Chrysler: Who's Going to Own It?

Obama, akin to typical liberal positions, blamed speculators for the failure of the auto maker giant, Chrysler; not the unappealing passenger cars, dismal quality, little technology, minimal international operations. The Financial Times this morning said that "Obama laid blame for the bankruptcy filing at 'a small group of speculators.'" This small group of speculators, hedge fund managers, blocked an out of court negotiation to trade almost 7 billion of debt for 2 billion in cash. That sounds like a no-brainer to me. It's like saying "oh, you got a check from your parents for a thousand dollars, great, I'll give you $286 in cash for it." I think the problem with situations like this is the numbers are so inconceivable to the average person, we lose the reality of the numbers' significance.

So what is the significance of these bad speculators who refused to accept a third of their due money? Chrysler files for chapter 11. Now this does not equate a "Going out of Business Sale" or a "We're Closing for Good; Up to 90% Off." What it actually means is that Chrysler will have to restructure and make some changes. (see specifics here.) One of the significances however of this chapter 11 filing, is that finally the Unions will have to understand the economics of their organizations.

Unions were established with a worthy mission: to protect workers from harsh and unfair practices of employers. In the beginning of industrialization these institutions were needed. Employers followed horrible ethical standards, thereby necessitating worker organization for individual rights and freedoms. Now, however, lawmakers have passed enough legislation protecting individuals for abusive treatment, the only function Unions serve is contract negotiation. And given the basics, such as leave, breaks, maximum number of hours etc., is negotiated in Congress, really all these Unions negotiate is the pay scale and frequency at which increases are given.

It behooves the Union representatives to negotiate the best wages for their constituents, given they are paid via a percentage of the employees wage. For example, let's say I am a Union representative and I am responsible for negotiating my local chapters' upcoming contract renewal. Let's assume the average employee is making $30.00/hour and I'm making 4% of that through dues and fees, if I negotiate a 7% increase, by threatening strikes or performance slowdowns if I don't receive it, by default my earnings rise 7%. This leaves the Union contract negotiators subject to similar ethics standards once abused by employers. If, still being that union contract negotiator, I need to put an addition onto my house to accommodate my needed bar, I fight to the death for that 7%. Maybe I get 7, maybe I get 5, but if they refuse all of it, my greed puts the company at a halt until, "We, the disenchanted employees, receive our fair share from the Big Bad Employer/Corporation."

Aside from the potential greed and ethics violations by the Unions they also boast their ability to command a significantly greater wage for their "protected" workers. The graph to the right illustrates the Unions boasting and the UAW's website proclaims the ability to command, on average, $11.03 per hour more that can the non unionized auto worker companies. According to the UAW website: "Union workers earn more. Wages and benefits for the average union worker in the private sector totaled $36.65 per hour in September 2008, compared to $25.92 an hour for the typical non-union worker." This may all seem pretty good; but really, is it?

Again according to the UAW website, I found that they have "approximately 710,000 active members and over 500,000 retired members in the United States, Canada and Puerto Rico." These million plus employees from UAW "represent skilled trades and production workers at General Motors, Ford and DaimlerChrysler. In addition, the UAW represents several thousand salaried employees — including engineers, designers and draftsmen — at DaimlerChrysler, Ford and General Motors." That said, we have to wonder what is really going on. The UAW has some of the highest paid employees in the industry; they have more than a million people represented; and they have contract negotiators upping the price of wages, what does this all equate, artificially inflated wages and drainage on corporate P&E.

The London School of Economics, one of the leading institutions for producing economists, reports that labour unions: "raise wages; reduce employment; reduce profits; and where capital they would also reduce investment." What this is essentially saying, if you believe the economists at the 66th highest ranked school of economics in the world, is that Unions are a cause of great disaster in businesses and the workforce. One of the greatest thinkers of economics came from this school, Friedrich Hayek, nobel prize winner and inspiration to Reagan and Thatcher; there is little proof that Lady Thatcher's union busting days and Reagan's economic plans didn't provide great prosperity. So if great schools are producing information like this against unions, how does that relate to what Obama said regarding Chrysler?

I'm arguing that it isn't "a small group of speculators" that caused their bankruptcy, it was Union greed and less than desirable products that have brought this 84-year-old company to its knees. The irony that some may fail to see; I did, my coworker pointed it out, is now the UAW, those promoters of institution crippling policies, by artificially increasing wages, own 55% of the company.

I feel for all the workers who suffer at the expense of this once useful, now failed institution we call labor unions. I can't help but chuckle, however, at the paradox. UAW will have to figure out how to earn a profit by cutting costs, and simultaneously maintaining their proud, puffed chest and saying that they employ roughly a million people who make more than market priced earnings.

Wages are paid by the consumer. That's what Ludwig von Mises, an Austrian School economist argued in his book, Planning for Freedom. (You can read the excerpt here.) Doesn't it then sound redundant for UAW teamsters to negotiate wage increases when the organizations are going to turn the cost back to the consumer?

Behold, Our New Savior; Real or Failure?

April 29, a day that will live in infamy. Union Square in New York City will unveil a "crowned" image of President Barack Hussein Obama on April 29, reinforcing the stereotype that the Messiah has come and our day of reckoning is near. All hail Him; He who is holier than thou; He who will lift the United States from its terrible, humility void, worldly image. Yes, He, the most humble of us all, He who refuses to read anything but a teleprompter for fear that he wont see the faces of His servants (critics thought Bush was bad for making up words, Obama can't do that, no jokes, no "fill in the blank" until the people realize they made an error in the prompter position; too bad).



There seems to be quite a bit of Church and State unification from a party that so avidly denounces its presence in government. So why is there a resurgence in Obama iconography?

This week marks Obama's first 100 days in office and the verdict is still out on whether he's doing a great, good, fair, poor, or horrible job as Commander in Chief. It isn't surprising that the Washington Post sees his tenure as positive thus far. The article on Sunday April 26 said "Obama off to a Solid Start," according to polls. Frankly though, I don't understand how the Post can simultaneously report this and have another article saying "A Hundred Anxious Days...Obama Supporters...Going From Fired Up to Tired Out."

I also don't see how there can still be claims that Obama is doing well when you look at the net changes in approval. Rasmussen tracks the POTUS performance on a daily basis, and Obama's is less than stellar. Between January 21 and today there is a net increase in total disapproval of 14% and a net decrease in total approval of 10%, but worse, there is a 23 point drop in the Presidential Approval Index. MSNBC has also done a poll asking readers to give Obama a grade. When World Net Daily wrote their associated article, 60% of the 110,000 responders gave Obama an "F!" (I got a lot of those in high school and you really have to work hard to get them.) That same questionnaire now breaks down 3.25 million responders, 37% gave an "A," 38% an "F;" there were 12% "D's," 7 "B's," and 4.5% "C's."

Regardless what all the skewed news services say, Obama's losing approval and supporters. Obama is also starting to have his beloved media, like CNN, ask the tough questions he never imagined or wanted. This, to me says he's failing. If Obama makes promises he can't keep and subsequently breaks them, he's doing his constituents a disservice. Now that the media is turning, it wont be long before Obama has to ask approval of his agenda rather that telling America what he's doing.

I want to end this post with a great quote from a great man, one of the Founding Fathers of the United States of America. I hope Obama can heed this advice and I hope all constituents follow it through the electoral process. If we fail at this, we have failed as a nation and certainly we, as a country, would face dissolution.


“When the people fear their government, there is tyranny; when the government fears the people, there is liberty.”

Thomas Jefferson

Stimulus Status; Success or Flop?

Today, world news is clamoring about mayhem and chaos related to the financial state of nations. In Jamaica, the government deployed the army as a disaster prevention measure before they announced "tax increases on gasoline, cigarettes and other consumer items."In 1999 riots erupted and 9 were killed when a gas tax was introduced. The Times online states "EDF Strikers Cut Power to French Homes" in an attempt to gain more salary from the French government and "to push back the capitalist logic which has crept into the company;” all an apparent attack on perceived failures of capitalism. Apparently as a reaction to Germany's declaration that GDP will shrink 6% in 2009, The Telegraph declared "Germany's slump risks 'explosive' mood as second banking crisis looms." The Social Democrats presidential candidate claims that "'the mood could turn explosive" over the next three months unless the government takes drastic action;"

So what kind of drastic action do these countries need to take?

Joe Biden claimed "we do believe that this [the stimulus package] is what is necessary to get the engine going again in the States." POTUS postulated that such an "unprecedented crisis" "calls for unprecedented action!"

World citizens have now seen what this unprecedented action is. The Obama administration is now responsible for engaging every man woman and child in the U.S. in debt unfathomable for the entirety of their existence. Team Obama, Geithner, Reid and Pelosi has now committed us to $12.8 trillion which will take decades to pay off.

So what's the consensus of the stimulus package?

Geithner, with apparently nothing better to do, wrote in the financial times Thursday, that the "economy has shown signs that the worst of the recession may be easing." Well this is GREAT news! It's call for celebration. So how'd it happen? The stimulus must be working, right? Well not exactly.

According to this morning's Wall Street Journal, "Stimulus Spending Gets a Slow Start, GAO Finds." Apparently "states had yet to spend 'significant amounts'" of their money. Only three states, South Dakota, California and Illinois, have completed the application to receive the "State Fiscal Stabilization Fund" (of course Illinois has). A meager $49 billion is set to go to the states and communities by September 30. Most wont get the majority of their money, $108 billion, until FY 2010 and the remaining $123 billion for states and communities wont fully have trickled out until 2016. Please see this page for details.

So what are the reasons Geithner can say the "economic downturn may be slackening?" It certainly doesn't appear to be from the stimulus package. So where's it coming from? I would argue that this is a direct result in Adam Smiths argument that there's an invisible hand in economics that helps the market move. I would also argue that Joseph Stiglitz is completely wrong with his statement that the invisible hand "is often not there."

The economy is rebounding. We can see evidence of this in market performance; we can see it in increased sales of some consumer goods. What is not happening however is the economy rebounding tremendously from increased spending or from the stimulus package. Recently Obama decided he was going to petition members of his cabinet to use both sides of their paper, shake pens to get all the ink out, and even reuse coffee grounds in an effort to save money. Obama would show more of a gesture by taking one for the team and announcing he's suspending his salary for a year. In case your interested and to fully comprehend the size of a trillion dollars and what Obama proposed cut, see the chart to the right.

Robert Gibbs Flubs Question on Spending

This video accompanies the article I wrote yesterday. Gibbs clearly states that $100 million dollars is a huge amount of money. Yet when asked how he could say several weeks ago that 8 billion was minuscule, he turned into a true politician and lied.

His response was: "it all adds up." Sounds to me like a double standard.

What Did You Say? Cut Spending? OK, Only a Fraction Though

Ding, Dong, Ding, Dong, sound the bells! Play the victory song Obama is listening! Well, maybe, but certainly not sufficiently. This morning Obama heeded the cries of hundreds of thousands of Americans across the country who demanded an end to the Obama spending spree by telling his cabinet members to cut the budget $100 million dollars.

Wow, $100 million!

Lets look at $100 million dollars. The picture to the right is of $100 million dollars. This seems like a lot of money. If I found that in my basement I'd be pretty happy. Most of us wouldn't be able to spend it in a lifetime...well maybe I could but not without a lot of work. I may have to find an island to buy, several yachts, and a few exotic sports cars. I'd have enough to throw a few million to my closest friends; you're welcome. This is what Obama decided to cut from the current budget.

Now lets look at a trillion dollars. A trillion is a little more than a hundred million. This is the amount Obama spent with one signature to get the banks lending again. The second picture to the right is of a trillion dollars. You may have to click on it for the full effect but the same man featured above drooling over his pallet of cash is dwarfed next to the warehouse of money represented here. This is 1/12 of what Obama has promised groups, organizations and industries of yours, mine and our children's future.

Again I'll mention the Congressional Budget Office's estimation that in 2019 we'll be putting forth 80 some percent of GDP to pay our national debt. And all Obama can do is cut 100 million!? If we need national defense to protect our precious resources Obama wants to give away to the Iranians, Cubans and Venezuelans we wont be able to put 80+ percent toward debt. We currently spend about 6% on education, about 5% on defense, and about 7% on health care. That's almost the remaining 20%. So what about infrastructure, interest, transportation, emergency relief, humanitarian aid, paying government employees, our World Bank, IMF, U.N. promises or anything else? Well I guess in the years coming they'll just have to wait.

Let's look at the actual numbers. One hundred million: 100,000,000, okay; one trillion: 1,000,000,000,000, yikes! 10,000, one hundred millions, equals one trillion. So ten thousand countries with one hundred million people, equals 1 trillion. Maybe a better perspective: there are apparently 3,873,000,000 bricks in the great wall of China, at that rate there would have to be 258 great wall's to reach 1 trillion bricks. The state of Indiana is about 1 trillion square feet. The new Colts stadium is 1.8 million square feet, which means you could put almost 56 into the 100 million square feet, then 10,000 of those into the whole state of Indiana. In all you could have 56,000 new Colts stadiums; wow would Payton Manning have a field day. Where would we put them? Anyway, you get the idea.

Needless to say 100 million is a pathetic number when looking at the total. And I only used 1 trillion as my reference, imagine if it were the 12.8 that Bloomberg estimates.

I would have to concede a little credit though if I felt the policies of spending us out of a recession at the expense of future generations were working, but really they aren't. Lets look at the banking industry. We'll use a conservative number and say of the 12.8 trillion promised thus far, only four trillion goes directly to the Banks. And given 2008's GDP was 14.2 trillion dollars, that's a tremendous influx of capital; almost 1/3 more. From that huge investment, we would assume capital is beginning to flow like wine, right. Wrong!

This morning's Wall Street Journal says that of the 21 banks receiving TARP money, 19 show a 23% decrease in new loans from October when the program began. In addition, of those 21 banks receiving money, there was a 4.7% decline in new loans between January and February.

I'd also concede credit if another benchmark to measure success were showing signs of improvement. Currently the jobless claims are almost as high as they have been since the Carter administration. If we look at the U.S. Bureau of Labor Statistics, they show 2/3 of all losses have been in the last 5 months, during the heaviest of spending. In March the Department of Labor reported a loss of 633,000 jobs and analysts say that the stimulus package will "only slow the pace of job losses."

Spending $12.8 trillion dollars doesn't seem like a viable solution. Neither does Obama's decision to trim a measly $100 million off the budget. It may be something, and critics will argue to give credit for that, but more can be done. What Obama needs to do is reevaluate his policies to conserve capital. He needs to spend it as if there weren't an unlimited supply. Obama needs also to welcome the payback of funds by corporations such as JPMorgan Chase, Morgan Stanley, TCF and others with no stipulations or restrictions; currently this isn't happening.

Obama, watch your step or you're going to be replace in a, short for you, long for us, four years. Certainly there will be an end to your attempted socialism in 2010.

Tax Day Tea Party...Lessons Learned.

Obama says he gets it. He gets why a couple thousand people gathered in front of his, well actually, our house yesterday and countless more gathered across the nation. But frankly, I think Obama and his advisers have missed the whole point entirely.

In this mornings Wall Street Journal, Obama is said to have seen the calls of the constituents and decided to reform the "monstrous tax code" with one plan being so that 40% of Americans wont have to file income tax. He claims that this break will be in addition to the break that came with the stimulus bill where taxes are supposedly cut for 95% of Americans, and that should suffice the protesters across the nation.

I don't think that the people protesting though are as concerned about current taxes as they are about perceived taxes from the Socialists hefty spending agenda. In the three long months Obama has been in office, he and his cronies, Nancy Pelosi and Harry Reid, have "lent or committed $12.8 trillion dollars" to different programs. These facts are horrific and this is what has people taking to the streets. By 2019, the Congressional Budget Office estimates that Obama's spending will reach 82% of GDP. This essentially says 82% of GDP in 2019 will not go towards education, infrastructure, national defense or anything other than paying off debt. It is the fear that our future generations will have to pay this off, reducing their standard of living, reducing the possibility of their prosperity, and reducing more of the marginal people into poverty given product inflation and currency devaluation. Ultimately, to pay for all this, people will have significantly higher taxes.

This is why people took to the streets! Not because they want simplification of the tax code.

Obama claims he sympathizes with us all. But really, how can he? Yesterday it became known, because of congressional law, what the Obamas made in 2008. The Obama's 2008 tax return (read here) shows the two earning roughly $2.7 million. Are these the earnings of a man who can relate to the average person? (Just as an aside; although all SSN's would be blocked for security reasons, careful examination of the 1040 shows where Malia, Natasha and Michelle's were whited out. There are even remnants of Michelle's numbers but Barack's area is completely clear, as if there was never a SSN listed. Rather interesting!)

Obama's exuberant earnings place him over and above the ability to sympathize with an ordinary citizen. I think he lives in a mythical dream world where all is bliss. What Obama really needs to do though is come back to reality, hear the calls of the people and quit spending so much money.

RightWing Radical...A New DHS Report!

On April 7th, 2009 the Department of Homeland Security issued a new report (can be read here) indicating that RightWing terrorists or extremists are gaining ground and need to be watched or diffused.

Within the first paragraphs, the report indicates that "the economic downturn and the election of the first African American president present unique drivers for rightwing radicalization and recruitment." Nowhere in the document is it stated that the policies of the new radical Leftwing President are the reasons for a resurgence in radicalization and recruitment.

The document does define, however, the term rightwing extremism as "those that are mainly antigovernment, rejecting federal authority in favor of state and local authority, or rejecting government authority entirely." Essentially this definition encompasses conservatives, libertarians, socially liberal conservatives, free market economists or, frankly, anyone that favors the Constitution of the United States of America.

The 10th Ammendment clearly gives power to the States over the federal government. It reads: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

This was what we were supposed to have; a federalist government that provides power to the people and the States while limiting that of the Federal branches. Where is this administration coming up with this stuff? When will it end?

Under the Legislative and Judicial Drivers section, DHS warns that those clinging to their guns and religion should be watched more closely because:

"Many rightwing extremist groups perceive recent gun control legislation as a threat to their right to bear arms and in response have increased weapons and ammunition stockpiling, as well as renewed participation in paramilitary training exercises."

I think the administration is forewarning us that they plan an attack on our rights declared in the amendments of the constitution. This wouldn't be a surprise given we learned throughout the campaign that Obama feels our constitution is a living breathing document, one in need of adjustments.

I head this morning a couple of federal defense attorneys saying that "no Democrat wants a gun law legislation battle because they'd lose key interior states." But, if a new report shows that the radicals toting the guns are a threat to society because they are maliciously reacting to economic downturn or the historic election of the first African-American president, legislators can argue that it's for the protection of the majority.

My personal views are that this administration is going too far. We thought Bush invaded our personal liberties with the "Patriot Act;" this radical Liberal leftwing terrorist named Obama is worse. Obama is destroying our freedom and limiting our inherent rights as citizens of the U.S. Regardless of his skin color or the economic situation, Obama is making bad choices for the country. These bad choices making the country worse are why people are reacting to Obama and if he continues along this path, we'll have a totalitarian state.

Do you regret voting for Obama? I would if I'd voted for him!