Really?! You want to raise taxes on everyone making more than $250,000 annually and on corporations?
Really?!
Let's walk through this for a moment...
If I were the hypothetical owner of a small business that had $15 million in revenue I could employ up to 100 people. I might make almost $500,000 a year personally. I just found out that both my personal and business taxes are being raised. What will I do?
1) My first response will be to raise prices to cover the increase in tax expenses. But this looks like a very difficult thing to do in our current economy. I need sales volumes to stay up.
2) I'll contact my lawyer and CPA and ask about how to avoid the full increase. But that doesn't offer a lot of hope.
3) I might hope that the economy gets better fast. I need my sales to pick up almost 20% to make up for the extra expenses. But once again, this economy isn't offering much hope of that.
4) Left with no other choice, I need to get rid of some employee overhead by firing some of my workers. How many? Let's start with 20% (20 jobs if I employ 100 workers). This allows my income to be mostly protected, and actually gives me less people to manage.
Option #4 is an obvious choice in this situation for business owners. They took the necessary risks to start their businesses, and they will take the necessary steps to protect them. Firing employees is the natural reaction to a large tax increase.
So now we have less jobs, and less people spending money. This leads to fewer sales and less company revenue. Now I need to fire some more workers. Anyone else feel like we are falling?
In the meantime, business owners will invest less in the stock market, fearful of losing liquid cash that may be needed for taxes. They will also buy fewer cars, houses, etc. So in essence, we are encouraging our biggest shoppers to stay home and worry about taxes.
Great plan! Really encouraging!! I bet Pelosi loves it!!!
Friday, February 27, 2009
Thursday, February 26, 2009
A Look Inside
This morning I had an MRI done on my right wrist due to a small motorcycle accident. My doctor is worried that I may have torn some cartilage, and he wanted to take a look. I quickly found out that "taking a look" involved inserting a needle into the middle of my wrist to inject metallic fluid that would help the MRI improve the viewing contrast for the soft tissues. OUCH!!
This experience left me wanting an inside look at the government budgets. I know there are symptoms, and I know that the systems we are dealing with are complex. So why can't I look inside to find out what is really going on? I'm willing to stick them with a needle if it helps!
Unfortunately, I don't think I will get to stick anyone, but I would still love the chance to follow $1 through the government process. Who touches it? How big is the bureaucratic load? How long does it take to get from my tax payment to a final destination, and what is the final destination?
Without having a way to answer these questions, I am left blind. I can't verify anything. I don't trust any of them (politicians). And I can't stop any of it.
All the while the spending increases. Republicans. Democrats. It doesn't matter. They all want to get their hands on tax money in order to spend their way to power. They help friends, they help friends of friends, and occasionally voter groups. They deal with each other like they are trading baseball cards, but instead they are trading spending bills using my money.
I'll vote for, and donate money to, the first person I can find that will SHOW ME THE MONEY (and where it goes)! This person will be hated by traditional politicians. This person will find closed doors anytime he/she asks for help. But this person could also rescue our country from backroom spending habits that are killing our future. Where are you?!
This experience left me wanting an inside look at the government budgets. I know there are symptoms, and I know that the systems we are dealing with are complex. So why can't I look inside to find out what is really going on? I'm willing to stick them with a needle if it helps!
Unfortunately, I don't think I will get to stick anyone, but I would still love the chance to follow $1 through the government process. Who touches it? How big is the bureaucratic load? How long does it take to get from my tax payment to a final destination, and what is the final destination?
Without having a way to answer these questions, I am left blind. I can't verify anything. I don't trust any of them (politicians). And I can't stop any of it.
All the while the spending increases. Republicans. Democrats. It doesn't matter. They all want to get their hands on tax money in order to spend their way to power. They help friends, they help friends of friends, and occasionally voter groups. They deal with each other like they are trading baseball cards, but instead they are trading spending bills using my money.
I'll vote for, and donate money to, the first person I can find that will SHOW ME THE MONEY (and where it goes)! This person will be hated by traditional politicians. This person will find closed doors anytime he/she asks for help. But this person could also rescue our country from backroom spending habits that are killing our future. Where are you?!
Wednesday, February 25, 2009
Patterns & Promises
We have a dangerous pattern taking shape: President Obama speaks - the markets go down.
There are two explanations that occur to me:
1) The market is in a spiral and will go down no matter who speaks.
2) President Obama continues to add mystery to future instead of clarifying plans.
Last night our president gave a very rousing speech. He was hopeful and strong in his delivery. He stated his goals for moving forward, goals that made a lot of sense in the context of his speech. But he failed to give any clear idea of how we will get there, leaving markets with the big question of "How will we pay for all of this?".
The only area mentioned that would generate money was the tax increase for families making more than $250,000 per year. Most of American will feel good about that. Unfortunately, most of America aren't serious investors. Most families, or individuals, that invest with any effect in the markets, make more than $250,000 per year.
Last night was a great pep talk, but I am far from assured that we are on a path that offers relief. Instead I have new fears about big government plans to ask for much more bailout money for banks. I have fears that I, as a responsible tax payer, am being asked to sacrifice while the UAW and Wall Street do their best to get back to the old way that seemed to pay them so well. And frankly, I'm not impressed.
There are two explanations that occur to me:
1) The market is in a spiral and will go down no matter who speaks.
2) President Obama continues to add mystery to future instead of clarifying plans.
Last night our president gave a very rousing speech. He was hopeful and strong in his delivery. He stated his goals for moving forward, goals that made a lot of sense in the context of his speech. But he failed to give any clear idea of how we will get there, leaving markets with the big question of "How will we pay for all of this?".
The only area mentioned that would generate money was the tax increase for families making more than $250,000 per year. Most of American will feel good about that. Unfortunately, most of America aren't serious investors. Most families, or individuals, that invest with any effect in the markets, make more than $250,000 per year.
Last night was a great pep talk, but I am far from assured that we are on a path that offers relief. Instead I have new fears about big government plans to ask for much more bailout money for banks. I have fears that I, as a responsible tax payer, am being asked to sacrifice while the UAW and Wall Street do their best to get back to the old way that seemed to pay them so well. And frankly, I'm not impressed.
Tuesday, February 24, 2009
Jindal
Tonight president Obama will address congress, with all attention focused on the economy. Let's see if we can guess the message:
1) There will be sacrifices (but I'd rather not mention them right now).
2) Give the stimulus package time to work (please let it work).
3) Yes We Can! (I think, but I'm really scared by everything I've learned since taking office).
The market has been cut in half, and the drop has been lead by stocks that were once considered the safest for retirees: bank stocks. Wall Street has gambled and lost, with other people's money (OPM). The UAW wants taxpayers to bail out their retired workers. Homeowners in foreclosure want government relief. And oh yeah, we expect our president to magically fix it.
Enter Bobby Jindal, 37 year old republican governor of Louisiana. He's a minority, he's young, and he's already said he will turn down part of the government bailout funds. In essence, Bobby is the opposite of rich old white guys, something we are all tired of in Washington. He's also the first generation of his family to be born in the U.S., allowing him to have lived the American dream that we all need reminded of. And he's the governor of a southern state! How did that happen?
However it happened, I'm thrilled. We need more people that understand the dream of opportunity. We need less fat cats pontificating on themselves. We need more Bobby's turning down money. We need less Pelosi's spending $20 million to save white mice in their home states. We still need change.
We need Obama and Jindal in the same room, working this out. Good luck boys. I'm praying you do well tonight.
1) There will be sacrifices (but I'd rather not mention them right now).
2) Give the stimulus package time to work (please let it work).
3) Yes We Can! (I think, but I'm really scared by everything I've learned since taking office).
The market has been cut in half, and the drop has been lead by stocks that were once considered the safest for retirees: bank stocks. Wall Street has gambled and lost, with other people's money (OPM). The UAW wants taxpayers to bail out their retired workers. Homeowners in foreclosure want government relief. And oh yeah, we expect our president to magically fix it.
Enter Bobby Jindal, 37 year old republican governor of Louisiana. He's a minority, he's young, and he's already said he will turn down part of the government bailout funds. In essence, Bobby is the opposite of rich old white guys, something we are all tired of in Washington. He's also the first generation of his family to be born in the U.S., allowing him to have lived the American dream that we all need reminded of. And he's the governor of a southern state! How did that happen?
However it happened, I'm thrilled. We need more people that understand the dream of opportunity. We need less fat cats pontificating on themselves. We need more Bobby's turning down money. We need less Pelosi's spending $20 million to save white mice in their home states. We still need change.
We need Obama and Jindal in the same room, working this out. Good luck boys. I'm praying you do well tonight.
Monday, February 23, 2009
We're Still Here
It feels like the Monday after. After a huge leg down in the market. After the govenment fails to inspire us by spending over $1 Trillion. After all the bad news. We're still here.
The market is called to start off a bit higher this morning, encouraged by the idea that CITI might sell a bigger chunk of equity to the U.S. government. Can that be correct? Are we arguing that a bigger government stake in a major bank is a good thing?! Wow. As a trader, that sounds to me like the market is tired of going down and simply wants to attempt a bounce, and the news is being manufactured to match the trade.
There really isn't much positive news out there. But we are still here on a Monday morning! And sometimes that is enough. Sometimes people need a chance to remember that the financial markets do not drive life on this planet.
So let's all take this chance to relax. Life goes on. Enjoy it!
The market is called to start off a bit higher this morning, encouraged by the idea that CITI might sell a bigger chunk of equity to the U.S. government. Can that be correct? Are we arguing that a bigger government stake in a major bank is a good thing?! Wow. As a trader, that sounds to me like the market is tired of going down and simply wants to attempt a bounce, and the news is being manufactured to match the trade.
There really isn't much positive news out there. But we are still here on a Monday morning! And sometimes that is enough. Sometimes people need a chance to remember that the financial markets do not drive life on this planet.
So let's all take this chance to relax. Life goes on. Enjoy it!
Saturday, February 21, 2009
Never Too Big
Let's get something straight, nothing is too big to fail. Nothing. Not Bank of American, not Chrysler, not the European Union.
It wasn't too many years ago that Russia failed. At the time no one made the argument that Russia was too big to fail. It just failed. And we all watched. And somehow the world kept turning.
You see, when things fail it doesn't mean that everything that is associated with that entity disappears suddenly. It means that the structure that previously organized that entity no longer exists. The day after a failure the search for a new structure begins. Sometimes this new structure is very similar, sometimes not. But rest assured that people will quickly seize the opportunity to reorganize the assets that still exist.
The process of reorganizing assets tends to happen quickly. Smaller, more portable assets find homes almost immediately. While messier chunks, such as people, may take a bit longer. But assets do not disappear or cease to function for long. Enterprising entrepreneurs (at least in free market societies) find uses for the idle and quickly start down new paths toward success.
This is a good process. This allows the strong to survive and the weak to stop wasting our time, energy, and money. So embrace failure. The sooner the better. Because pretending there is another way out just prolongs the pain.
It wasn't too many years ago that Russia failed. At the time no one made the argument that Russia was too big to fail. It just failed. And we all watched. And somehow the world kept turning.
You see, when things fail it doesn't mean that everything that is associated with that entity disappears suddenly. It means that the structure that previously organized that entity no longer exists. The day after a failure the search for a new structure begins. Sometimes this new structure is very similar, sometimes not. But rest assured that people will quickly seize the opportunity to reorganize the assets that still exist.
The process of reorganizing assets tends to happen quickly. Smaller, more portable assets find homes almost immediately. While messier chunks, such as people, may take a bit longer. But assets do not disappear or cease to function for long. Enterprising entrepreneurs (at least in free market societies) find uses for the idle and quickly start down new paths toward success.
This is a good process. This allows the strong to survive and the weak to stop wasting our time, energy, and money. So embrace failure. The sooner the better. Because pretending there is another way out just prolongs the pain.
Friday, February 20, 2009
Chicago Trader Rant
You've got to check this out! Rick Santelli, a Chicago Trader on the floor of the Merch, says exactly what I'm feeling.
http://www.youtube.com/watch?v=bEZB4taSEoA
Growing up in a commodity trading house (unusual upbringing, I know) I hold a special place in my heart for Chicago traders. These people speak my language. They know, because they deal with it constantly, that markets can and will go down. They know that if you get caught on the wrong side of a violent trade that you can lose everything. They also know that when someone loses everything, that the government isn't coming to the rescue.
So the stock market is down hard- SO WHAT!!! Caveat Emptor! Let the buyer beware! This is the basis of our property law in America. If we are now saying that the buyer does not have to beware, then the system is finished. There is no way to protect every one's downside market risk.
It may be sad to watch families lose their houses. It may mean that for a while all of our houses are worth less. It may mean that banks fail (have you pulled any cash out lately?). But this is a natural occurrence. Just like a wildfire (maybe a Texas Wildire!) the dead brush is consumed and the new ground is more fertile. So let it burn.
In the meantime we are hearing about deflation on one side and hyper-inflation on the other. It can't be both. But this wide gap shows that people are confused and in a panic. Why? Let's look at Germany. Germany is the strongest economic entity in the EU. Germany attempted to sell $6 Billion in bonds a few weeks ago and couldn't get it fully subscribed, so their fed printed the money to fund the last $1 Billion. Why does this matter? Because the new Obama stimulus plan will require the U.S. to auction $100 Billion almost twice a month. The biggest subscription we have ever held was $60 Billion. And do you know what happens if they go under-subscribed? We print money to make up the difference. This could led to hyper-inflation.
My favorite trade right now? Sell the dollar and buy oil. It is a one year spread that will do best in inflationary markets. And inflation scares me much more than deflation today.
http://www.youtube.com/watch?v=bEZB4taSEoA
Growing up in a commodity trading house (unusual upbringing, I know) I hold a special place in my heart for Chicago traders. These people speak my language. They know, because they deal with it constantly, that markets can and will go down. They know that if you get caught on the wrong side of a violent trade that you can lose everything. They also know that when someone loses everything, that the government isn't coming to the rescue.
So the stock market is down hard- SO WHAT!!! Caveat Emptor! Let the buyer beware! This is the basis of our property law in America. If we are now saying that the buyer does not have to beware, then the system is finished. There is no way to protect every one's downside market risk.
It may be sad to watch families lose their houses. It may mean that for a while all of our houses are worth less. It may mean that banks fail (have you pulled any cash out lately?). But this is a natural occurrence. Just like a wildfire (maybe a Texas Wildire!) the dead brush is consumed and the new ground is more fertile. So let it burn.
In the meantime we are hearing about deflation on one side and hyper-inflation on the other. It can't be both. But this wide gap shows that people are confused and in a panic. Why? Let's look at Germany. Germany is the strongest economic entity in the EU. Germany attempted to sell $6 Billion in bonds a few weeks ago and couldn't get it fully subscribed, so their fed printed the money to fund the last $1 Billion. Why does this matter? Because the new Obama stimulus plan will require the U.S. to auction $100 Billion almost twice a month. The biggest subscription we have ever held was $60 Billion. And do you know what happens if they go under-subscribed? We print money to make up the difference. This could led to hyper-inflation.
My favorite trade right now? Sell the dollar and buy oil. It is a one year spread that will do best in inflationary markets. And inflation scares me much more than deflation today.
Thursday, February 19, 2009
Auto Bailout for Average People
Last summer I purchased a used Nissan Xterra. I borrowed money to finance this purchase, and have been using the car for my main source of transportation. But I found out some horrible news lately, the car is worth less than I paid for it! In fact, if I sold the car today, it would barely pay off the loan I took out one year ago!
I suspect that there are millions of others out there with a similar problem. Well-intentioned people that bought cars using loans that were approved by- wait for it- BANKERS! The banker never, ever, ever told me that this could happen. In fact, I don't think that bankers told anyone this could happen. And I feel taken advantage of.
I really think that it is time that the government step in and fix this problem. I would like the following solutions to be enacted with federal tax money:
1) I want the ability to re-negotiate my loan with the bank to a lower value than what I originally agreed to pay.
2) I want the government to help me make the payments, capping them at $200 per month.
3) I don't want any of this to negatively impact my credit rating, just in case I want to borrow again in the future.
Taking immediate action on this problem could help millions of people today, people that are struggling to keep nice cars. People that need cars for transportation. People whose cars are worth much less than they bought them for!
Please forward this to your political representative today!
I suspect that there are millions of others out there with a similar problem. Well-intentioned people that bought cars using loans that were approved by- wait for it- BANKERS! The banker never, ever, ever told me that this could happen. In fact, I don't think that bankers told anyone this could happen. And I feel taken advantage of.
I really think that it is time that the government step in and fix this problem. I would like the following solutions to be enacted with federal tax money:
1) I want the ability to re-negotiate my loan with the bank to a lower value than what I originally agreed to pay.
2) I want the government to help me make the payments, capping them at $200 per month.
3) I don't want any of this to negatively impact my credit rating, just in case I want to borrow again in the future.
Taking immediate action on this problem could help millions of people today, people that are struggling to keep nice cars. People that need cars for transportation. People whose cars are worth much less than they bought them for!
Please forward this to your political representative today!
Wednesday, February 18, 2009
Who Are We Rewarding?
The stock market is down 40% since the day Obama won the Democratic Party nomination. That is not encouraging. Effectively, the market has given our new president a terrible reaction at every turn.
Why? Investors have no idea what to make of the future of this country. Will they get to keep capital gains? Will taxes explode? Will unions get huge bailouts? Will companies be nationalized? These are all possibilities that investors hate, and our president has done little to ease such fears.
In the meantime, it seems that the best way to get a government reward is to screw up. Bankrupt a bank - get money!
Lose your house - get money!
Make cars nobody wants with expensive labor - get money!
Is this really how American should work? Of course not. We should reward the conservative tax payers that didn't get into bad mortgage deals. We should reward executives that have been responsible with their companies. We should reward success - NOT FAILURE!!
So suck it up, America, the worst is yet to come. Until we send clear signals that success will be rewarded we can logically expect investors to be fearful, and fearful investors to not make for good economies.
Why? Investors have no idea what to make of the future of this country. Will they get to keep capital gains? Will taxes explode? Will unions get huge bailouts? Will companies be nationalized? These are all possibilities that investors hate, and our president has done little to ease such fears.
In the meantime, it seems that the best way to get a government reward is to screw up. Bankrupt a bank - get money!
Lose your house - get money!
Make cars nobody wants with expensive labor - get money!
Is this really how American should work? Of course not. We should reward the conservative tax payers that didn't get into bad mortgage deals. We should reward executives that have been responsible with their companies. We should reward success - NOT FAILURE!!
So suck it up, America, the worst is yet to come. Until we send clear signals that success will be rewarded we can logically expect investors to be fearful, and fearful investors to not make for good economies.
Tuesday, February 17, 2009
UAW - United Against Wisdom
I can't believe that I, as a normal taxpayer, am being loaded up with even more debt thanks to the UAW.
I'll give it to their negotiators, who have been successful time and again, at winning deals that are financially unsustainable for the auto companies. The UAW has exercised it's might, right to the point of breaking the companies they work for! Great job, guys!
This is nothing new. All you have to do is look at the Quad Cities, a set of four towns on the Mississippi river between Iowa and Illinois, to see that the exact same thing happened in the mid-eighties. The big difference is that there were no government bail-outs back then, so factories were shut down and moved to other areas. The UAW tactics worked for years in the Quad Cities, winning labor deals that made many workers much more money than they could explain. But when it got too carried away, the companies simply left town, unable to meet union demands after many months of strikes and negotiations. It broke the town, for years. Sound familiar Detroit?
So now here we stand, being asked as a country to honor the deals that auto executives signed for retired employees, because it would be sad not to. These workers count on this deal! These workers worked for years to earn it! These workers deserve my tax money! OK, maybe not that last one. Since when is it my responsibility to make good on union deals? I don't want that burden, no matter how sad the retired workers look.
All of this comes down to entitlement. There seems to be a growing call for the government to make everything OK, even if that costs our children their future. This is not a train I want to be on. But what are my options? The UAW isn't about to grow up and make hard decisions in Detroit. The Obama campaign doesn't seem ready to tell this large group of political supporters that they can't help them. And I really don't want to move to Canada.
I grew up in The Quad Cities. And to me this feels like a bad flashback. The UAW is breaking things again.
I'll give it to their negotiators, who have been successful time and again, at winning deals that are financially unsustainable for the auto companies. The UAW has exercised it's might, right to the point of breaking the companies they work for! Great job, guys!
This is nothing new. All you have to do is look at the Quad Cities, a set of four towns on the Mississippi river between Iowa and Illinois, to see that the exact same thing happened in the mid-eighties. The big difference is that there were no government bail-outs back then, so factories were shut down and moved to other areas. The UAW tactics worked for years in the Quad Cities, winning labor deals that made many workers much more money than they could explain. But when it got too carried away, the companies simply left town, unable to meet union demands after many months of strikes and negotiations. It broke the town, for years. Sound familiar Detroit?
So now here we stand, being asked as a country to honor the deals that auto executives signed for retired employees, because it would be sad not to. These workers count on this deal! These workers worked for years to earn it! These workers deserve my tax money! OK, maybe not that last one. Since when is it my responsibility to make good on union deals? I don't want that burden, no matter how sad the retired workers look.
All of this comes down to entitlement. There seems to be a growing call for the government to make everything OK, even if that costs our children their future. This is not a train I want to be on. But what are my options? The UAW isn't about to grow up and make hard decisions in Detroit. The Obama campaign doesn't seem ready to tell this large group of political supporters that they can't help them. And I really don't want to move to Canada.
I grew up in The Quad Cities. And to me this feels like a bad flashback. The UAW is breaking things again.
Thursday, February 12, 2009
Too Easy to Say NO!
I occasionally teach MBA classes at the Acton School of Business. The students at Acton work 100 hours a week to get through what I feel is a very difficult immersion-type program. They work hard because they want to be entrepreneurs.
Even this group of entrepreneurial students, dedicating massive amounts of work to studying how to start new businesses, find it very easy to say NO! when confronted with a new idea. It must be in our nature. NO! seems to be a default response when anything outside of our comfort zone is proposed.
This may help to explain why change is so hard. We really don't want change. As U.S. citizens we are well aware that the economy cannot function the way it did in 2007. We know that the old system lead us to huge problems. We don't want Wall Street executives taking the same huge bonuses. But we really don't want change, either. If someone would propose a plan with a tag line that read "The easy path back to the way it was..." we would seriously consider it.
But "the way it was" is badly broken. So now we have to open our minds up to a new path that will require openness of thought, personal energy in changing old habits, and the emotional uncertainty that comes with doing something new. Given the choice very few of us would have picked this as a preferable path. But we weren't given the choice. Instead we resisted change and road the horse we were on until it died beneath us. And now we must find (or build) a new horse.
So saddle up! There will be change. It will not be easy. But if we do it thoughtfully it should be worth the effort. As for the part of us that fears the unknown - ignore it!
Even this group of entrepreneurial students, dedicating massive amounts of work to studying how to start new businesses, find it very easy to say NO! when confronted with a new idea. It must be in our nature. NO! seems to be a default response when anything outside of our comfort zone is proposed.
This may help to explain why change is so hard. We really don't want change. As U.S. citizens we are well aware that the economy cannot function the way it did in 2007. We know that the old system lead us to huge problems. We don't want Wall Street executives taking the same huge bonuses. But we really don't want change, either. If someone would propose a plan with a tag line that read "The easy path back to the way it was..." we would seriously consider it.
But "the way it was" is badly broken. So now we have to open our minds up to a new path that will require openness of thought, personal energy in changing old habits, and the emotional uncertainty that comes with doing something new. Given the choice very few of us would have picked this as a preferable path. But we weren't given the choice. Instead we resisted change and road the horse we were on until it died beneath us. And now we must find (or build) a new horse.
So saddle up! There will be change. It will not be easy. But if we do it thoughtfully it should be worth the effort. As for the part of us that fears the unknown - ignore it!
Wednesday, February 11, 2009
Catastrophe!
Catastrophe! Are you Freakin' Kidding Me!!!
Did the president of the United States really use that word in a specially called news conference concerning our economy?! Is that his idea of helping?
The market responded with a 381 point drop in the DOW. I'm responding with utter disbelief that our newly elected leader used such language. These word choices give the distinct impression that since inauguration Obama has learned new, secret information about our situation that has scared him enough to abandon his message of hope. How else did we go from "Yes we can!" to "Catastrophe" in the last two weeks?!
Our new president seems unsettlingly quick to change his tone. Bipartisanship? I'm not seeing any. New ethical standards? Where are they? I know it has only been a few short days for this new administration, but setting a new tone requires consistent, constant reinforcement. It is simply not possible to lead in a new direction without the demonstration of commitment to the new ideals, and this must be proven every single time these new ideals are tested. The earliest tests are typically the most impactful, so please Mr. President, pick a course and stay with it!
President Obabma has very little time to set expectations, and his most recent mishandling of the economic news conference was a big disappointment. Much more of this and he will have an entirely new problem to deal with, one that runs the risk of undercutting his credibility permanently. You've already heard it whispered by people that were strong supporters just one month ago - maybe he's not up to it...
I seriously hope this is not the case. But his leadership over the next 3 months must be strong, or the risk of being a lame duck becomes very real. If this negative possibility occurs we'll be able to recognize it immediately. It will be announced with one of these phrases:
1) It's not my fault.
2) The election came too late.
3) Let's talk about how Bush did this.
Did the president of the United States really use that word in a specially called news conference concerning our economy?! Is that his idea of helping?
The market responded with a 381 point drop in the DOW. I'm responding with utter disbelief that our newly elected leader used such language. These word choices give the distinct impression that since inauguration Obama has learned new, secret information about our situation that has scared him enough to abandon his message of hope. How else did we go from "Yes we can!" to "Catastrophe" in the last two weeks?!
Our new president seems unsettlingly quick to change his tone. Bipartisanship? I'm not seeing any. New ethical standards? Where are they? I know it has only been a few short days for this new administration, but setting a new tone requires consistent, constant reinforcement. It is simply not possible to lead in a new direction without the demonstration of commitment to the new ideals, and this must be proven every single time these new ideals are tested. The earliest tests are typically the most impactful, so please Mr. President, pick a course and stay with it!
President Obabma has very little time to set expectations, and his most recent mishandling of the economic news conference was a big disappointment. Much more of this and he will have an entirely new problem to deal with, one that runs the risk of undercutting his credibility permanently. You've already heard it whispered by people that were strong supporters just one month ago - maybe he's not up to it...
I seriously hope this is not the case. But his leadership over the next 3 months must be strong, or the risk of being a lame duck becomes very real. If this negative possibility occurs we'll be able to recognize it immediately. It will be announced with one of these phrases:
1) It's not my fault.
2) The election came too late.
3) Let's talk about how Bush did this.
Tuesday, February 10, 2009
Failure is Not an Option
I feel that it is time to clarify my message. I do not want Obama to fail! That is insanity!
A few weeks ago Rush Limbaugh was credited with saying that he wanted Obama to fail, and while I understand that Rush's livelihood depends on creating controversy, I find such comments to be harmful and destructive. Hoping that the president of the United States fails is like hoping that the captain of your football team breaks his leg, just so you can lead the team. The reason Rush (and others- Democrats did plenty of this crap to Bush) feel safe in saying such things is that they fail to see that we are on the same team.
So, are we on the same team? Are abortionists and anti-abortionists on the same team in any way? Is Pelosi on the same team as former president Bush?
While opponents on major issues may have huge differences of opinion I feel a need to remind them that we are in this together. We can fight extremely hard for our beliefs as long as we do it respectfully and acknowledge that at the end of the day freedom and opportunity are the most important issues. This cannot be taken for granted. We must return, on a regular basis, to our shared goals if there is to be any hope of resolving our differences.
The other side of this argument is that some people are idiots that don't deserve a vote. And while this may be an expedient argument, it is the most dangerous argument of all. We simply cannot neglect to value each other without choosing to give up freedom. And I will not choose to give up the freedom that this great country stands for.
I want us to fight hard. I want us to care deeply. I want us admit that the reason we fight so hard is that we share the dream of peace and prosperity that we have tasted in recent years.
This is not a fight for one side or the other. This is a fight for our future. Forget that perspective at the peril of freedom.
A few weeks ago Rush Limbaugh was credited with saying that he wanted Obama to fail, and while I understand that Rush's livelihood depends on creating controversy, I find such comments to be harmful and destructive. Hoping that the president of the United States fails is like hoping that the captain of your football team breaks his leg, just so you can lead the team. The reason Rush (and others- Democrats did plenty of this crap to Bush) feel safe in saying such things is that they fail to see that we are on the same team.
So, are we on the same team? Are abortionists and anti-abortionists on the same team in any way? Is Pelosi on the same team as former president Bush?
While opponents on major issues may have huge differences of opinion I feel a need to remind them that we are in this together. We can fight extremely hard for our beliefs as long as we do it respectfully and acknowledge that at the end of the day freedom and opportunity are the most important issues. This cannot be taken for granted. We must return, on a regular basis, to our shared goals if there is to be any hope of resolving our differences.
The other side of this argument is that some people are idiots that don't deserve a vote. And while this may be an expedient argument, it is the most dangerous argument of all. We simply cannot neglect to value each other without choosing to give up freedom. And I will not choose to give up the freedom that this great country stands for.
I want us to fight hard. I want us to care deeply. I want us admit that the reason we fight so hard is that we share the dream of peace and prosperity that we have tasted in recent years.
This is not a fight for one side or the other. This is a fight for our future. Forget that perspective at the peril of freedom.
Monday, February 9, 2009
Rookie at the Helm
Everyone who campaigned against Obama said that he lacked the necessary experience to run the country, and he seems to be in a rush to prove them right. Despite promises of a new ethical standard, renewed bipartisanship, and and end to wasteful government programs we have seen the exact opposite so far. In the last few weeks we have watched as the White House nominated old cronies with tax problems while attempting to bully Republicans over the stimulus bill, a bill which is full of expensive waste.
On top of all of it, I am most disappointed that the message of hope has been traded in for a message of fear. It gives citizens the distinctly uncomfortable impression that president Obama has learned new, scary facts about the state of our nation since inauguration day. Facts that he was not aware of during his campaign. Facts that are dark and worthy of fear.
Meanwhile, the faithful Democratic Party is in denial. What mistakes? Daschle is a saint who earned $5.2 million without peddling his influence! It is NOT OUR FAULT, Bush did this!! It is this last message that worries me most. I am left wondering if the Democrats know how to move forward. Is the Obama victory really about moving into a new era, or was that just the cover story for a bitter old guard focused on revenge?
All the while life goes on for the rest of us. But it doesn't feel right. And our hope for a new tone is quickly melting into old cynicism.
On top of all of it, I am most disappointed that the message of hope has been traded in for a message of fear. It gives citizens the distinctly uncomfortable impression that president Obama has learned new, scary facts about the state of our nation since inauguration day. Facts that he was not aware of during his campaign. Facts that are dark and worthy of fear.
Meanwhile, the faithful Democratic Party is in denial. What mistakes? Daschle is a saint who earned $5.2 million without peddling his influence! It is NOT OUR FAULT, Bush did this!! It is this last message that worries me most. I am left wondering if the Democrats know how to move forward. Is the Obama victory really about moving into a new era, or was that just the cover story for a bitter old guard focused on revenge?
All the while life goes on for the rest of us. But it doesn't feel right. And our hope for a new tone is quickly melting into old cynicism.
Friday, February 6, 2009
Opportunity in Economic Crisis
Last Tuesday, Obama assured CNN's Anderson Cooper, "Look, the only measure of my success as president, when people look back five years from now or nine years from now, is going to be, did I get this economy fixed?"
Really?! Really?!
We are still at war, aren't we? Last time I checked there were tens of thousands of U.S. men and women stationed abroad in carrying out missions that required the use of ammunition on a regular basis.
Many of our enemies (yes, we have very real enemies) have taken notice of how distracted the U.S. is by the economic problems we are struggling with. Iran launched its first satellite, proving a new missile capability that no one should feel good about. Russia has pressured Kyrgyzstan into no longer allowing U.S. access to a key military base. Kim Jong-Il is threatening war. The piracy of heavy weapons, such as tanks, is thriving. And Afghanistan, known to historians as the "graveyard of empires" is threatening to fall apart even more (and I'm still not sure how that is possible).
The world we live in is too complex to allow us the luxury of tunnel vision on any single issue. Nor is it helpful to the current economic crisis to continually focus so much attention on bailout bills that are being sold under the pretext of pure fear. Rather than bringing all of our best efforts to bear on the economy to assure citizens that solutions are being offered, the government's floundering is further weakening confidence and exposing the unfortunate truth that Washington D.C. simply does not know how to fix this problem. Calling attention to how hard you are workign to fix an immediate problem only works if you can also routinely celebrate progress, or at least discovery. The Obama administration can do niether.
There may be an unusual amount of very critical decisions to be made, but that is what an American president must do. And if Obama does not lift his eyes from this economic crisis in the very near future he will have lost vital ground with me, our military, and our enemies. Great leaders know this. You know this. Does Obama know this?
Really?! Really?!
We are still at war, aren't we? Last time I checked there were tens of thousands of U.S. men and women stationed abroad in carrying out missions that required the use of ammunition on a regular basis.
Many of our enemies (yes, we have very real enemies) have taken notice of how distracted the U.S. is by the economic problems we are struggling with. Iran launched its first satellite, proving a new missile capability that no one should feel good about. Russia has pressured Kyrgyzstan into no longer allowing U.S. access to a key military base. Kim Jong-Il is threatening war. The piracy of heavy weapons, such as tanks, is thriving. And Afghanistan, known to historians as the "graveyard of empires" is threatening to fall apart even more (and I'm still not sure how that is possible).
The world we live in is too complex to allow us the luxury of tunnel vision on any single issue. Nor is it helpful to the current economic crisis to continually focus so much attention on bailout bills that are being sold under the pretext of pure fear. Rather than bringing all of our best efforts to bear on the economy to assure citizens that solutions are being offered, the government's floundering is further weakening confidence and exposing the unfortunate truth that Washington D.C. simply does not know how to fix this problem. Calling attention to how hard you are workign to fix an immediate problem only works if you can also routinely celebrate progress, or at least discovery. The Obama administration can do niether.
There may be an unusual amount of very critical decisions to be made, but that is what an American president must do. And if Obama does not lift his eyes from this economic crisis in the very near future he will have lost vital ground with me, our military, and our enemies. Great leaders know this. You know this. Does Obama know this?
Thursday, February 5, 2009
SEC - Another Government Mess
Have you heard about Harry Markopolis? If not, check this out...
http://ac360.blogs.cnn.com/2009/02/05/where-have-you-been-harry-markopolos/
3 inches of warning to the SEC over 8 years about Madoff's ponzi sceme!!!
The SEC is a government agency that promotes from within. Promotion is not based on ability, but rather seniority, the ability to play nice, and timely paperwork completion. The SEC is simply not capable of doing the job it is tasked with. In fact, I bet less than 10% of the SEC staff would even know what Free Cash Flow was in a business, let alone understand how it might be calculated.
This is the situation we find ourselves in when we expect the government to protect us.
http://ac360.blogs.cnn.com/2009/02/05/where-have-you-been-harry-markopolos/
3 inches of warning to the SEC over 8 years about Madoff's ponzi sceme!!!
The SEC is a government agency that promotes from within. Promotion is not based on ability, but rather seniority, the ability to play nice, and timely paperwork completion. The SEC is simply not capable of doing the job it is tasked with. In fact, I bet less than 10% of the SEC staff would even know what Free Cash Flow was in a business, let alone understand how it might be calculated.
This is the situation we find ourselves in when we expect the government to protect us.
Wednesday, February 4, 2009
Where is the Opportunity?
A number of my readers have sent emails asking how they might profit from the current situation we are all facing in the U.S. economy. This is the big question on every one's mind (everyone with a job, that is). This is also a very entrepreneurial question, and says a lot about the people who are asking it.
My great grandfather, Pop, was a farmer in Iowa, and one of the old sayings that he passed on was a statement regarding the value of being a contrarian:
"When everyone else is running, you should walk."
(Of course, this may not apply during a fire, or would it?)
This leads me to a big question regarding our current situation:
Where is everyone else running to?
Everyone else is running away from the auto industry, away from banks, and away from the stock market. Everyone else is looking for the government to fix it, their bosses to save jobs, and their households to seriously cut spending. But I'm not everyone else. I know the government can't fix this, that there will be an auto industry, and that banks will survive. I also know that if I spend a little money right now I can find real bargains. This all leads me to to a plan:
1) Set a target at which you would like to invest in the stock market. Mine is 6,500. At that point I plan on buying back in. If we don't get that low, no big deal. If I buy at 6,500 and we sink lower, I'll buy again.
2) Upgrade your life. If you have steady income (and a rainy day fund), then you need to look at the bigger purchases that you have been putting off. Contractors are hungry, and stores are desperate. This means that everything (yes, everything!) is negotiable. Upgrade your furniture, or kitchen, or buy that new truck. These are the deals you've been waiting for.
3) Find a company that is thriving and study it, invest in it, and imitate it. For me this is McDonald's. Mickey D's is rocking, and everyone knows the jingle - I'm Loving It! They are a low cost provider operating under a franchise model that has limited the middle management salary problem while successfully incenting local owners to run great stores.
That's the plan....
Email me at bwa.texas@gmail.com with your ideas!
My great grandfather, Pop, was a farmer in Iowa, and one of the old sayings that he passed on was a statement regarding the value of being a contrarian:
"When everyone else is running, you should walk."
(Of course, this may not apply during a fire, or would it?)
This leads me to a big question regarding our current situation:
Where is everyone else running to?
Everyone else is running away from the auto industry, away from banks, and away from the stock market. Everyone else is looking for the government to fix it, their bosses to save jobs, and their households to seriously cut spending. But I'm not everyone else. I know the government can't fix this, that there will be an auto industry, and that banks will survive. I also know that if I spend a little money right now I can find real bargains. This all leads me to to a plan:
1) Set a target at which you would like to invest in the stock market. Mine is 6,500. At that point I plan on buying back in. If we don't get that low, no big deal. If I buy at 6,500 and we sink lower, I'll buy again.
2) Upgrade your life. If you have steady income (and a rainy day fund), then you need to look at the bigger purchases that you have been putting off. Contractors are hungry, and stores are desperate. This means that everything (yes, everything!) is negotiable. Upgrade your furniture, or kitchen, or buy that new truck. These are the deals you've been waiting for.
3) Find a company that is thriving and study it, invest in it, and imitate it. For me this is McDonald's. Mickey D's is rocking, and everyone knows the jingle - I'm Loving It! They are a low cost provider operating under a franchise model that has limited the middle management salary problem while successfully incenting local owners to run great stores.
That's the plan....
Email me at bwa.texas@gmail.com with your ideas!
Tuesday, February 3, 2009
Expense of Reactionary Policy
The FINANCIAL CRISIS (yes, it deserves caps) is too serious to allow us the luxury of time. We must act NOW! We must move forward and change laws, ownership structures for banks, taxes, and more. We cannot hold up the confirmation of anyone Obama has suggested to any post in the government. We cannot ask if $800B in a bailout is too much, or even if it is being used properly. We must act NOW!
Yes, I realize that Wall Street is still in denial. I know that their bonuses are still huge, and that average taxpayers are footing the bill. I am well aware that U.S. automakers cannot possibly survive the burden of their labor agreements, and that those business mistakes are being passed on to taxpayers as well. But we must look past these small issues and act NOW! to stimulate the economy. Or else...
When is it enough?
Crisis situations require action. That logic makes sense to me. But they also require thoughtful action. We need to slow down, put the right people in the right leadership positions, and only spend money in areas we feel very strongly about (and can defend in the light of day). Otherwise, we will complicate things and make matters worse.
But what about public perception, you ask? Does it matter what we spend the money on? Isn't the real goal here to simply look like we are trying hard so that investor/consumer confidence is supported? HELL NO! Perception is not that easily managed, and rushing $800B out the door just to be embarrassed by the results will not inspire confidence. Transparency, maturity, and results inspire confidence.
Reactionary Policy will cost us trillions. And as a solid taxpayer I am sick to my stomach at the mistakes I am being asked to cover financially. Please, America, SLOW DOWN!! Breathe. Think. Then act.
Yes, I realize that Wall Street is still in denial. I know that their bonuses are still huge, and that average taxpayers are footing the bill. I am well aware that U.S. automakers cannot possibly survive the burden of their labor agreements, and that those business mistakes are being passed on to taxpayers as well. But we must look past these small issues and act NOW! to stimulate the economy. Or else...
When is it enough?
Crisis situations require action. That logic makes sense to me. But they also require thoughtful action. We need to slow down, put the right people in the right leadership positions, and only spend money in areas we feel very strongly about (and can defend in the light of day). Otherwise, we will complicate things and make matters worse.
But what about public perception, you ask? Does it matter what we spend the money on? Isn't the real goal here to simply look like we are trying hard so that investor/consumer confidence is supported? HELL NO! Perception is not that easily managed, and rushing $800B out the door just to be embarrassed by the results will not inspire confidence. Transparency, maturity, and results inspire confidence.
Reactionary Policy will cost us trillions. And as a solid taxpayer I am sick to my stomach at the mistakes I am being asked to cover financially. Please, America, SLOW DOWN!! Breathe. Think. Then act.
Monday, February 2, 2009
High Life!
What a great Super Bowl!!
Lead changes, Bruce Springsteen, and last minute drama. We got it all.
I watched all the commercials, and there was one that really stood out to me as making sense. Miller High Life's 1 second ad. Maybe you missed it. Here's a link to the pre-ad that they released a few days ago on YouTube.
http://www.youtube.com/watch?v=J9ut9tvqOHY
In 1 second Miller reminded you of their product, generated interest, and showed more branding consistency than anything I've seen in quite a while. These are the types of campaigns that prove a company is serious about the message they send. And I loved it. I'm actually going to buy Miller High Life next time I'm at the store. I'm going to reward them with my dollars!
It seems that corporate-America (no caps for "corporate" as a conscience choice!) is asking "When can we return to business as usual?". The answer they don't want to hear, and the answer that millions of Americans will need to admit, is "We are not returning to the old normal!"
Unemployment will grow to over 10%. Obama's reliance on the labor unions (again, no caps as a choice!) will be deepen this mess. Denial will go on for months. And all the while businesses that are providing truly valuable goods & services will meet their payrolls. Everyone else has a lot of pain to experience as they tighten the belts.
Me, I'm going to relax with a Miller High Life and enjoy a great day in Texas!
Lead changes, Bruce Springsteen, and last minute drama. We got it all.
I watched all the commercials, and there was one that really stood out to me as making sense. Miller High Life's 1 second ad. Maybe you missed it. Here's a link to the pre-ad that they released a few days ago on YouTube.
http://www.youtube.com/watch?v=J9ut9tvqOHY
In 1 second Miller reminded you of their product, generated interest, and showed more branding consistency than anything I've seen in quite a while. These are the types of campaigns that prove a company is serious about the message they send. And I loved it. I'm actually going to buy Miller High Life next time I'm at the store. I'm going to reward them with my dollars!
It seems that corporate-America (no caps for "corporate" as a conscience choice!) is asking "When can we return to business as usual?". The answer they don't want to hear, and the answer that millions of Americans will need to admit, is "We are not returning to the old normal!"
Unemployment will grow to over 10%. Obama's reliance on the labor unions (again, no caps as a choice!) will be deepen this mess. Denial will go on for months. And all the while businesses that are providing truly valuable goods & services will meet their payrolls. Everyone else has a lot of pain to experience as they tighten the belts.
Me, I'm going to relax with a Miller High Life and enjoy a great day in Texas!
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