Wednesday, November 26, 2008

Bailout

This melt-down of our economy is not something that just happened "on accident" to borrow a phrase from my ten year old son. I'm no expert, but it seems to me that the people who run many of the big companies took risks formulated through greed and a short-sighted management philosophy, the risks didn't pay off and now the next couple of generations of 'average' people will be forced to pay for that greed and the short-sightedness.



I worked for a company once that went via an IPO from being a wholly owned subsidiary of a huge multi-national conglomerate to being a much smaller company. Before the IPO, the management focused on "the core business." We did a very good job, much better than the industry averages, selling our primary commodity. Our profits were always good, though we didn't always beat the last quarter, and therein lies the problem. After the IPO, the management lost focus on "the core business" and began to worry more about our share price, our investor/owners, and the opinions of market analysts. That meant we HAD to beat last quarter--EVERY QUARTER. And, that is fundamentally impossible. Yet, somehow we did it for several years. We set precedents with our steady increases in sales and profits, but then all of sudden one quarter, even though the profits were good, we didn't meet "expectations" and the analysts weren't happy, and our share prices fell. Senior management panicked. They lost sight of the long term objectives and made poor decisions that ultimately lead to the company's decline. They laid off key support people, they cut maintenance budgets, they reduced advertising budgets, they cut benefits, they froze wages & bonuses (and morale and productivity), and the next quarter was the best ever. But, three quarters later, the company began to fall apart and was eventually gobbled up by a larger company within the industry. Hundreds of people lost their jobs, in this case due to the short-sightedness more than greed.



Now, you couple the typically short-sighted nature of business decision making with greed and this is what you get--massive failures, hundreds of thousands of lost jobs, industries crashing, national debt beyond imagination, and a bleak outlook for the near future--by "near" I mean 10 to 20 years. The greed factor is what's really made it this bad. Again, I'm no expert, but it seems to me that "greed" is a human characteristic--businesses can't be greedy, only the people that run them can exhibit greed. Greed causes the bad decisions I mentioned above to morph into actions that are speculative beyond the interests of all but an individual, or small group of individuals. The industries doing so poorly now are rife with examples. Mortgage, banking, real estate are perhaps the worst of the worst. The senior leaders of the big players caused the current economic crisis--whether through greed or incompetence, no one else can be blamed. They made lousy decisions and will probably continue to make lousy decisions because that's what they do. They can't help themselves--evidence the AIG stupidy of big dollar corporate events AFTER the bailout began.

Similar problems plague the U.S. automobile industry, and perhaps in some ways, it's even worse than insurance & banking. The leaders of GM, Ford, and Chrysler have plenty of successful business models to emulate, but they are so arrogant that they refuse to do so. This has gone on for decades. They make poor quality cars, compared to the competitors, and everyone has known this for many years, yet the Big Three continue along the same path. When gas prices were over $4 a gallon recently GM was running ads every night for the Escalade. How stupid is that? Of course, the UAW leaders are partners in this debacle. No one with any common sense can justify "bailout" for these three companies. The truth is they'll very likely mis-manage any money they get, just as they've mis-managed everything else for the last twenty years. Remember the Ford ad slogan "Quality is Job One?" When did Ford ever make top quality products? The tow-truck industy laughingly referred to the Explorer as the Exploder--

In conclusion, my opinion is that the bailouts are not the best way to turn the economy around. The big companies are poorly run and giving them more money won't change that. Instead, give more money to consumers and let them decide which companies survive.

Thursday, November 20, 2008

Yeast rolls

Somehow, I got volunteered to make yeast rolls for my 5th grader's Thanksgiving celebration at school. It's one of those things that mean absolutely nothing to a 10 year old, in fact he forgot to even mention it for several days; thankfully, I found a note crumpled up in the bottom of his backpack a couple days before the celebration so I did have some time to get it done.







This normally would have been a family project, but my wife was out of town that week helping her brother move here from the west coast. So, I did what you might expect--I went on line and found a recipe, went and bought the ingredients, followed the directions exactly, and. . . the "rolls" were a terrible disaster. The dough didn't rise at all. It bubbled a little, so I figured the yeast was alive, but it didn't rise. I rolled 'em up and put them in the oven, anyway, but they still didn't rise, and were hard as rocks when they came out. Now, I was out of time and ingredients, so I gave up. The next morning I went to the local super market and bought two dozen rolls that looked sort of like what I had in mind. When I delivered them to the school the teacher seemed perfectly OK with the fact that I had store-bought rolls--as a man, I had met her expectations, but I was just about humiliated--and that's a whole 'nother story.







My point about all this is that sometimes I really, really, really miss my mother. She's been gone for over 10 years and there are times when I really need her advice. First, she made great yeast rolls, and like so many other things she did it appeared effortless. I don't know that it was, but she made it look that way. The yeast rolls are a tiny thing--the big thing I could use some help with is parenting my son. He's ten, as I've mentioned. When I was 10, my mother was also raising an 8 year old, a 6 year old, and a three year old--all boys. And, I can't imagine how she did it, and again made it look so easy. Of course, my dad was around, and he was a wonderful father, but I think my mother did most of the hard work with me and my brothers. Many days, most days probably, it takes all of the energy my wife and I can muster, jointly, to get our one child up in the morning, dressed, fed, off to school, through his homework in the evening, get him to eat his dinner, keep him from sneaking into the pantry for junk food snacks, get his teeth brushed--how could my mother have possibly done this so well everyday with four boys and kept her sanity? Beyond that, I never sensed any of the pressure or frustration in Mom that I feel everyday with my son.



Mom's birthday was December 6th. She would have been a wonderful grandmother.

Saturday, November 15, 2008

Opinion about Obama

Well this is nearly unavoidable. You have to have an opinion about our new president. So, I have one:

His election IS historically significant. My nine year-old son explained it to me at dinner the other night. He (my son) has a "Presidents of the United States" place mat that he eats dinner on every night. When I sat down at the table he was reading the detail on the back side of the mat and said, "Obama is the only President ever born in Hawaii." He is basically an expert on presidents (among nine & ten year olds), and found this distinction to be the only one of any significance. I agree with him.

There are other differences that I see when I compare him to other presidents (and other candidates) and those are the ones that concern me. But, I don't consider them "historically significant." They're the same types of differences we see whenever we have elections. Candidates have varying levels of experience. Obama does not have sufficient experience to give me confidence that he can be successful as Head of State. I don't agree with all of his ideas about economics, social programs, national defense, foreign policy, and more. The overriding theme of his campaign was "Change," and that doesn't inspire me either. For many years I had a long daily commute over a mountain range to my office. The only radio station I could get driving over the mountain was an NPR station out of San Francisco. At the time, NPR was broadcasting the Senate Judiciary Committee hearings on the nomination of Stephen Breyer to the US Supreme Court. I listened to nearly every word of the hearings over a two week period. Near the end of the two weeks, I had a meeting with my team. While we were getting settled I listened as my managers discussed the "real news" of the the day, the OJ Simpson trial. Once I got the meeting started, I asked my managers a couple of straight forward questions about the Senate hearings:

  1. Who knows what the Judiciary committee is?
  2. Why is it in the news?
  3. Who are they interviewing?

Only one person knew the committee reviewed judicial appointments, no one knew there was a newly nominated justice, and of course, no one knew Breyer's name.

So, I asked another questions: What's the name of the long-haired guy that lives in OJ's garage? And, as you might expect, they all knew his name (though I've long since forgotten it).

My managers and I discussed this for a while. I asked them whether they intended to vote in the upcoming election. Only half (of 14) said they would vote. Of that half, only two expressed any real interest in the outcome of the election. The over-riding sentiment was, "No matter who gets elected on Tuesday, on Wednesday I'll still have to get up at 4:30 in the morning, get my kids off to daycare, get my husband off to work, get myself to work by 5:45, then work 10 hours at a stress-filled job, go home cook dinner, clean up, help the kids with their home work, get them off to bed, then get myself to bed, so I can do it all again on Thursday. Nothing will change for us."

I expect it'll be the same this time.

Wednesday, November 12, 2008

Opinions, part 1

Opinions--Everybody has them, sometimes they're stupid, ill-informed, poorly articulated, irrelevant, and irreverent. But, I'm a polite, respectful person, so I listen to other's opinions, smile, nod approvingly (feigned), and then when I sense that it's appropriate, I move on. That's one of the good things about being a greyhairedguy (ghg)--you don't have to stand or sit and listen to drivel, if you don't want to. You can always say, "I better get back to 'whatever'" and walk away, or hang up the phone, or end a conversation. People suspect that you're a busy person (I'm not so old that they look at me and think "retired"). I work hard to maintain the image of a busy person.



There are some opinions that I do respect. I don't always agree with them, but I consider them valid.

So, my blog will be my opinions on most everything--politics, parenting, money/finance, big business, being a husband, father, son-in-law, brother-in-law, uncle, brother, & the other roles I play, only one or two of my choosing.