Amidst Increased Security, We Get Ripped Off

Securities fraud cases are down 87% since 2000. Great News! On the surface, it appears that Wall Street has finally turned away from the dark side and the free market system of letting the market take care of itself is working for the good of everyone.

Don’t bet your life savings on it. This ‘miraculous’ turn of events is simply another Ponzi scheme. Instead of shifting money around to cover other debts, as is the idea of the Ponzi scheme, the federal government has been shifting investigative resources towards preventing terrorism and away from preventing the U.S. economy from being ripped off.

As a result of spending less time ferreting out the con artists that everyone knows are there, the FBI and the SEC has allowed the American taxpayer to be ripped off to the tune of billions of dollars to bailout the economy. How did our government best serve our interests in this brilliant maneuver?

We now have armed security forces roaming our airports rummaging through our luggage forcing us to take off our shoes and empty our water bottles. They see through our clothing to view every personal detail of our bodies. When they see fit, they confiscate our electronic equipment and force us to sit in rooms designated as ‘international zones’ so that the ‘authorities’ are not encumbered with Americans’ civil rights while we await further investigation. All this so we can visit relatives and friends. We are subjected to this humiliation while our fellow Americans on Wall Street are allowed to rip us off of our savings and our government further rips us off to bail them out. What a country.

Have we even had any terrorist threat to our airline industry since 2001? Some will argue that its because of all the security that we haven’t had any threats. How about using that same logic on Wall Street? If we watched our money handlers as stringently as we scrutinize our ‘friendly skies’ we wouldn’t be in this financial mess.

Wall Street claims it doesn’t need to be regulated. Free market cheerleaders say the economy should handle itself. The current state of the economy, swirling down the toilet, is a great argument for more regulation and less ‘free’ market.

It always comes down to humans cannot be trusted with other people’s money.

We will never see an end to corporate abuse. Even if there was a regulatory investigator on every corporate staff, there would not be enough honest, un-corruptible individuals to rid the American people of this type of evil.

To these guys, money no longer represents a hard working individual trying to make a better living for himself and his family by buying into the stock market dream of having your money work for you. This money becomes nothing more than another commodity that can and should be controlled and used to make more money for the fund manager. The implied promise to protect the owners investment becomes secondary. And if they have to bend a few rules or make unethical decisions that could result in a quick profit for themselves while there is no one watching over his shoulder then he will take that chance.

Obama has promised an overhaul of the SEC, but this is just a matter of course for an incoming authority when the current system has failed. In the end, nothing will really change, as long as humans are handling other peoples money, unregulated and without the threat of severe punishment, there will be fraud and deception.

Big 3 Automakers Need to Change Course

Bailing out the auto industry, without making significant changes to how they do business and what they produce, is not in the best long term interest of America or the environment. Bankruptcy may “not be an option” for automakers but it may very well be the best thing that could happen for consumers.

We are facing difficult economic times and America needs to change its attitude concerning what is really necessary to maintain healthy, satisfied lives. Our excesses have finally caught up with us and we must learn to now become more frugal. We have adopted a destructive throw-away mentality in this country that has to be reversed. The automotive industry is no exception.

There are far too many cars on the market. A Long Beach California port is warehousing thousands of new cars due to lack of buyers. Detroit has housed thousands of unwanted American-made cars over the last two years at Michigan’s state fairground and in lots at its airports. Car lots across the country remain crowded with unsold new cars. We need to make our cars last longer. We will survive without a new car every year or even every three years. Automakers do not need to make new model changes every year.

What is wrong with driving a used car a little longer? The Big 3 likes to tell us that the after-market parts industry will suffer without new cars every year, this is simply a scare tactic. As their cars age, car owners will need to replace parts and this will keep the after-market parts industry alive. Automakers need to concern themselves with making a product that produces less pollution, gets better fuel economy and lasts longer than just a couple of years. All of this can be done by combining current and developing technologies.

Wages in the auto industry are out of whack with the rest of the nations work force. They need to be brought in-line with everyone else.

Automaker CEO’s will actually survive without their exorbitant multi-million dollar a year salaries and private jets. My advice to them is to get your heads out of the clouds and live amongst the consumers you claim to care so much about. Take this time and the money already given to you to build the new breed of cars that the environment needs and Americans truly want.

Flying private jets to Washington to ask for financial help and then defending the practice as ‘standard procedure’ shows that their ‘standard procedure’ leans towards excess that a financially troubled corporation should not be indulging in. Are they more concerned with hanging on to their exalted perch so they can continue to loot their respective corporations than they are in keeping millions of Americans employed? Extremely high executive salaries and membership in exclusive country clubs, use of private jets, and various other miscellaneous fluff that typically goes with being the figurehead of a large American corporation does not help the average American auto worker put food on their table.

Auto executives say they are going to streamline business operations, keeping in mind that their idea of streamlined business operations in the past was to layoff thousands of workers and move their operations overseas, I can’t help but think they are a bit disingenuous in trying to convince us that asking for our help is going to benefit us.

This request for help, from an industry that affects so many aspects of American life, comes at a pivotal point in our economic and environmental health. The concerns of both must be taken into account, for they can both benefit if we proceed responsibly.

Should we bail them out of a situation of their own making? The painful lesson of British Leyland must be heeded in the limited effectiveness of bailouts. The government got in the business of trying to make a winner out of a structurally flawed company. Is the U.S. auto industry structurally flawed? They have already proven they are willing to deprive U.S. auto workers of jobs by sending those jobs outside the U.S. Flint Michigan, and ultimately the entire state, has been devastated due to auto executives decisions to hire cheaper labor in Mexico. And GM is currently building a $300 million facility to build cars in Russia.

And when Americans began turning away from American made cars in favor of foreign made cars that got better gas mileage, the U.S. auto makers, instead of listening to the trend and retooling their industry to make what Americans obviously wanted, their answer was to increase the production of gas guzzling behemoths to help keep the price of their product down. By ignoring consumers U.S. auto makers took a path that led to an oversaturated market of ever larger vehicles that increased our dependence on fossil fuel which in turn increased pollution. Environmentalist have been demanding for decades to have access to vehicles that addressed these two major concerns. Auto executives chose to ignore these demands and that decision put them in their current situation.

I don’t think they can be trusted to put America’s best interest first. Their current business model of bleeding the industry dry to pad their executives’ lifestyle and let their employees fend for themselves needs to end. They need to listen to their consumers to produce a safer and more fuel efficient product and prove they are willing to put America first by keeping jobs here in America.

Bailing them out is not going to force changes that need to take place. Perhaps the humbling experience of a bankruptcy is exactly what is called for.

Bailout? What Bailout?

Does acting quickly have the desired effect of appearing to know what you are doing? In the case of the $700B Wall Street bailout, the answer is apparently, No.

Treasury Secretary Henry Paulson panicked and cajoled Congress into passing a bailout that was identified as needed immediately in order to avert a looming economic crash that would have rivaled the stock market crash of 1929. In hindsight, his plan failed to have any effect and the stock market is still fluctuating wildly. Now, after being given complete control over how that money is to be used, he has changed course. This action has angered many who voted for the measure and has raised the question of his credibility and competence.

The plan was to buy troubled assets. Then the money was used to buy shares in banks. Now it’s going to be used to support financial institutions offering consumer credit. Democrats in Congress want some of the money to go to the auto industry.

The money was to be used to “stabilize” the economy. It didn’t stabilize anything.

The money was supposed to buy “troubled assets”, but it will not buy troubled assets.

The money was supposed to “rescue” Wall Street, but has only rescued some big banks and corporations. (The conspiracy theorist in me wants to think that those who were rescued had some ties to the Bush administration. Another theory has the federal government socializing the banking system. But these are fodder for other posts at another time).

The fact is Henry Paulson doesn’t have a clue how to best use this money and the program that was originally passed has changed. (Sounds an awful lot like a scam, doesn’t it).

The majority of House Republicans didn’t want any part of the original plan without more details and therefore did not vote for it. The plan was voted for by House GOP Leadership defying the wishes of the majority of members of their own House caucus. Now, some members of Congress, republicans and democrats alike, are supporting Bloomberg News in its legal demand that the Federal Reserve provide details of the bailout process.

It is down right scary to know that Congress will vote for a plan without details of that plan and place unprecedented power in the hands of a man who has now clearly shown does not know what to do with the money.

So, what we have is an extremely large pool of money (many say is not large enough), a man in charge of that fund who admittedly does not know what to do with it, and a faltering economy that desperately needs to be stabilized. Would demanding Paulson’s resignation improve things? I doubt it.

People are still loosing their homes and jobs, and our faith in our future is being badly shaken. CEO’s and big oil are walking away with record profits. Politicians grasp at any glimmer of hope to keep things working and no one is truly in control of anything.

Bailing out the auto industry

America’s automobile industry is suffering, along with the rest of our economy. Few of us are shedding tears over it. Those that are crying bailout depend on the auto industry for their livelihood.

Auto sales are at their lowest in 25 years. Chrysler sales are down 35%, General Motors sales are down 45%, Ford posted a loss of $3 billion in its latest report. They are all asking the federal government for a $25 billion bailout. This is in addition to the $25 billion already granted them just last quarter.

Let’s get past the question of whether or not the federal government should bail out all of the hard working middle class Americans who are suffering from the result of corporate greed and mismanagement and take a close look at what caused this problem and what we can do to turn it around.

The auto industry has a long history of sleeping with big oil and believe that since they are considered the manufacturing backbone of our economy that they should receive special benefit of a bailout anytime industry leaders decisions backfire on them.

In a free enterprise system, there are winners and there are losers. Winners keep themselves abreast of the latest technologies and consumer trends and adapt their products to keep up with the market. This is simple economic strategy and every successful business owner knows this rule inside and out. The American auto manufacturers have not followed this rule. They have repeatedly lost sales to far superior foreign products all the while knowing they had the ability to change their methodology to match or exceed their competitors products. They simply did not keep up with the competition. They lobbied the federal government to pass laws so that their products did not have to meet strict emissions standards even while foreign manufacturers were beating those standards. They did not take it upon themselves to make their product financially attractive enough to American consumers.

Why should they be bailed out when their own behavior has put them in this position? They ignored the writing on the wall when people began buying more fuel efficient foreign vehicles and instead of reinvesting in retooling to produce lighter-weight, more fuel-efficient vehicles continued to build the largest ‘land-yachts’ in the world.

Another major problem adding to the auto industry woes is the rising cost of doing business in America. Both the federal government and the union should share the blame for this. Runaway insurance costs, the increasing tax burden, wages and inflation have made it more attractive for many industries to move their operations overseas to healthier financial environments where they realized greater profits due to not having to pay such high overhead.

The American auto industry relied too heavily on the old sentimental loyalty of Americans to “buy American” and it backfired on them.

Now the auto industry is using American jobs as the reason they should be bailed out. They are probably correct in assuming that if this industry goes under the loss of tax revenue generated from automobile sales, the loss of income tax generated by workers and the loss of payments into social security will cripple this economy even further. The America economy will suffer far greater damage than we can imagine.

Some people compare bailing this industry out with bailing out the bankers and Wall Street CEO’s and they don’t want to see it. This industry differs in that it directly affects hundreds of thousands of jobs, each contributing to a tax base that drives this economy.

What can be done to help the economy and the auto industry in the long run depends on the cooperation of the federal government and the auto industry.

Government should rewrite its laws to allow, and force, auto manufacturers to produce competitive products.

Any foreign country that sells a car here should be required to manufacture it here, this will create jobs here and will help keep some of the money here in this country instead of shipping it overseas.

Create an international standard for fuel efficiency, gas emissions, and alternative means of power to help us get away from fossil fuels and force the auto industry to adhere to these standards.

Any car manufacturer that wants to ship vehicles to the U.S. should pay higher tariffs making less attractive for them to do so.

In fact, raising tariffs on everything that comes into this country would help other American industries as well. America has become the dumping ground of cheap products made overseas and this needs to stop. Americans used to feel a certain pride in making quality American products. There is no pride in sending our money overseas for product that should be made here.

Ideally, these changes will entice all industry to bring their manufacturing back to America and re-employ Americans.

Let’s face it, Americans are not loyal to American products, we are loyal to getting the best product for our money. It will always be this way.