the republican promise to filibuster the auto industry bailout

Due to a lot of public pressure especially from the constituents of the Republican senators, those senators rightly bending to their PAC and elector pressure have threatened to filibuster as in not allow to pass the massive bailout of the auto industry. Both sides have a case and if one really looks at the case fairly, it seems that it is really due to the intransigence of the unions not to give in to some realistic compromises in order to receive the money that has put paid to the bill.

One must realize that the auto industry in the US must seriously reform itself as the Japanese car makers in the US making cumulatively as much as the big three are doing it with less than half the labor force and costing about two thirds of a big three worker, in total payroll costs. While some of this cost is due to the high retiree pension and health benefits, that is not the whole answer. We are not denying that they work hard, but in order that their jobs be saved, they must accept some reduction in their benefits as sacrifices need to be made in industries that are struggling or are not competitive in the market today.

I do accept the argument that a bailout will cost the government far less than the bankruptcy of the auto industry. However if bankruptcy is what will take to reform it then so be it. Once bankrupt, individual car marks can be sold to investors who will build cars with less cost and half the labor force, and so the unions would have got their comeuppance. The union’s purpose is to safeguard the long term interest of their members and I do not believe they are doing it at present, and are willing to play poker with the government to obtain what they want and if they fail they are toast with no one else to blame.

I suspect the President elect at the back of his mind will be pleased with the sequence of events as he can reform the industry, something he would have found hard to do if just called upon just to save the big three who continue with their same old habits. Unions must realize what the times are telling them. Namely, if they are to survive they have to be flexible, as the whole world is changing and in order to survive the upheaval there has to be a lot more give than take if one is to preserver the jobs of one’s members. In the rough and tumble world of playing poker with politics this time the unions unquestionably lost badly to common sense and reason. So instead of blaming the Republicans, thank them for making Obama’s job easier.

the hedge fund scandal of December 2008

I was recently informed of the Ponzi scheme involving a hedge fund that has no assets and therefore the details I have are sketchy and could be factually incorrect, however the point of the essay nevertheless is valid.

Echoing the recent Sakvithi scandal where a person of supposed repute defrauded untold number of investors of their life savings and skipped town, I understand a hedge fund manager in the US has just been arrested, and it has been exposed that the fund does not have any assets, and instead investments by new people were used for redemptions until as we know redemptions in the wake of the financial crisis now exceed new investments and the fund was unable to pay out due to no funds in the kitty. This is almost equivalent to the Sakvithi fraud referred to above where the same method was used to cover withdrawals.

The fund was run by a reputable person known within hedge funds and is also similar to the above. This alone makes people lose their sense of care when making investments based only a person’s reputation. I know better now than to invest with any person however reputable they may be.

It is no surprise that due to the lack of careful oversight this has come about. I fear this is the tip of the iceberg and there are many more like this to surface as they always do when times are tough and the charade can no longer be played. The sad result of all this is that people’s money is at stake with no recourse and therefore permanent loss with the resultant consequences of hardship and in some cases suicide when people with means suddenly become destitute and are then unable to cope.
There is a body of people I hold responsible as they are expected to report on these scandals and they are auditors, the only people from outside allowed in to inspect the records of these companies. Just as in the fall of the banks, the auditors have been conspicuous by their absence as they fear for their survival. I firmly believe they should also bear some of the responsibility as their systems fail to detect such mega fraud and that is not acceptable.

I have left the field of accounting due in part to my belief that they defraud investors money by not performing a satisfactory inspection, and we have the current financial scandal begun by the secondary mortgage crisis as an example of their failure. It should have been brought to light in a good audit.

the methodical way the new appointments are announced

I am very impressed at the way the new administration, of Barak Obama is announcing the key positions and who will be in place. If I am not mistaken, it is unprecedented, namely the thought and careful planning that appears to be going into each appointment along with the rational being discussed as to the whys and wherefores of each appointment.

This start bodes well for how the problems of the day will be handled and delegated, especially as the policy will be set by the new president and senior people will be responsible for carrying out the policy, even though it is likely that they may not agree with  some of the methods of achieving the objectives.

I would like to be a fly on the wall to witness the debate amongst the intellectuals putting forward their individual points of view being moderated by the President and then decisions finally made by the President who will be eventually responsible for the outcome, and accept blame where they fail, as indeed many will just as a matter of course.

I am also interested in seeing the order of play, to determine what issues will be tackled first along with the economic crisis which seems to get worse as each day goes by. Come inauguration day the economic mess will be so great, people will wonder why we are spending money on the inauguration when there are more important areas to concentrate on. I hope the celebrations will be muted just for that reason.

We haven't seen nothing yet, as far as the economic crisis is concerned. We are heading for a 1930s style depression which will scar a whole generation, just as it did that past generation. My ancestors suffered directly as a result of the Great Depression, and I expect many of my contemporaries and relatives as well as myself to suffer now. How much we suffer and for how long is something I cannot predict, but suffer we will.

It is therefore important that a disciplined way is adopted in dealing with the crisis at hand. I therefore am glad that the signs are good. With an unflappable President I am sure we will confront the crisis with the best person at the helm, as we will sink, and he will guide us in the water to safety, but not before we actually sink. So don't  blame him for the sinking ship, as the holes had already been made before he took charge as captain and he is doing his best to plug these holes. In this process, we may delay the speed with which we will sink and the boat may not capsize and we will have to thank him for saving the boat from capsizing, not blame him for sinking!!

Those who are fortunate to read this blog will know I am seeing the picture ahead much clearer than most people who are not inclined to believe my opinion on the severity of the recession, which is likely to become a depression. We just seem to be escapists and are currently unwilling to accept that this is a possibility. A student of history would however point to the sure signs of depression and as there are few students of history and those who do not believe that history will repeat itself will be living in total denial until it actually happens.

I am not at all being alarmist, I am just being a realist as this has to happen, as there is no concerted effort to avoid this problem. The bandaid that is being applied is just not enough to prevent the bleeding, and the stitches that are eventually required will take a longer time to heal as we are not ready to accept the inevitable.

The point to realize is that there is more to life than economics. We just need just enough to live and everything else is just icing on the top. So we can survive this onslaught when we get a grip of our lives and decide what is really most important to us. Materialism is not the answer, so we go back to spirituality and family and friends.