at the dealership level. Individual models were stagnant and stale. Compensation was out of line with performance and the consumer thought it would be common place for the company to lumber along in losses. So in the real world what should have happened? First of all management should have axed and removed from top to bottom. A new search should have been deployed to find new and innovative talent to steer the company. Each division/brand should have then undergone a thorough evaluation to ascertain if it would be viable as a standalone entity. Then the brand popularity should be measured. The least desirable brands should then should have been spun off and generate cash and eliminate debt. Piece by piece it should have been liquidated. Then in the end the remaining desirable divisions/brands should have made up the new GM. Funny though, I think all the brands would have survived but just in a different configuration. The consumer would have most likely had access to all they see today but just run and manufactured more efficiently.
A New Finance Division Was Needed
Instead of floating a dead stock issue the company should have then recapitalized a new and more vibrant finance division with new creative minds at the helm. Out with the old and in with the new and more capable. This new finance arm should be able to provide an array of products and services to not only the consumer but the dealer as well. This finance company should have been prepared to invest in every dealer remaining worth his/her salt. This new company just should not have been renamed but rebuilt from the ground up.
The Formation of a New Dynamic Company Was Required
The newly structured GM should have floated a separate stock issue to re-tool the dealership distribution network and put the money where the most return could have been realized. The remaining brands should have put money into new more cutting edge product development. Instead of floating stock to pay off the US government/taxpayer, money should have been deployed to form a new more dynamic company. Instead what we have is a top heavy company with old management, just less of them, in place doing what they have always done. Yes it is making money but they should have been doing that all along. Yes they should be making money because they have less debt. That sort of seems like a no brainer to me.
It Is The Same Old GM
A GM trying to make a sows ear look like a silk purse with this upcoming offering. I think my imagination would have served GM better and the public as well and it would have saved the government/taxpayer a ton of money. The rules of commerce and survival of the fittest were derailed. I thought those rules were what out capitalist system were all about? I guess I need to rethink all of this.

Tuesday, November 9, 2010

Ben Bernanke is the Smartest Guy in the Room

The Return of the Salad Days
Let’s talk about the return of the salad days of the economy. I have heard scores of people say it is just around the corner. I have heard other say 2011 is the big year. Yet the realists say it is some time off. I am going out on a limb here. I say 2013 is the year we will actually start to feel the effects of the economy on our wallets and bank accounts. The market as a whole is overpriced. Interest on deposits are underpriced. With the recent flood of Fed Money into the bond market there soon should begin a measurable shift in the behavior of the cost and return on real money. But all this as it will affect us will take some time.
The Unusual and the Unexpected
The international pundits say we are self-serving. Yet they remain big investors in the United States of America. As long as we are healthy their investments should remain healthy. So quiet down China, Russia and Brazil. We are in the midst of reforming the structural elements of our economy. We are rebuilding the foundation for sustained economic growth. In a time where all the rules have changed we need to do the unusual and the unexpected. Pouring 600 billion dollars into the bond market is a smart move. Ben Bernanke is the smartest guy in the room. He knows what he is doing. He is the most forward thinking Chairman we have ever seen. Let him pull the levers and push the buttons that need attention. Make the moves that long term have the best effect on getting the economy back on tempo.
My Bet is 2013
The best thing for us all to do now is to be patient. Be watchful. Be mindful and be inventive. By all of us playing by the same rules we will see gradual but sustained growth. After all that is what we all want and all need. The return to the salad days will take some time but it will come. My bet is 2013.

Tuesday, November 2, 2010

We WILL Raise a Hand of Discontent

A Smoky Haze Over Washington
There has been a smoky haze over Washington for a long time now. To some of us the term smoky haze had a different meaning when we were in college but now it has a different meaning but the effect is the same…a stunned dazed look at nothing in particular and resulting in inarticulated movement. The result for us in the real world is economic stagnation. The effect on business is banking congestion. Banks are not lending and businesses are not growing and as a result new jobs are not being created and consumer spending is halted. Banks are uncertain of the future. We as citizens are uncertain of our future. Guess what everyone agrees that is the state of the economy we live in today. There is no argument.
Sober Up Washington
Washington must now sober up and clear their collective heads. The voter will tell the heads that we want solutions and not rhetoric on this election day. We want options not edicts. We need unbuckling of regulation not bridling. The tax incentives of the former administration stimulates business. Regulations bind business growth. And at a time when we need for Washington to go on its own diet of spending and growth the cause and effect of such will benefit us all in many different ways.
We WILL Raise a Hand of Discontent
Hey all you heads in Washington!!! Pay attention!!! Wake up!!! Sober up!!! Shrink spending!!! Reduce regulation!!! Provide the tax incentives to those that pay the majority of them to begin with!!! Put the economy back on track!!!! Or else you may not be fortunate enough next election to win. We WILL raise a hand of discontent with our votes.