A Solution for the Auto Industry

By Bill Glynn

This will be short and to the point. Like the 10% solution I have been touting to buy back and retire our national debt, I have another radical idea. Didn't the government say they wanted radical ideas and changes? If I were bailing out the whole auto industry, I would create a new company; let's call it Auto Manufacturing USA. Each automaker would contribute their manufacturing capacity - plant, property, equipment and, by the way, union contracts, into the new company. The new company then would look across all plants, product lines, capabilities and streamline the production of all automobiles for the big 3 or even foreign manufacturing. The optimization of the auto manufacturing sector - the challenge to convert all the plants and cars to being "more green" and the otherwise antiquated operations - could be addressed under one business strategy. The best of breed operations would be kept, others upgraded and all the plants retooled with the ability to produce each other cars. [more...]

Chrysler and GM: A Classic Case of Top Management Failure

By Ross Reck

The headline to an article in a February, 1968 issue of the Wall Street Journal read something like, "Domestic Automobile Sales Down, Foreign Automobile Sales Up; Japan Could Be Big Player Someday." Today, some 41 years later, with Chrysler and GM going into bankruptcy, are we in a position to fully appreciate the profoundness of that headline? The Japanese automakers took on the mighty U.S. automakers on their own turf and in a little over 40 years took control of the American auto industry. What’s more, they made it look easy. This begs the question: Why was it so easy for the Japanese automakers to walk in and take over? The answer is simple. The senior executives running the American auto companies were completely and totally out of touch with the basics of making and selling cars - they lacked hands-on knowledge and experience in dealing with front line employees, customers, suppliers and technologies. This made for pretty easy pickings for the Japanese auto executives who were well schooled in those same basics. Consequently, when the Japanese automakers moved in, the American automakers had nothing to counter with. For the Japanese, it was like fighting a battle where your counterparts had no weapons. And now, as Paul Harvey used to say, "You know the rest of the story." [more...]

GM Held Hostage

Money Talks - Employees and Stock Holders Walk
By Bill Glynn

I cannot believe that the GM bondholders are strangling GM. They have a choice to allow the business to operate and convert at least some of their bonds into stock although no guarantees that will work. This is the dilemma. Wouldn't it make sense that they are teed up to lose big money in a bankruptcy? Since they are bondholders they have a secured interest in the assets of GM. I believe their strategy is that no one is buying cars anyway, so regardless, GM is going bankrupt. Even if GM gets bailed out further, the bondholders at least will be in the driver's seat of a bankruptcy. This way they can make sure they are in the first position to get any money from a restructuring or sale of assets. In other words, they get their money out first up to the total face value of the bonds. Well guess what - mom and pop and mainstream will get virtually wiped out!

If GM declares bankruptcy because they are forced to because of the inflexibility of the bondholders those bondholders will be partially responsible for bringing down another American icon brand. There seems to be no way around bankruptcy and this is also largely because people aren't buying cars and that GM is backed into a corner. Strapped with unions, debt and lack of sales, I do not believe there is any way around it and I do not believe that the auto industry in its current form will be a surviving industry here in America anyway. As appalling as it sounds, these are the tea leaves. This industry is a dinosaur and just cannot compete globally.

The bondholders are strictly focused now on their ability to control GM assets in a bankruptcy. It is really the only thing they can do to protect their capital. It is not about people, shareholders or employees - it is all about the money. Money talks and people walk in this case. When you see several of America's top automakers forced into bankruptcy and are cratering before our eyes, we can't even fathom and measure the massive unemployment skyrocketing and huge loss of more money in the stock market. This is really bad - I mean REALLY bad - and watch for the other markets I have been ranting about because there are many more of these in other sectors to come. [more...]

Why Not Take the Fast Track Out of This Recession?

By Ross Reck

Right now there's not a lot of excitement in America, and rightfully so, because there's not a whole lot to get excited about. The economy is awful, people are still losing their jobs and homes continue to be foreclosed upon. Everyone would like to see this recession end sooner than later, but all indications are that it will end later - much later. This begs the question: is there anything that can be done to speed this process up so that we can begin to see the light at the end of the tunnel? The answer is YES and it's really quite simple; but the executives running American businesses must abandon their century-old practice of top-down management and replace it with company-wide collaboration. The assumption behind top-down management is that the people at the top possess all the necessary knowledge to make decisions that are in the best interest of the business. That assumption is no longer true. It's the employees on the front line - the people who do the work that the company gets paid for - who possess that knowledge. They're the ones who understand how the business works and they know what needs to be done to fix things. So, why not take advantage of this wealth of knowledge? [more...]

Americans Can't or Won't Consume: What it means to Chrysler and Many Others

By Bill Glynn

We are now seeing what I have been ranting about for a year. American consumption is the basis for our economy and a sustained recovery. This isn't going to happen soon enough and the economic affairs of this nation won't be back on track for up to a decade – if we don't corner ourselves into bankruptcy first. If you want an example, watch Chrysler and the rest of the automakers. They can't sell cars, damn it! How many times do we have to sit back and watch this? No one is buying cars and shutting down deal relationships that have 44,000 cars on the lots isn't going to help and certainly will crater a whole segment of the industry. This will for sure happen across almost every industry. Look at retail as well. If you want bell weathers for the economy, look no further. Home sales, credit card usage, investments, retail, auto – name it and it's all hurt badly. Why? We are a consumption economy. Until we get that right and everyone comes to grips with this fact, we will not get the real read on the damage now and to come. [more...]

Revolution: The First Shot of the Tax Revolt Begins in California!

By Wayne Allyn Root, 2008 Libertarian Vice Presidential Nominee

Tax and Spend Propositions Go Down in Flames Despite Out-Spending Opponents 10 to 1.

The People That Pay All the Taxes and Create All the Jobs Are in Revolt.

The model for America: NEVADA where the state constitution bans income taxes.

Whatever revolution starts in California always spreads to the nation. In arguably the most liberal state in America, California taxpayers sent a message to the nation on Tuesday: "We've had enough and we're not going to take it anymore!" California voters shocked the political establishment by rejecting a slew of propositions meant to save California from a massive, unsustainable $15 to $23 billion-dollar budget deficit, by taxing and spending some more. All the tax-and-spend propositions went down to a resounding defeat, despite a $30 million spending campaign. Perhaps these big government proponents should have instead saved the $30 million and applied it to the deficit. The results were remarkable considering that proponents of "tax and spend" out-spent the opposition by 10 to 1. [more...]

The Government's Iron Fist

By Bill Glynn

I have a question. If government can't balance a checkbook and run itself other than into the ground, then why on earth would we believe that they can dictate business practices and take over more and more of the system? These people must really believe in themselves and their business savvy. Well, we all know its career politicians, lawyers, public personalities and, yes, some sharp business people that are in the vast minority in Congress. I can't rant strong enough to get the point across that our government at federal, state and local levels is frankly incompetent and here we are letting them dictate how business is run.

The unprecedented interdiction of the government into our banking system was, sorry to say, absolutely necessary or we would have had a collapse. However, Obama is driving his fist through massive government expansion into the face of capitalism. The door has been cast wide open for Obama to spend trillions of dollars to expand government like we have never seen and dictate to private industry what it can and cannot do. Automakers are one example and credit card companies another of late. Is this the price of doing business with the government? Can these government people help or hurt the industry and companies they are "bailing out?" [more...]

Paying Socialism Forward

By Roger Hedgecock

President Obama has proposed massive increases in federal government spending and trillion dollar deficits as far as the eye can see. But last week, he said such deficit spending was "unsustainable." He's right. Not four months into his term of office, President Obama has:

• doubled the fiscal year deficit by adding $460 billion to the Bush budget he inherited;


• proposed an astounding $1.8 trillion deficit for FY 2010, and


• projected adding $9 trillion over 10 years to the existing accumulated U.S. debt of $8 trillion.

Obama's pledge to "cut the deficit in half" by the fourth year of his term is to be achieved first by tripling the deficit this year, then cutting that amount in half three years later - still leaving a deficit in FY 2012 bigger than any year since 1945. And that's if Congress doesn't spend more than the president asks for - which is what Congress does every year. Finding lenders for this record amount of debt looks problematic. Recent Treasury debt auctions featured discounted prices and higher than expected interest rates, fueling speculation that the AAA-rated U.S. debt may already be losing its luster. [more...]

Workplace Abuse Keeping America in Recession

By Ross Reck, PhD

Zogby International conducted 7,740 online interviews of a panel that is representative or the adult population of the U.S. The survey found that not only were tens of millions of workers not being treated well, but 37% or an estimated 54 million American workers had personally experienced an extreme form of workplace abuse referred to as "bullying."

The study defined bullying as "repeated health-harming mistreatment" that takes one or more of the following forms:

*Verbal abuse: shouting, swearing, name calling and malicious sarcasm
* Offensive behaviors: threatening, intimidating, humiliating and inappropriately cruel conduct
* Work interference: sabotage, which prevents work from being done

The study also found that an additional 12% of the American workforce (or 17.5 million people) had personally witnessed bullying behavior. This means that 49% of the workforce or 71.5 million American workers have been touched by this extreme form or workplace abuse. And, who are these bullies? Seventy-three percent of them were bosses/managers!

This is not only an outrage; it's immoral, cruel and barbaric; and it's keeping us in this recession. When employees feel abused, their motivation is to get even and find another job somewhere else. Researchers Gostick and Elton estimate the cost of employee turnover in America to be $1.7 trillion annually. Then, if you factor in the other things employees are motivated to do when they feel they're being abused such as taking more sick days, missing work more often, stealing from the company, doing as little work as possible and a poorer quality of work, convincing other employees not to work as hard and refusing to share their ideas on how to improve products and services, we're probably looking at a four to five trillion dollar price tag for this abusive behavior. This is huge especially given that the size of the entire American economy is only $14 trillion. Just think of the shot in the arm it would be to our economy if American business could recover a sizeable chunk of this amount.

The question then becomes: can this mess be turned around? The answer is yes, and it can be turned around immediately, but it's up to the senior managers who run American businesses. They could easily reclaim the lion's share of these four to five trillion dollars if they would do the following three things sincerely, consistently and well... [more...]

Proof That Obama's Economic Plans Are Wrong for America

By Wayne Allyn Root, 2008 Libertarian Vice Presidential Nominee

Capitalism works in Las Vegas, Nevada! Las Vegas home sales are up a staggering 86%! Could Las Vegas be the first out of the recession? While President Obama moves our country and economy further away from capitalism, entrepreneurism and personal responsibility, my adopted hometown of Las Vegas, Nevada proves that the opposite direction is the one that works. Despite the worst economic downturn since 1929 (that I correctly labeled as a "depression" in the Spring of 2008), and a national economy showing few signs of life, Las Vegas is springing back to life. As usual, the most capitalist and fiscally conservative economy in the nation (Nevada) will be the first out of the recession.

In a sign that the local Nevada economy is far outpacing the nation, despite today's gloomy report that national retail sales are once again in decline, Las Vegas home sales were up a staggering 86% month-to-month. Yes, I said 86%! In the middle of an economic tsunami, capitalism is alive and well in Las Vegas. This is the 12th consecutive month of improvement in home sales in Las Vegas. Other signs of recovery in Las Vegas: hotel occupancy is up; the visitor count is up; and MGM Mirage just announced its first increase in hotel room prices in months. All of these are positive signs that Las Vegas is springing back to life to lead America's recovery. [more...]

The Medicare Program is Expected to Run Out of Money in Just Eight Years

By Robert Weiss

Released today, the Medicare Trustee report predicted that the Medicare program is expected to run out of money in just eight years. Medicare, now in its fifth decade, provides health insurance to about 45 million - mostly senior citizens. The Social Security trust fund is expected to run out of money in 2037. Social Security and Medicare are financed primarily by taxes evenly divided between workers and employers that amount to 15.3% of wages. The current economic downturn, which has resulted in the elimination of millions of jobs, has further eroded Medicare.

I, Robert H. Weiss, have written many blogs about the under-funding of pensions and pension fraud around the country – when people retire and see their savings go under water, they look to the safety of Medicare and Social Security to help them weather the storm. With the rising costs of private healthcare insurance, and rising numbers of unemployed Americans, we need to take back control of our country. It is not an excuse to blame the "economic crisis" for losses in Social Security and Medicare benefits. Billions of dollars have gone to banks – it is time we take these dollars back. These are American dollars that belong to American people – not corporations. We must stand up for our rights now. [more...]

Before You Create a Portfolio Using a 72t Withdrawal Program...

By Robert Weiss

It's no secret that virtually all 401(k), IRA, pension and retirement plan participants can suffer IRS penalties for early withdrawals. In fact, many investors know little else about the stock market or securities except for the potential tax liabilities. One method of avoiding early withdrawal penalties has been to create a portfolio using a 72t withdrawal program. Unfortunately for many investors, advisers do not accurately describe the program or forecast realistic growth in the account. In order for a penalty to be waived using a 72t withdrawal program, the program must meet the test of being "substantially equal periodic payments" as provided under 72t.

The payments to the customer are developed using sophisticated methodologies but one of the most important decisions a customer or adviser must make is the interest rate at which the payments will be based on. That is because principal is being depleted over the life expectancy of the investor and that amortization of principal represents a return of principal. In most cases, the customer always believed and was motivated by promises of an estate, but the full amortization schedule shows that at the end of his life expectancy, the customer will have nothing. It is common practice to use a very high interest rate thereby creating a larger monthly payment to the customer – therein lies the problem. Once the withdrawal begins, it cannot be changed (until of course age 62 or 5 years). If a change occurs, there is a 10% penalty! The investor can only sit idly by, watching his portfolio deplete more and more each month.

Given the nature of these complex programs, a 72t case requires a highly experienced securities attorney who can understand the sophistication such a case requires. As a securities attorney who has battled nearly every brokerage firm on Wall Street, I have the ability to stand up for your rights! I am tired of brokers taking advantage of their customers' lack of knowledge in securities. I have countless number of clients who seek brokers because they simply do not have the understanding to handle their own portfolios. They tell me, "Who else would I turn to?" After their retirement savings are left in shambles, I am the person to pick up the pieces. It's my job as an attorney and consumer advocate – I will fight for your rights. [more...]

Welcome to Thug Capitalism

How Obama Conducted a Mafia-Style Shakedown and Stole Chrysler From Secured Lenders and Handed the Stolen Goods to the Auto Unions
By Wayne Allyn Root, 2008 Libertarian Vice Presidential nominee

I've been arguing for two years now that Barack Obama and his anti-capitalism, pro-union friends want to change the way America does business. I've stated out loud on numerous occasions that their goal is to destroy (or certainly badly damage) capitalism and tilt the playing field in favor of socialism. I've argued that Obama is trying to turn the U.S. economy into FRANCE - a country dominated by big government and big unions. Well, I wish I were wrong, but my worst fears were realized last week when Obama literally stole the ownership of Chrysler from capitalist investors and risk-takers, and handed the stolen property to the auto worker unions that supported him in the recent presidential election. It was a shakedown that would make John Gotti or the leaders of the Crips and Bloods proud. [more...]