My daughter turned 17 years of age on 4th February, and has been excited about the possibility of being able to drive for some time, apart from a period of concern when the British Government hinted at raising the driving age to 18. Fortunately that passed.
I likewise always wanted to drive and at age 17 moved from two wheels to four and in 10 days had passed my test. The car insurance giving nearly minimum cover was £26 a year, my first car having a 2.6 litre engine. The next was a Jaguar 2.4, and the third, another Jag, this time a 3.8 XK 150S, for which I probably had to pay an extra £10 a year, all while I was 17. (1969 ) Continue reading “What a con!”→
Here’s one person who doesn’t agree with the President.
The President seems to believe that he can say whatever he wants and no one will hold him accountable. He now claims that “every economist, from both sides of the aisle, believes that the stimulus program created jobs.”
I am an economist, Mr. President, and I know, based either on simple first principles of economics, or on a more rigorous controlled study of labor markets in each major sector of the economy, that the unemployment rate would have been much lower today had the stimulus program never occurred.
You are either woefully unaware of the facts, Mr. President, or are purposefully distorting the facts. Neither is good. When are you going to realize that just because you say something does not make it so? The world does not contort itself to support your version of the truth.
The unacceptable face of the big agricultural businesses
Another wonderful link from Naked Capitalism. This one refers to the way that the definition of ‘organic’ as in organic milk is being twisted and distorted to favour the huge indoor milking herds, up to 10,000 cattle, that in any sensible mind could never be regarded as the organic production of milk.
This to me is a picture of organic production of milk:
An English meadow
This to me is NOT! Yet the milk from these cows is defined as organic!
Organic milk?
This last picture is courtesy of The Cornucopia Institute, another web site worth a visit whether or not you take an interest in farming – after all, one presumes that you do eat!
What’s more common in business could/ought to apply to us.
I was very pleased to call by and have a chat with a very good friend and his wife recently because they are facing financial difficulties.
Slightly unusual in that he is a qualified Doctor and has a share in the practice and his wife is a music teacher. Why should they have problems?
They bought their house three years ago and, like so many others, took out a large mortgage. Probably not the best deal available at the time but it allowed them to secure the house they wanted. Since they purchased the property, house prices have fallen so they have fallen straight into negative equity!
The house needed some work and they also carried out a loft conversion. To make this possible they arranged another loan, not at a very good rate, but at least they are working on the property, and the bits they have done look great.
Working hours and the need to keep up to date with patient notes and write appraisals means that there is almost no time for relaxation; to fall into bed at night is a welcome relief! But what of the financial situation?
To keep the show on the road there has been no time to review the arrangement of ‘bricks’ on which the financial blocks are built. Now they facing a large tax bill, so another large loan is being proposed, just to keep the tax man quiet and keep the show on the road.
How many of us find ourselves in a similar situation? Yet industry has a business practice that can help us. Analyse, diagnose, correct – sort of based on the mantra that ‘You can’t manage what you can’t measure‘.
Review our situation and diagnose the problems.
Look at our options.
Decide what to do.
Action our decision
And lastly REVIEW progress.
How often are we likely to review our situation like this at home or even make basic changes. Well perhaps we need to review more often than we think. Make it a regular weekly practice.
Look at being tax efficient, and in the case I am describing this was the major problem, so the cycle of worry is now being broken, and a new firm financial arrangement of blocks being put in place rather than the little boxes, which were piled high, and about to fall down.
Yes it takes time. No we don’t want to face it, but hey its like banging your head against a wall.
President Obama’s proposal to freeze parts of federal government spending over the next three years is a lot like a smoker buying a truckload of cigarettes one year before promising to “freeze spending” on cigarettes the next. He can keep smoking for years to come without spending another dime.
Federal government spending has increased so much over the last year — by some estimates at a rate of 34% — that in December of 2009 the debt limit had to be raised to $12.4 trillion to help absorb a record-shattering $1.4 trillion deficit.
The promise to freeze spending is actually a guarantee that spending will remain at record high levels for the next three years. It effectively prevents a reduction in federal spending.
I’m not quite sure how I feel about this yet. The Fed recently announced that it has appointed a long-time staffer with the New York Fed to head a newly created branch to oversee the the parts of its balance sheet acquired in efforts to bail out firms like AIG.
These massive asset purchases, orchestrated by Timothy Geithner, the current Treasury Secretary and former New York Fed official, ballooned the Fed’s balance sheet from $800 billion in primarily government bonds to $2.3 trillion in toxic assets.
Now the New York Fed is overseeing the assets brought into the Fed by the Treasury Secretary as he moved from the New York Fed to the Treasury. All while the Treasury functions are supposed to be isolated from the Federal Reserve’s role in its implementation of monetary policy.
Keep in mind, even as the number of first-time claims for unemployment insurance rose again recently, that the 10% U.S. unemployment figure understates the actual number of unemployed. Even the 17% underemployment figure, which includes those who are either unemployed or who are working part-time but would like to work full-time, fails to include many of those who have lost their jobs but, because they fail to qualify for unemployment, are not being tracked. I know several such people personally; one has been unemployed for over a year.
My point? Structural unemployment is a serious economic issue. But the solution is not to funnel more unemployment benefits to the unemployed. The best thing the government can do is to reduce the barriers it has erected to a vibrant economy, including oppressive taxes, fees, paperwork, bureaucracy, and regulations that repress business productivity and raise prices. By reducing these explicit and implicit costs, there is absolutely no doubt that the private economy will be able to employ more workers as it produces more output at lower prices.
The best thing we can do as private citizens and neighbors is to treat each other right. Keep the economy moving. Put in a good day’s work. Volunteer or learn a new skill if you can’t find a job. Fill a need. Buy smart. And, finally, elect business-friendly local and national politicians. It matters.
In a new departure for Learning from Dogs, Sherry Jarrell publishes a three-part article on the Daimler-Chrysler merger. Learning from Dogs is indebted to Professor Jarrell for both giving so freely of her time to the Blog and for sharing such erudite material.
Here is Part Three, the concluding part. If you missed Part One then it is here and Part Two is here.
Where is DCX today?
The Daimler-Chrysler merger was troubled from the beginning.
Investors sued over whether the transaction was a ‘merger of equals’ or a Daimler-Benz takeover of Chrysler. A class action lawsuit was settled in August 2003 for $300 million. A lawsuit by activist investor Kirk Kerkorian was dismissed
Jürgen E. Schrempp
in April 2005, but claimed the job of the merger’s architect, Chairman Jürgen E. Schrempp, who resigned in response to the fall of the merged company’s share price. The merger was also the subject of a book Taken for a Ride: How Daimler-Benz Drove Off With Chrysler, (2000) by Bill Vlasic and Bradley A. Stertz.
It is questionable whether the merger ever delivered promised synergies or ever successfully integrated the two businesses. As late as 2002, Daimler-Chrysler appeared to run as two still-independent companies. In 2006, Chrysler reported losses of $1.5 billion. In 2007, it announced plans to lay off 13,000 employees, close a major assembly plant, and reduce production at other plants in order to try to restore profitability.
It was all for naught. In May of 2007 Daimler-Chrysler announced that it would sell 80.1% of Chrysler to Cerberus Capital Management of New York, a private equity firm specializing in troubled companies. Daimler continued to hold a 19.9% stake. Daimler paid Cerberus $650 million to take Chrysler and associated liabilities off its hands, an amazing development given the $36 billion Daimler paid to acquire Chrysler in 1998. Of the $7.4 billion purchase price, Cerberus Capital Management invested $5 billion in Chrysler Holdings and $1.05 billion in Chrysler’s financial unit. The de-merged Daimler AG received $1.35 billion directly from Cerberus but invested $2 billion in Chrysler LLC itself.
On April 27, 2009, Daimler AG agreed to give up its remaining 19.9% stake in Chrysler LLC to Cerberus and pay as much as $600 million into the auto-maker’s pension fund. On April 30, 2009, Chrysler LLC filed for Chapter 11 bankruptcy protection and announced a plan for a partnership with Italian automaker Fiat. On June 1, Chrysler LLC stated they were selling some assets and operations to the newly formed company Chrysler Group LLC, with Fiat retaining a 20% stake in the new company.
On June 10, 2009, the sale of most of Chrysler assets to “New Chrysler”, formally known as Chrysler Group LLC, was completed. The federal government financed the deal with $6.6 billion in financing, paid to the “Old Chrysler.” The transfer does not include eight manufacturing locations, nor many parcels of real estate, nor equipment leases. Contracts with the 789 U.S. auto dealerships who are being dropped were not transferred.
In a new departure for Learning from Dogs, Sherry Jarrell publishes a three-part article on the Daimler-Chrysler merger. Learning from Dogs is indebted to Professor Jarrell for both giving so freely of her time to the Blog and for sharing such erudite material.
Here is Part One
What does the Daimler-Chrysler merger demonstrate in broader terms?
In a paper co-authored with Rick Harris, Tom McInish and Bob Wood, we explored the Daimler-Chrysler merger of 1998 to examine the interplay between disclosure rules in the U.S. and corporate governance standards in Germany. Here is an overview of what we found.
Large shareholders typically control European and Asian industrial giants, leaving minority shareholders less than well protected. In several studies of the legal protection afforded minority shareholders across 27 countries, German shareholder protection ranked among the very worst. In the early 1990s, Daimler-Benz, one of the largest firms in Germany, was no exception. In 1993, with Deutsche Bank owning 24% of the equity, Mercedes AG Holding 25%, and the Emirate of Kuwait 14%, its controlling shareholders decided to cross-list Daimler-Benz on the New York Stock Exchange (NYSE).
1997 Daimler Mercedes
All foreign firms that cross-list [list their shares for sale in more than one country] in the U.S. subject themselves to stricter disclosure standards. In addition to listing on a major U.S. stock exchange, Daimler was required to file financial statements with the SEC and report any material non-financial information as well. Cross-listed firms are also followed more closely by U.S. stock analysts and the business press. These legal disclosure requirements and additional scrutiny by the investing community improved both the quantity and quality of information available to all shareholders about Daimler.
1997 Chrysler Town and Country Minivan
By early 1998, the cross-listed Daimler shares were widely held and actively traded worldwide, including significant volume originating in the United States. In September of 1998, Daimler and Chrysler shareholders, majority and minority owners alike, overwhelmingly approved a merger creating DaimlerChrysler AG (DCX) through an exchange of the cross-listed share for the first “global registered share” (GRS). The so-called “merger of equals” was widely expected to realize both operating efficiencies and, via the informational transparency of the GRS, improved access to international capital markets.
The engine of world economic growth is sputtering. The most clear evidence of this is the lack of new business formation in developed nations across the globe. Over the last year, the number of entrepreneurs starting new businesses in the wealthiest of nations dropped 10% from the 2006-07 level; in the U.S., that number fell by 24%.
The contaminants in the fuel line are oppressive government policies that increase the cost of doing business, increase unemployment, and raise the risks to the current labor force of quitting their jobs to try to start new businesses.
At a time when government should be encouraging venture capitalists and the formation of new business, it is instead putting on the brakes to this source of economic growth in the form of cap and trade, compensation regulations, fees on banks, and myriad other explicit and implicit new taxes. In 2009, nearly half of U.S. employment was generated by small businesses; U.S. companies started through venture capital employed more than 12 million people, or 11 percent of private sector employment, and generated $2.9 trillion in revenues, or 21 percent of U.S. GDP.
Fully 100% of economic growth is created in private industry. Government simply redistributes that wealth, destroying some portion of it in the process. Never have we needed non-interventionist government policies more.
Fortunately that passed.
Learning from Dogs 