Wednesday, September 8, 2010
Tuesday, March 2, 2010
Sunday, February 28, 2010
Our Canadian Platinum Olympics
On Feb 13th, I blogged under the title, “No, we are really not that boring”. It was in response to the opening night gala of the Olympics and a phone call from a dear American friend. I have subsequently deleted the body of the post but decided to retain the title as a reminder of how perceptions change.
At this point, no one can say Canada is boring.
February 12th was remarkable for its highs and lows. Following the torch that Friday was truly an emotional high. The feeling of utter despair and heartbreak on hearing of the tragic death of Nodar Kumaritashvili that afternoon, was the ultimate low.
Joannie Rochette may have won the bronze in the figure skating but won gold in the hearts of the world for her strength, courage and perseverance. For the duration of the Olympics and most probably her life, she will be known as Canada’s daughter.
Our first gold medal was not Alexandre Bilodeau in skiing, but one of our youngest “national treasures”, Nikki Yanofsky of MONTREAL. Yes, I admit to bias. I wasn’t a supporter of her rendition of O Canada but am thrilled by the accolades she is receiving from “ I Believe”. the Olympic song. There is something very special about Nikki.
I refuse to allow the Canada USA hockey game to be the defining moment of these extraordinary Olympics, so I am posting this before it starts. If we win, of course I allow myself the prerogative to change my opinion and state that it was the defining moment. For now, 13 GOLD medals is not only an incredible feat, but as I am not a triskaidekaphobiac, good luck. Maybe, by tonight it will be 14.
Canada, with our population of only 30,000,000 has won the most gold medals in the 2010 Olympics. More than the USA who is in first place and has a population of 300,000,000 with 9 gold medals or Germany, who is in 2nd place with a population in excess of 80,000,000 and 10 gold medals.
In the next day or so, every journalist and blogger, will be opining these past 17 days and what it meant to them Our Olympics have come and are will soon be a memory. I am not a sports fanatic or at least wasn't until two weeks ago and probably will not be again for a long long time. I can’t believe I even watched some curling even though I admit to not understanding it.
I love the spirit in this country. The past two weeks have been indescribable. There really is something so magical about these Olympics. I don't think it is exclusively because it is in Canada either. It started off with such sadness and it ending on the ultimate triumph. It has brought this country together sharing a wonderful journey.
Tomorrow, I, like many others, will revert back to reality of every day living, with our red mittens as a tangible memory, exemplifying sportsmanship, unity, national spirit and cohesiveness, from sea to shining sea.
I am proud to be CANADIAN!
.
At this point, no one can say Canada is boring.
February 12th was remarkable for its highs and lows. Following the torch that Friday was truly an emotional high. The feeling of utter despair and heartbreak on hearing of the tragic death of Nodar Kumaritashvili that afternoon, was the ultimate low.
Joannie Rochette may have won the bronze in the figure skating but won gold in the hearts of the world for her strength, courage and perseverance. For the duration of the Olympics and most probably her life, she will be known as Canada’s daughter.
Our first gold medal was not Alexandre Bilodeau in skiing, but one of our youngest “national treasures”, Nikki Yanofsky of MONTREAL. Yes, I admit to bias. I wasn’t a supporter of her rendition of O Canada but am thrilled by the accolades she is receiving from “ I Believe”. the Olympic song. There is something very special about Nikki.
I refuse to allow the Canada USA hockey game to be the defining moment of these extraordinary Olympics, so I am posting this before it starts. If we win, of course I allow myself the prerogative to change my opinion and state that it was the defining moment. For now, 13 GOLD medals is not only an incredible feat, but as I am not a triskaidekaphobiac, good luck. Maybe, by tonight it will be 14.
Canada, with our population of only 30,000,000 has won the most gold medals in the 2010 Olympics. More than the USA who is in first place and has a population of 300,000,000 with 9 gold medals or Germany, who is in 2nd place with a population in excess of 80,000,000 and 10 gold medals.
In the next day or so, every journalist and blogger, will be opining these past 17 days and what it meant to them Our Olympics have come and are will soon be a memory. I am not a sports fanatic or at least wasn't until two weeks ago and probably will not be again for a long long time. I can’t believe I even watched some curling even though I admit to not understanding it.
I love the spirit in this country. The past two weeks have been indescribable. There really is something so magical about these Olympics. I don't think it is exclusively because it is in Canada either. It started off with such sadness and it ending on the ultimate triumph. It has brought this country together sharing a wonderful journey.
Tomorrow, I, like many others, will revert back to reality of every day living, with our red mittens as a tangible memory, exemplifying sportsmanship, unity, national spirit and cohesiveness, from sea to shining sea.
I am proud to be CANADIAN!
.
Saturday, February 13, 2010
Monday, January 25, 2010
The First 365 Days
Before continuing, it would only be fair to engage in full disclosure. I am not an Obama fan. Although I have tried to be objective in previous posts, I am sure that I gave myself away.
That being said, I was a strong Hillary supporter . I would have preferred that she had dropped Bill along the way, but I would imagine she was advised that would be committing political suicide. I wasn't always one of her advocates but following her during her run for the Dem. nomination and listening to her in the debates and on various interviews, my respect for her grew not only for her acumen as a politician, but as an individual. She was and has been a professional in every aspect of her recent life and especially in the public arena. She understands “Politics”.
Back in Jan 2009, after his first “100 Days”, I felt it premature to pass judgment. Obama truly inherited a mess, so, in all fairness, I deferred until now.
In his interview with Oprah in December, she asked him how he would grade his first year. It was obvious, that he knew the questions in advance of the interview. He gave himself a B+ , qualifying it by saying, “an A- if healthcare is passed” When Charlie Gibson of ABC was asked what he thought of Obama’s grade of himself, he responded. “…I would have given myself an incomplete…” Very astute of Charlie.
Regrettably, Obama came across to the nation and the world as an egocentric narcissist.
He did do a few things that I liked. Unfortunately, he did so much more that I didn’t.
What I liked:
• Engaged Hillary to be Secretary of State.
• Brought Paul Volcker in as an advisor on the economic council (even though he was shelved for a full year until last Thursday)
• Legislature that he instituted bringing down the fees that credit card companies were charging.
What I didn’t like:
• He allocated the same priority to everything, accomplishing little.
• His priorities didn’t mesh with the those of the people who elected him.
• It’s the economy S_____! Larry Summers shares the final grade.
• Please do not get me started on the GM/Chrysler/GMAC bailouts.
• He stressed bipartisanship in his campaign, yet made it too difficult for the Rep to participate.
• The deplorable administration of the TARP (Case in point AIG, bonuses etc)
• Did not address the housing crisis
• Allowed the creation of a 2,000 page healthcare bill full of pork and special interest give aways, that was too complicated and long to read.
• Showed his brilliance as an orator in Cairo, without any follow through.
• He promised transparency yet hid from C Span.
• Ineffectiveness of the stimulus- favouring more liberal union oriented projects and not creating long term employment
• Completely misunderstanding the concept of stimulus. Getting the money out ASAP to areas which would create the most jobs
• Adding over $1 trillion to the deficit
• Inability to comprehend the consequences and slowness in reacting to the Christmas Day Bomber
• Acts like a manager and not a leader being reactive in lieu of proactive
• Too dependant on Pelosi and Reid (who hopefully will be only a bad memory in November)
• Still blaming the Bush administration
I would like to be a fan of Obama. I wish he gave me just reason to be one. He went to Washington with an incredible agenda, a Dem. House and Senate and accomplished very little. He promised hope and change but did not follow through. The Audacity.
What I would like to see in the next year is tangible substance and not a pretty image.
With the above in mind, my grade for his first year is D-
I would really like to believe in President Obama, and overcome my cynicism but he has to prove to me that he is more than a proficient orator and demonstrate that his words translate into meaningful actions.
I am sincerely hopimg that next January, I have reason to raise his grade.
.
That being said, I was a strong Hillary supporter . I would have preferred that she had dropped Bill along the way, but I would imagine she was advised that would be committing political suicide. I wasn't always one of her advocates but following her during her run for the Dem. nomination and listening to her in the debates and on various interviews, my respect for her grew not only for her acumen as a politician, but as an individual. She was and has been a professional in every aspect of her recent life and especially in the public arena. She understands “Politics”.
Back in Jan 2009, after his first “100 Days”, I felt it premature to pass judgment. Obama truly inherited a mess, so, in all fairness, I deferred until now.
In his interview with Oprah in December, she asked him how he would grade his first year. It was obvious, that he knew the questions in advance of the interview. He gave himself a B+ , qualifying it by saying, “an A- if healthcare is passed” When Charlie Gibson of ABC was asked what he thought of Obama’s grade of himself, he responded. “…I would have given myself an incomplete…” Very astute of Charlie.
Regrettably, Obama came across to the nation and the world as an egocentric narcissist.
He did do a few things that I liked. Unfortunately, he did so much more that I didn’t.
What I liked:
• Engaged Hillary to be Secretary of State.
• Brought Paul Volcker in as an advisor on the economic council (even though he was shelved for a full year until last Thursday)
• Legislature that he instituted bringing down the fees that credit card companies were charging.
What I didn’t like:
• He allocated the same priority to everything, accomplishing little.
• His priorities didn’t mesh with the those of the people who elected him.
• It’s the economy S_____! Larry Summers shares the final grade.
• Please do not get me started on the GM/Chrysler/GMAC bailouts.
• He stressed bipartisanship in his campaign, yet made it too difficult for the Rep to participate.
• The deplorable administration of the TARP (Case in point AIG, bonuses etc)
• Did not address the housing crisis
• Allowed the creation of a 2,000 page healthcare bill full of pork and special interest give aways, that was too complicated and long to read.
• Showed his brilliance as an orator in Cairo, without any follow through.
• He promised transparency yet hid from C Span.
• Ineffectiveness of the stimulus- favouring more liberal union oriented projects and not creating long term employment
• Completely misunderstanding the concept of stimulus. Getting the money out ASAP to areas which would create the most jobs
• Adding over $1 trillion to the deficit
• Inability to comprehend the consequences and slowness in reacting to the Christmas Day Bomber
• Acts like a manager and not a leader being reactive in lieu of proactive
• Too dependant on Pelosi and Reid (who hopefully will be only a bad memory in November)
• Still blaming the Bush administration
I would like to be a fan of Obama. I wish he gave me just reason to be one. He went to Washington with an incredible agenda, a Dem. House and Senate and accomplished very little. He promised hope and change but did not follow through. The Audacity.
What I would like to see in the next year is tangible substance and not a pretty image.
With the above in mind, my grade for his first year is D-
I would really like to believe in President Obama, and overcome my cynicism but he has to prove to me that he is more than a proficient orator and demonstrate that his words translate into meaningful actions.
I am sincerely hopimg that next January, I have reason to raise his grade.
.
Wednesday, December 30, 2009
Friday, December 11, 2009
Tuesday, April 28, 2009
The Regenerated DuO in DetrOit
Will a marriage between labour and a Democratic gOvernment friendly to unions and financed by tax payers money be good for business in general?
What happens when labour and government become partners? At General MOtors, the shareholder structure would be as follows: gOvernment holdings approximately 50%, UAW 39% and bondholders 10%.
Fairness is already in question as the gOvernment will receive an equity interest of 50% to convert their loans of $10 billion, whereas the bondholders will receive only 10% for their $24 billion.
Within the context of the outline of the potential Chrysler proposal, due on Friday, the banks will write off close to $5 billion of secured loans. Some of those banks, Citi in particular, are recipients of TARP money. Recent chatter is that Citi will be requiring an additional infusion of cash, in the immediate future. In essence, the government will lend Citi additional funds, while they are taking a loss in a government imposed restructuring at Chrysler. Conflict of interest.
Even from a lay person’s perspective, there are serious questions which should be raised.
The Chrysler proposal would give the UAW a majority holding of 55%. Based on the performance of the UAW over the past decade or so, it would be difficult to foresee Fiat buying into a 35% minority shareholder position.
.
What happens when labour and government become partners? At General MOtors, the shareholder structure would be as follows: gOvernment holdings approximately 50%, UAW 39% and bondholders 10%.
Fairness is already in question as the gOvernment will receive an equity interest of 50% to convert their loans of $10 billion, whereas the bondholders will receive only 10% for their $24 billion.
Within the context of the outline of the potential Chrysler proposal, due on Friday, the banks will write off close to $5 billion of secured loans. Some of those banks, Citi in particular, are recipients of TARP money. Recent chatter is that Citi will be requiring an additional infusion of cash, in the immediate future. In essence, the government will lend Citi additional funds, while they are taking a loss in a government imposed restructuring at Chrysler. Conflict of interest.
Even from a lay person’s perspective, there are serious questions which should be raised.
The Chrysler proposal would give the UAW a majority holding of 55%. Based on the performance of the UAW over the past decade or so, it would be difficult to foresee Fiat buying into a 35% minority shareholder position.
On Friday, as Chrysler will be presenting it's proposal to the gOvernment, the results of car and truck sales will be released.
The next few weeks should prove to be very interesting. Perhaps, the main stream media will start asking questions..
Monday, April 27, 2009
The Imperfect Storm
As more and more cases of swine flu are diagnosed in Mexico and the United States, a quiet and surreal panic permeats throughout the business world.
This morning, ABC, had Dr. Oz on both GMA and the View. His demeanour on GMA was very different to how he appeared 3 hours later on The View. On GMA, he was not his composed relaxed self. The circles under his eyes were very pronounced and he seemed stressed.
Dr Oz is probably the best known medical doctor in the United States and Canada. He, along with Dr Roison authored “You, The Owners Manual” books, is the force behind the popular website http://www.realage.com/ and with his frequent appearances on Oprah, is now a household name.
With his fan base of millions of viewers, he is perfect as the designated spokesperson for ABC with reference to this flu. His message of don’t panic, was clear. This was not altruistic of ABC’s part but proactive. Their parent, Disney owns theme parks and holiday resorts through out the world.
The speed of the spread of the flu is proportionate to the decrease in the stock prices of companies in the airline and hospitality industries. Today was a difficult day for those stocks.
Timing of this imperfect storm could not be worse. Canadians have vivid memories of the devastating impact SARS had on Toronto’s economy in 2003. Conferences and conventions were cancelled which brought down hotel occupancy rates to approximately 50%. Revenue at related industries driven by the cancellations, also diminished. Sporting events, shopping malls, cinemas, charity events even churches reported substantially reduced traffic. In general, the economy in Toronto was good and the city was more than able to weather it.
After 9-11, large companies in an attempt to be proactive researched and wrote up disaster plans, to be implemented should there be a need. Unfortunately, in my experience, there are many companies who do not have a plan of action, should one be necessary and the plans at large companies are outdated.
Today’s economy is considerably different, from Toronto’s in 2003. Consequences of a panic, let alone pandemic would be considerable and far reaching. The potential decrease in consumer purchasing of non essential items will lead to deflationary pricing, which in turn will prolong the recession or, depending on the length and depth, convert to a depression.
The present WHO, Global Pandemic Alert Level is at 3. The concern will accelerate should it be raised.
This morning, ABC, had Dr. Oz on both GMA and the View. His demeanour on GMA was very different to how he appeared 3 hours later on The View. On GMA, he was not his composed relaxed self. The circles under his eyes were very pronounced and he seemed stressed.
Dr Oz is probably the best known medical doctor in the United States and Canada. He, along with Dr Roison authored “You, The Owners Manual” books, is the force behind the popular website http://www.realage.com/ and with his frequent appearances on Oprah, is now a household name.
With his fan base of millions of viewers, he is perfect as the designated spokesperson for ABC with reference to this flu. His message of don’t panic, was clear. This was not altruistic of ABC’s part but proactive. Their parent, Disney owns theme parks and holiday resorts through out the world.
The speed of the spread of the flu is proportionate to the decrease in the stock prices of companies in the airline and hospitality industries. Today was a difficult day for those stocks.
Timing of this imperfect storm could not be worse. Canadians have vivid memories of the devastating impact SARS had on Toronto’s economy in 2003. Conferences and conventions were cancelled which brought down hotel occupancy rates to approximately 50%. Revenue at related industries driven by the cancellations, also diminished. Sporting events, shopping malls, cinemas, charity events even churches reported substantially reduced traffic. In general, the economy in Toronto was good and the city was more than able to weather it.
After 9-11, large companies in an attempt to be proactive researched and wrote up disaster plans, to be implemented should there be a need. Unfortunately, in my experience, there are many companies who do not have a plan of action, should one be necessary and the plans at large companies are outdated.
Today’s economy is considerably different, from Toronto’s in 2003. Consequences of a panic, let alone pandemic would be considerable and far reaching. The potential decrease in consumer purchasing of non essential items will lead to deflationary pricing, which in turn will prolong the recession or, depending on the length and depth, convert to a depression.
The present WHO, Global Pandemic Alert Level is at 3. The concern will accelerate should it be raised.
Thursday, April 2, 2009
Flavours of Insolvency
There were two announcements last week, one significant, the other purely cosmetic. This gave tax payers in both Canada and the US, an insight of what will be coming down the road for GM.
Crucial to potential car buyers, the US government will be guaranteeing the warranties of all GM vehicles purchased (in the US) until June 1st.
The other, is reminiscent of Trump’s Apprentice. You’re FIRED, Mr. Wagoner. “You did not do enough”
The successor, Fritz Henderson, a 25 year veteran and second in command was mentored and groomed for the top position, the past few years by none other than Rick Wagoner. Cosmetic…
The above coincided (intentionally)with the release of March 2009 car sales, down 45% from March 2008. As a consolation, it was an improvement over February’s decrease of 53% and January’s 49% over comparative periods the previous year. Unfortunately, in the eyes of all, except perhaps the UAW, the company has perhaps only one option left.
Certain numbers cannot be massaged, manipulated or spun to coresspond to something other than what they represent. Car sales at GM, for the first quarter, are down nearly 50%. A material representation of what is going on in the consumers psyche when they are sourcing new cars. The few that are actually purchasing are staying far away from GM. Sales are down at Ford, Toyota and Honda but not nearly as much.
When sales are nearly half of what they were in the past, the company has to act fast. A sense of urgency should prevail. Something, which is not happening. The luxury of time ceases to exist. Plan B has to be implemented immediately. The management of GM know which plants have to be closed and how many workers be either re-located or laid off. A difficult and painful process. The company cannot keep factories open, producing a product that is not being sold. Inventory costs.
The two month “get it right” period, the Obama administration established for GM is really a prep period for the government to organize an official form of insolvency, probably a pre-packaged Chapter 11.
Obama's administration will be responsiblef for the the "broke it" therefore "own it" scenerio. The laid off employees have to be treated as the number one priority of this administration. It is inconceivable that they might lose their health benefits. GM's restructuring should not come at the cost of the healthcare of their employees. It is difficult to comprehend why the US doesn't have healthcare for it's citizens. Thats another subject in itself.
On (or before) June 1st, the target date, General Motors will probably go into Chapter 11 and will emerge within a reasonable amount of time with agreements from the UAW, Bondholders, Vendors, Retirees, Secured Creditors. DIP financing to be supplied by the tax payer and 100% secured.
This weeks talking points by government officials and Henderson, had multiple references to bankruptcy and Chapter 11. This functions as a preparatory acclimation to the public’s ear. Word association: General Motors and Chapter 11, orderly bankruptcy, emerge stronger, healthier etc. Bankruptcy is not a negative.
Wagoner was always adamant in his view that General Motors will NEVER go into bankruptcy. Therefore, one of the most important telltale signs that a bankruptcy was imminent was the release of Wagoner He frequently alluded that if GM filed for bankruptcy, they would never emerge and the company would be broken up and cease to exist.
Of course GM would have not ceased to exist as the profitable divisions and or brands within the company would have been sold and continue to operate, trading not exclusively on the product but also their brand name.
It is important to the company and especially to the potential consumer that the inevitable happens as quickly as possible. Any bankruptcy lawyer, trustee or employee working within a bankrupt firm will tell you, the worst part is long wait, knowing what is coming. Once the filing has taken place, everyone can move foreward.
.
Thursday, March 19, 2009
The Sitting President
The past few days the news and talk shows have been featuring three stories: bonuses, the tragedy of Natasha Richardson and how history will be made on Thursday night.
What history will be made on Thursday night that the media outlets are so heavily promoting? Barak Obama, a "sitting President" will be on a talk show.
I have incredible respect for the host (and his wife) of this talk show. He has the true gift of humour. It is intelligent, witty and not at the expense of others.
He is very charitable, yet hides from the kudos which is associated with donations whether it be financial or public appearances. If there was a choice to be given, as to who deserves and should receive the honour of the President as a guest on their show, I would chose him. He leads, not by his chin but by example.
Yet, there is a very serious question which appears not to have been asked. Is it fair for a "sitting President" to go on one talk show and not another? How does he decide and what criteria supports that decision? Millions of people will be tuning in.
There are tangible financial benefits resulting from the President’s appearance, to the show and the television network. These benefits will be both immediate and long term.
It would be interesting to know if the advertisers on tonight's show are paying a premium. The only way one might consider this equitable would be if there is no advertising before and during the show. Otherwise, one might question the motivation.
..
What history will be made on Thursday night that the media outlets are so heavily promoting? Barak Obama, a "sitting President" will be on a talk show.
I have incredible respect for the host (and his wife) of this talk show. He has the true gift of humour. It is intelligent, witty and not at the expense of others.
He is very charitable, yet hides from the kudos which is associated with donations whether it be financial or public appearances. If there was a choice to be given, as to who deserves and should receive the honour of the President as a guest on their show, I would chose him. He leads, not by his chin but by example.
Yet, there is a very serious question which appears not to have been asked. Is it fair for a "sitting President" to go on one talk show and not another? How does he decide and what criteria supports that decision? Millions of people will be tuning in.
There are tangible financial benefits resulting from the President’s appearance, to the show and the television network. These benefits will be both immediate and long term.
It would be interesting to know if the advertisers on tonight's show are paying a premium. The only way one might consider this equitable would be if there is no advertising before and during the show. Otherwise, one might question the motivation.
..
Sunday, January 18, 2009
The First 365 Days
The day after the inauguration, both the pundits and the public start the customary countdown. The First Hundred Days. Historically, the President and his administration hit the ground running. Judgment is rendered on day 101.
Commitments which were made during the campaign are front and center in the minds of all and the implementation process commences.
But these are not normal times The veneer no longer shields the harsh reality of what is happening in the United States today. That hypothetical aura which prevails in the storybook world where promises translate into certainties ceased to exist.
President Obama has inherited a Pandora’s box of troubles: The debacle of the TARP bailout, banks camouflaging reddened balance sheets - reticent to lend to zombie companies, high unemployment, states who cannot meet payroll, insolvent car manufacturers with outstretched hands heading a potential line up for future bailouts from other industries, a health care system which doesn’t work, under funded social security, statistically too low a percentage of University graduates as compared to other countries in the developed world, a road and bridge infrastructure which is literally falling apart and two wars, (not to mention the on going Israeli Palestinian problem and a potential situation in Pakistan).
We won’t discuss America’s sullied reputation now.
We should give him 265 days grace and not pass judgment until January 21st, 2010. The previous administration made several dubious decisions without thinking through the consequences. Hundreds of billions of dollars was spent with little positive impact on the economy.
Perhaps President Obama might consider dividing his stimulus package into three tiers with well defined goals. Short-term (as defined by 6 months), where tax cuts would give ownership of their spending power to the average American, address the health care system with an eye to government funding as opposed to business and facilitate the ability of the average student to get a University education, mid term (6 months to 2 years) where the infrastructure of the country is concentrated on, and long term (2 to 4 years) where social security is the focus.
I am willing to wait for 365 days before judging, are you?
.
Sunday, January 4, 2009
Transparency
As time moves forward and additional information is made available, one must seriously question what is going on in Washington.
Between the TARP bank rescue package initiated by Paulson and Bernanke and the GM, Chrysler and GMAC bailouts promoted by Congress, tax payers have to start asking questions and insisting on answers.
The lack of transparency and oversight on the part of the government is unacceptable.
Obama has said on multiple occassions that he would like to have the stimulus package on his desk, for signing, the day he takes office. Yet, listening to the Sunday political shows, several comments have been made insinuating not only that there will not be sufficient time for both parties to read through the entire bill but that the Republican voice has not been heard.
Obama's platform had been based on change and transparency. Let the transparency show through and post the stimulus package on the Internet for all to see before pushing it through the house and commons. There is little question that there will be dissenting opinions by many but after the past 3 months it is imperative that we know how and where the money will be allocated.
Knowledge is a powerful tool. The elected officials answer to their public.
There is talk that this stimulus will be in the vicinity of $1,000,000,000,000, an incredible amount of money to spend. Will there be pork barrel spending?
..
Between the TARP bank rescue package initiated by Paulson and Bernanke and the GM, Chrysler and GMAC bailouts promoted by Congress, tax payers have to start asking questions and insisting on answers.
The lack of transparency and oversight on the part of the government is unacceptable.
Obama has said on multiple occassions that he would like to have the stimulus package on his desk, for signing, the day he takes office. Yet, listening to the Sunday political shows, several comments have been made insinuating not only that there will not be sufficient time for both parties to read through the entire bill but that the Republican voice has not been heard.
Obama's platform had been based on change and transparency. Let the transparency show through and post the stimulus package on the Internet for all to see before pushing it through the house and commons. There is little question that there will be dissenting opinions by many but after the past 3 months it is imperative that we know how and where the money will be allocated.
Knowledge is a powerful tool. The elected officials answer to their public.
There is talk that this stimulus will be in the vicinity of $1,000,000,000,000, an incredible amount of money to spend. Will there be pork barrel spending?
..
Saturday, December 13, 2008
Where is the Leadership?
The Canadian public learned a new word in early December, “prorogue” which means to suspend or end a legislative session.
This was precipitated by the justifiable fear of a modern day coup. Had the Conservative Canadian Prime Minister not suspended parliament on December 5th, there would have been a vote of non confidence, bringing down the government.
A coalition of the absurd was formed by the three remaining Canadian parties, the national center left liberals, the national socialist NDP and the regional Quebec Bloc separatists.
Imagine inviting a regional separatist party into a national coalition.
The Canadian government is now on hiatus until January 26th , at which time, this coalition can still initiate for a non confidence vote.
In summary, a coalition is formed by separatist, liberal and socialist parties with the sole purpose to bring down a government which was duly elected by the country six weeks before. The new PM, would be the humiliated ex- leader of the liberal party, who lost in a crushing defeat to the present PM, Stephen Harper.
Where is the leadership?
In September, Republican Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernake, initiated a $700 billion bank “rescue” plan. Initially, its primary objective was to purchase the toxic mortgages held by the financial institutions. The bill was passed with reticence by both Republicans and Democrats.
In essence, it would “detoxify” the balance sheet therefore encouraging financial institutions to commence lending to one another again. This, in turn, would enable the commercial banks to start lending to credit worthy businesses and consumers, ultimately easing the credit crunch. Unfortunately, to date, based on media rhetoric, (actual statistics are not available) there is little evidence of this happening.
Paulson, Bernake and the congress let down the American tax payer. Once the funds were disbursed, it was the banks prerogative to distribute the funds as they deemed appropriate. What Paulson and Bernake failed to do. nor were they mandated by the congress, was to implement realistic policies with pre-determined individualized conditions and accountability for each of the TARP borrowers.
What was surprising was that the CEOs and board of directors of these companies, who were responsible for the financial armagedon, remained in their positions. To date, the government has not put one of their own representatives on any of the boards.
As of today, the Treasury has not disclosed a list of the beneficiaries who received approximately $335 billion of TARP funding. The logic for this lack of transparency stems from the potential for panic should the public know which of the financial institutions the government was bailing out.
This lack of transparency does not help to encourage confidence in the average American. The perception is that the financial situation is much worse.
Where is the leadership?
Taking the above into consideration, it wasn’t surprising when, in mid November, CEOs from General Motors, Chrysler and Ford flew into Washington asking for a $25 billion lifeline.
The Democratic Speaker of the House along with the Democratic Senate Majority Leader didn’t request that the Big 3 prepare plans and projections, along with concessions that they would be initiating to obtain this money.
As the government hadn’t required accountability or performed a due diligence on the recipients of the TARP funds, it was not surprising the Big 3 came empty handed. Perhaps they expected it to be a slam dunk.
They returned to Washington in early December increasing their request to $34 billion. After all, perhaps they justified the increase of $9 billion because they brought a written report.
In todays world, corporations applying for financing are required to submit both quantitative and qualitative information and bonifide projections to the lender in support of the loan request.
Where is the leadership?
Last week, the $34 billion request was reduced to $14 billion and subsequently refused by the senate. There appeared to be a impasse between the senate republicans and Gettelfinger, the President of the UAW.
This past week, Gettelfinger appeared on several television news shows, voicing the position of the UAW. He stated the UAW have made considerable concessions in their most recent agreement (2007). What he did not elabourate on, what the original amounts of the benefits prior to these concession were. In his opinion, their part was completed and it was now time for the other classes of creditors and shareholders to do the same. In itself, this was not wrong, but it resulted in the bill not being passed.
In the 2007 agreement, UAW workers average 42 paid days off per year, comprised of approximately 5 weeks vacation and 17 paid holidays. Was that the result of prior concessions?
Job banks - If the tax payers were cognizant of what a job bank was and how it was funded, not only would they be up in arms but it could seriously impact their future purchases of a Big 3 car.
Gettelfinger alludes to the great sacrifice the UAW workers have made these past years but as the President of the union, his sights appear to be short term.
They were so close to an agreement on Thursday. Gettelfinger played his bluff. The republican White House had stated, in advance of this session that they wanted this loan to pass. Perhaps, the White House feel that since there is question as to the success of the bank bailout, they do not want to be the government in power who was responsible for the fall of the Big 3.
In approximately one month there will be a Democratic President who is union friendly. Does Gettelfinger know that the UAW will fare better or was he bluffing?
Winning this battle could be the first step to losing the war.
Hours later, GM announced they will be closing 20 factories throughout North American thereby reducing their production by approximately 250,000 vehicles. Will these laid off workers benefit from the job bank?
Where is the leadership?
Subsequent to the election, President elect Obama (democrat) stated there is only one President and stepped back.
President Bush (republican), has been giving exit interviews to the media and saying his goodbyes. Due to his ineffectiveness, his urging to senate to pass the bailout bill for the Big 3, has been to no avail.
Neither the President or President elect appear to have a sense of urgency with respect to the dilemma in the automobile industry. Something definitive has to be done and quickly.
Everyday that goes by fewer and fewer of the Big 3 cars are being purchased. The prospect of a Chapter 11 isn’t what is frightening the public. The fact that absolutely nothing tangible has been accomplished since the middle of November when the Big 3 first came to Washington, is what is absolutely terrifying them.
WHERE IS THE LEADERSHIP?
…
This was precipitated by the justifiable fear of a modern day coup. Had the Conservative Canadian Prime Minister not suspended parliament on December 5th, there would have been a vote of non confidence, bringing down the government.
A coalition of the absurd was formed by the three remaining Canadian parties, the national center left liberals, the national socialist NDP and the regional Quebec Bloc separatists.
Imagine inviting a regional separatist party into a national coalition.
The Canadian government is now on hiatus until January 26th , at which time, this coalition can still initiate for a non confidence vote.
In summary, a coalition is formed by separatist, liberal and socialist parties with the sole purpose to bring down a government which was duly elected by the country six weeks before. The new PM, would be the humiliated ex- leader of the liberal party, who lost in a crushing defeat to the present PM, Stephen Harper.
Where is the leadership?
In September, Republican Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernake, initiated a $700 billion bank “rescue” plan. Initially, its primary objective was to purchase the toxic mortgages held by the financial institutions. The bill was passed with reticence by both Republicans and Democrats.
In essence, it would “detoxify” the balance sheet therefore encouraging financial institutions to commence lending to one another again. This, in turn, would enable the commercial banks to start lending to credit worthy businesses and consumers, ultimately easing the credit crunch. Unfortunately, to date, based on media rhetoric, (actual statistics are not available) there is little evidence of this happening.
Paulson, Bernake and the congress let down the American tax payer. Once the funds were disbursed, it was the banks prerogative to distribute the funds as they deemed appropriate. What Paulson and Bernake failed to do. nor were they mandated by the congress, was to implement realistic policies with pre-determined individualized conditions and accountability for each of the TARP borrowers.
What was surprising was that the CEOs and board of directors of these companies, who were responsible for the financial armagedon, remained in their positions. To date, the government has not put one of their own representatives on any of the boards.
As of today, the Treasury has not disclosed a list of the beneficiaries who received approximately $335 billion of TARP funding. The logic for this lack of transparency stems from the potential for panic should the public know which of the financial institutions the government was bailing out.
This lack of transparency does not help to encourage confidence in the average American. The perception is that the financial situation is much worse.
Where is the leadership?
Taking the above into consideration, it wasn’t surprising when, in mid November, CEOs from General Motors, Chrysler and Ford flew into Washington asking for a $25 billion lifeline.
The Democratic Speaker of the House along with the Democratic Senate Majority Leader didn’t request that the Big 3 prepare plans and projections, along with concessions that they would be initiating to obtain this money.
As the government hadn’t required accountability or performed a due diligence on the recipients of the TARP funds, it was not surprising the Big 3 came empty handed. Perhaps they expected it to be a slam dunk.
They returned to Washington in early December increasing their request to $34 billion. After all, perhaps they justified the increase of $9 billion because they brought a written report.
In todays world, corporations applying for financing are required to submit both quantitative and qualitative information and bonifide projections to the lender in support of the loan request.
Where is the leadership?
Last week, the $34 billion request was reduced to $14 billion and subsequently refused by the senate. There appeared to be a impasse between the senate republicans and Gettelfinger, the President of the UAW.
This past week, Gettelfinger appeared on several television news shows, voicing the position of the UAW. He stated the UAW have made considerable concessions in their most recent agreement (2007). What he did not elabourate on, what the original amounts of the benefits prior to these concession were. In his opinion, their part was completed and it was now time for the other classes of creditors and shareholders to do the same. In itself, this was not wrong, but it resulted in the bill not being passed.
In the 2007 agreement, UAW workers average 42 paid days off per year, comprised of approximately 5 weeks vacation and 17 paid holidays. Was that the result of prior concessions?
Job banks - If the tax payers were cognizant of what a job bank was and how it was funded, not only would they be up in arms but it could seriously impact their future purchases of a Big 3 car.
Gettelfinger alludes to the great sacrifice the UAW workers have made these past years but as the President of the union, his sights appear to be short term.
They were so close to an agreement on Thursday. Gettelfinger played his bluff. The republican White House had stated, in advance of this session that they wanted this loan to pass. Perhaps, the White House feel that since there is question as to the success of the bank bailout, they do not want to be the government in power who was responsible for the fall of the Big 3.
In approximately one month there will be a Democratic President who is union friendly. Does Gettelfinger know that the UAW will fare better or was he bluffing?
Winning this battle could be the first step to losing the war.
Hours later, GM announced they will be closing 20 factories throughout North American thereby reducing their production by approximately 250,000 vehicles. Will these laid off workers benefit from the job bank?
Where is the leadership?
Subsequent to the election, President elect Obama (democrat) stated there is only one President and stepped back.
President Bush (republican), has been giving exit interviews to the media and saying his goodbyes. Due to his ineffectiveness, his urging to senate to pass the bailout bill for the Big 3, has been to no avail.
Neither the President or President elect appear to have a sense of urgency with respect to the dilemma in the automobile industry. Something definitive has to be done and quickly.
Everyday that goes by fewer and fewer of the Big 3 cars are being purchased. The prospect of a Chapter 11 isn’t what is frightening the public. The fact that absolutely nothing tangible has been accomplished since the middle of November when the Big 3 first came to Washington, is what is absolutely terrifying them.
WHERE IS THE LEADERSHIP?
…
Friday, December 5, 2008
Hard Cold Reality
As a result of the high unemployment and speculation of what is to come, there is tangible fear on the pedestrian streets.
November job losses were in excess of 500,000. well above the forecasted estimates. Since September, the cumulative figure is approximately 1.2 million jobs lost. Frightening numbers.
On Dec 4th, individual retailers released their comparative store sales (CSS) for the month of November. It was dire. . Later this week, the industry as a whole will be releasing their figure. As it is well known in industry that retail is notorious for its layoffs during January, expect more volatility in the markets. With Christmas around the corner, and the consumer not buying small ticket items, it is difficult to imagine them buying cars.
This was a contributing factor and set the tone for the speeches in Congress on Friday. At the onset, one knew that regardless of what they said or presented in their reports, the gentlemen from Detroit will be returning home with committments for financing.
To many consumers, the likelihood that General Motors will cease to exist as a going concern is a high probability. This was indicated by November sales. GM was down 41%, from November 2007. The drop in sales at the other car manufacturers was approx. 32% for November.
This is really about General Motors. Short term Ford is holding its own.
Chrysler, is 80% owned by Cerberus, which is a private equity fund. Due to the nature of the ownership there is little information available. Prior to any funding from the government, it is imperative that a due diligence be performed to ascertain if there has been any movement of Chrysler assets.
Regardless of what it is called or how it is restructured, this endeavour to return General Motors to solvency must also work to restore consumer confidence in the company or it will be to no avail.
This must be the number one priority. The consumer has to feel confident enough in the ability of the company to survive. Without that confidence, they will continue to purchase their cars elsewhere.
The question is, how will this bailout “package” be structured? In what terms will it be referred to? Unfortunately, this past month, the labels, bankruptcy, re-structuring, insolvency, Chapter 11, Chapter 7, among others gives the public very negative connotations of what bankruptcy might lead to.
The UAW, automobile executives and media are alluding that if there is a bankruptcy, the industry will not survive, resulting in the loss of millions of direct and indirect jobs.
If not handled with the proper expertise, there is concern that the automobile industry in the US could implode.
In line with that perspective, perhaps what is necessary is to structure the “bailout” to shadow the Chapter 11 process but refer to it a bridge loan. It is all in ones perception.
Treat it exactly as a bankruptcy but refer to it as something else. In essence it would be like a pre-packaged Chapter 11, with the government guaranteeing the DIP financing and mandating the Czar as the bankruptcy judge.
The difference between concessions under a government bailout or re-organization under a Chapter 11 bankruptcy filing is the degree of structure and elasticity that would be demanded of General Motors, the most needy . Keep the stringent rules as if an actual filing under Chapter 11 had occurred.
Detailed below are some thoughts on the restructuring:
· Each company must be evaluated on its own merits.
· Completely replace the board of directors. The Chairperson of the board would be appointed by the government. The balance of the board must include representation from each major class of creditors, along with representatives from management.
· The CEOs and upper management of the companies be evaluated and if dismissed, agree to leave without severance.
· Restructure all categories of debt. Each class of creditors would have to accept a certain percentage of forgiveness of their debt in turn for a debenture or an equity position in the newly reorganized company. The main categories of creditors would include: UAW, employees, bond holders, trade creditors, service creditors, dealerships, landlords, financial institutions, and retires.
· All existing contracts are open to re-negotiation including the UAW, retires, vendor agreements and leases.
· An independent auditor be commissioned to crunch the numbers and present a more realistic report than that, that was submitted on December 2nd.
A predetermined amount of the loan would be allocated to honouring of warranties, along with an ongoing percentage of sales.
There has to be a high level of transparency. Learn from the mistakes of the rescues of the financial institutions. If the public knew that their money was being used by banks to purchase other banks……
A sense of urgency has to be established. Waiting for the next administration or until after the holidays is not an option. A temporary loan of $10 or $15 billion to tide the companies over until March is not a solution, or even a band-aide.
Proceedings must take place immediately. Otherwise, it is hard to imagine car buyers going to GM during December and January.
November job losses were in excess of 500,000. well above the forecasted estimates. Since September, the cumulative figure is approximately 1.2 million jobs lost. Frightening numbers.
On Dec 4th, individual retailers released their comparative store sales (CSS) for the month of November. It was dire. . Later this week, the industry as a whole will be releasing their figure. As it is well known in industry that retail is notorious for its layoffs during January, expect more volatility in the markets. With Christmas around the corner, and the consumer not buying small ticket items, it is difficult to imagine them buying cars.
This was a contributing factor and set the tone for the speeches in Congress on Friday. At the onset, one knew that regardless of what they said or presented in their reports, the gentlemen from Detroit will be returning home with committments for financing.
To many consumers, the likelihood that General Motors will cease to exist as a going concern is a high probability. This was indicated by November sales. GM was down 41%, from November 2007. The drop in sales at the other car manufacturers was approx. 32% for November.
This is really about General Motors. Short term Ford is holding its own.
Chrysler, is 80% owned by Cerberus, which is a private equity fund. Due to the nature of the ownership there is little information available. Prior to any funding from the government, it is imperative that a due diligence be performed to ascertain if there has been any movement of Chrysler assets.
Regardless of what it is called or how it is restructured, this endeavour to return General Motors to solvency must also work to restore consumer confidence in the company or it will be to no avail.
This must be the number one priority. The consumer has to feel confident enough in the ability of the company to survive. Without that confidence, they will continue to purchase their cars elsewhere.
The question is, how will this bailout “package” be structured? In what terms will it be referred to? Unfortunately, this past month, the labels, bankruptcy, re-structuring, insolvency, Chapter 11, Chapter 7, among others gives the public very negative connotations of what bankruptcy might lead to.
The UAW, automobile executives and media are alluding that if there is a bankruptcy, the industry will not survive, resulting in the loss of millions of direct and indirect jobs.
If not handled with the proper expertise, there is concern that the automobile industry in the US could implode.
In line with that perspective, perhaps what is necessary is to structure the “bailout” to shadow the Chapter 11 process but refer to it a bridge loan. It is all in ones perception.
Treat it exactly as a bankruptcy but refer to it as something else. In essence it would be like a pre-packaged Chapter 11, with the government guaranteeing the DIP financing and mandating the Czar as the bankruptcy judge.
The difference between concessions under a government bailout or re-organization under a Chapter 11 bankruptcy filing is the degree of structure and elasticity that would be demanded of General Motors, the most needy . Keep the stringent rules as if an actual filing under Chapter 11 had occurred.
Detailed below are some thoughts on the restructuring:
· Each company must be evaluated on its own merits.
· Completely replace the board of directors. The Chairperson of the board would be appointed by the government. The balance of the board must include representation from each major class of creditors, along with representatives from management.
· The CEOs and upper management of the companies be evaluated and if dismissed, agree to leave without severance.
· Restructure all categories of debt. Each class of creditors would have to accept a certain percentage of forgiveness of their debt in turn for a debenture or an equity position in the newly reorganized company. The main categories of creditors would include: UAW, employees, bond holders, trade creditors, service creditors, dealerships, landlords, financial institutions, and retires.
· All existing contracts are open to re-negotiation including the UAW, retires, vendor agreements and leases.
· An independent auditor be commissioned to crunch the numbers and present a more realistic report than that, that was submitted on December 2nd.
A predetermined amount of the loan would be allocated to honouring of warranties, along with an ongoing percentage of sales.
There has to be a high level of transparency. Learn from the mistakes of the rescues of the financial institutions. If the public knew that their money was being used by banks to purchase other banks……
A sense of urgency has to be established. Waiting for the next administration or until after the holidays is not an option. A temporary loan of $10 or $15 billion to tide the companies over until March is not a solution, or even a band-aide.
Proceedings must take place immediately. Otherwise, it is hard to imagine car buyers going to GM during December and January.
Tuesday, December 2, 2008
The Pride of Texas!
Was pride lost in Texas yesterday? Perhaps not!
Pilgrim’s Pride Corp., the largest poultry company in the US, filed for Chapter 11 bankruptcy protection. They are headquartered in the Lone Star state. They chose bankruptcy, not a request for a bail out.
In the business and finance environment, there was little surprise. The company, unable to meet its credit obligations, had applied for three waivers. The last of which expired yesterday. With a $25 million interest payment due this week, and tight cash flow, they had little alternative.
Laymen are questioning this as a consequence of the credit freeze and economy. It is not. This is the result of questionable business decisions, which leveraged the company to such an extent that the slightest reduction in cash flow would trigger major repercussions.
According to the 2007 10K, the company had revenue of $7.6 billion up from $5.2 billion the previous year. The increase in revenue was directly attributed to the acquisition of Gold Kist, the 3rd largest poultry company in the US,. Pilgrim’s Pride purchased the company in December 2006 for $1,139 billion.
Acquisitions come at a cost. Long term debt increased to $1.5 billion and it appears that the penalty to a this business decision is a Chapter 11 filing. Unusually high corn and oil prices along with well capitalized competition were contributing factors.
The business commenced operations in 1946. One of the original partners, Lonnie Pilgrim, remains as Senior Chairman of the company today.
As of Sept 2007, in the US, they had 35 processing plantsm. 34 are located in the south. The company employed 49,800 employees of which 16,350 were members of a union.
They are presently in the process of negotiating a $450 million DIP facility with the Bank of Montreal.
Why bring up Pilgrim’s filing?
The government appears to be entering into a new venue, that of financing. Its format, bailouts. What is the criteria for a bailout?
Twos weeks ago 3 candidates from the car industry applied.
On the 1st Thursday of every month retailers post their comparative store sales (CSS) for the previous month. There is little question that the news this Thursday will not be good. What happens next?
The retail industry employs millions of taxpayers throughout the country. How does the insolvent retailer restructure? Do they request a bailout or go through Chapter 11? The only retailer, who is considered "too big to fail" will not be asking. Their competiton might..
.
Pilgrim’s Pride Corp., the largest poultry company in the US, filed for Chapter 11 bankruptcy protection. They are headquartered in the Lone Star state. They chose bankruptcy, not a request for a bail out.
In the business and finance environment, there was little surprise. The company, unable to meet its credit obligations, had applied for three waivers. The last of which expired yesterday. With a $25 million interest payment due this week, and tight cash flow, they had little alternative.
Laymen are questioning this as a consequence of the credit freeze and economy. It is not. This is the result of questionable business decisions, which leveraged the company to such an extent that the slightest reduction in cash flow would trigger major repercussions.
According to the 2007 10K, the company had revenue of $7.6 billion up from $5.2 billion the previous year. The increase in revenue was directly attributed to the acquisition of Gold Kist, the 3rd largest poultry company in the US,. Pilgrim’s Pride purchased the company in December 2006 for $1,139 billion.
Acquisitions come at a cost. Long term debt increased to $1.5 billion and it appears that the penalty to a this business decision is a Chapter 11 filing. Unusually high corn and oil prices along with well capitalized competition were contributing factors.
The business commenced operations in 1946. One of the original partners, Lonnie Pilgrim, remains as Senior Chairman of the company today.
As of Sept 2007, in the US, they had 35 processing plantsm. 34 are located in the south. The company employed 49,800 employees of which 16,350 were members of a union.
They are presently in the process of negotiating a $450 million DIP facility with the Bank of Montreal.
Why bring up Pilgrim’s filing?
The government appears to be entering into a new venue, that of financing. Its format, bailouts. What is the criteria for a bailout?
Twos weeks ago 3 candidates from the car industry applied.
On the 1st Thursday of every month retailers post their comparative store sales (CSS) for the previous month. There is little question that the news this Thursday will not be good. What happens next?
The retail industry employs millions of taxpayers throughout the country. How does the insolvent retailer restructure? Do they request a bailout or go through Chapter 11? The only retailer, who is considered "too big to fail" will not be asking. Their competiton might..
.
Sunday, November 30, 2008
$25 Billion Bridge Financing Facility
MEMO
To
Bob Nardelli, Chrysler
Alan Mulally, Ford
Rick Wagoner General Motors
Ron Gettelfinger UAW President
From :
Speaker of the House
Senate Majority leaser
Re: $25 Billion Bridge Financing Facility
To ensure the optimum use of time we would request the following be addressed in your report due Dec 2nd, 2008 Please note, we have added an extra seat at the table for Mr. Gettelfinger, President of the UAW. Your attendance is mandatory.
·Objective: To ascertain exactly how much money is required, short term as defined by next 6 months and long term as defined by 12 and 24 months.
·Action: Realistic projections which must include the following: Management, labour, vendor, and bondholder concessions. Costs associated with closing of facilities, dealerships and disposal of assets.
Proceeds from the sale of assets.
·Objective: To pinpoint the problems and determine the options relating to the unprofitable or marginally profitable brands.
· Action: Profitability analysis by brand
· Objective: To understand the brand profitability and cost differentials by country.
· Action: A comparative detailed line by line breakdown of the direct individual costs in the manufacturing of a brand by plant and country.
· Objective: To ensure complete transparency with respect to the proposals submitted to other governments.
· Action: A summary of the concessions that you will be requested of the governments in the countries where you are presently manufacturing.
· Objective: To establish the level of seriousness to which the UAW is prepared to commit to these proceedings
· Action: The concessions that the UAW is prepared to make to the existing agreements.
· Objective: To ascertain the threshold the unsecured creditors and bondholders will accept with respect to debt forgiveness and/or conversion of debt into equity..
· Action: For all trade payables in excess of $250,000: A list of the summarized aged accounts payable. Next to each vendor, note if this is a secured or unsecured debt. Indicate if the vendor has credit insurance and if so, who is the insurer. Has communication been initiated with respect to forgiveness of part of the debt or the conversion into equity.
· Action: At the present time, the value of the General Motos unsecured bonds is approximately . 50 cents on the dollar. What degree of communication has been held with the major bond holders?
· Objective: To establish what the upper management, owners and Board of Directors are prepared to do for the company with respect to tenure, compensation, voting rights, dividends and collateral. The Ford family still maintains special voting rights, are they prepared to give them up, along with the dividends? Chrysler is 80% owned by private-equity company, Cerberus Capital Management, who in turn also own approximately 50% of GMAC. Are they prepared to put those shares up as security and/or other assets?
· Action: A detailed proposal by each of your companies in response to the above..
· Objective: To determine at what point Chrysler, Ford, and General Motors will become profitable and competitive and to ensure that you have your finger on the pulse of what your customer wants in relation to fuel efficiency, and ecology
· Action: 3 year plan going forward.
· Objective: To find out what alternative options are available to the companies.
· Action: A realistic plan (not a worse case scenario) going forward should the government decide not to loan you the money.
Gentlemen, the reports that you will be submitting next week, will have a tremendous impact on the country you are living in, the business and banking world and the lives of many of your countrymen. Please treat this with the level of seriousness it deserves.
To
Bob Nardelli, Chrysler
Alan Mulally, Ford
Rick Wagoner General Motors
Ron Gettelfinger UAW President
From :
Speaker of the House
Senate Majority leaser
Re: $25 Billion Bridge Financing Facility
To ensure the optimum use of time we would request the following be addressed in your report due Dec 2nd, 2008 Please note, we have added an extra seat at the table for Mr. Gettelfinger, President of the UAW. Your attendance is mandatory.
·Objective: To ascertain exactly how much money is required, short term as defined by next 6 months and long term as defined by 12 and 24 months.
·Action: Realistic projections which must include the following: Management, labour, vendor, and bondholder concessions. Costs associated with closing of facilities, dealerships and disposal of assets.
Proceeds from the sale of assets.
·Objective: To pinpoint the problems and determine the options relating to the unprofitable or marginally profitable brands.
· Action: Profitability analysis by brand
· Objective: To understand the brand profitability and cost differentials by country.
· Action: A comparative detailed line by line breakdown of the direct individual costs in the manufacturing of a brand by plant and country.
· Objective: To ensure complete transparency with respect to the proposals submitted to other governments.
· Action: A summary of the concessions that you will be requested of the governments in the countries where you are presently manufacturing.
· Objective: To establish the level of seriousness to which the UAW is prepared to commit to these proceedings
· Action: The concessions that the UAW is prepared to make to the existing agreements.
· Objective: To ascertain the threshold the unsecured creditors and bondholders will accept with respect to debt forgiveness and/or conversion of debt into equity..
· Action: For all trade payables in excess of $250,000: A list of the summarized aged accounts payable. Next to each vendor, note if this is a secured or unsecured debt. Indicate if the vendor has credit insurance and if so, who is the insurer. Has communication been initiated with respect to forgiveness of part of the debt or the conversion into equity.
· Action: At the present time, the value of the General Motos unsecured bonds is approximately . 50 cents on the dollar. What degree of communication has been held with the major bond holders?
· Objective: To establish what the upper management, owners and Board of Directors are prepared to do for the company with respect to tenure, compensation, voting rights, dividends and collateral. The Ford family still maintains special voting rights, are they prepared to give them up, along with the dividends? Chrysler is 80% owned by private-equity company, Cerberus Capital Management, who in turn also own approximately 50% of GMAC. Are they prepared to put those shares up as security and/or other assets?
· Action: A detailed proposal by each of your companies in response to the above..
· Objective: To determine at what point Chrysler, Ford, and General Motors will become profitable and competitive and to ensure that you have your finger on the pulse of what your customer wants in relation to fuel efficiency, and ecology
· Action: 3 year plan going forward.
· Objective: To find out what alternative options are available to the companies.
· Action: A realistic plan (not a worse case scenario) going forward should the government decide not to loan you the money.
Gentlemen, the reports that you will be submitting next week, will have a tremendous impact on the country you are living in, the business and banking world and the lives of many of your countrymen. Please treat this with the level of seriousness it deserves.
Friday, November 28, 2008
Bailouts Breed Entitlement
Memo
Date: November 28th, 2008
To: Speaker of the House
Senate Majority Leader
From: The Taxpayer
Subject: “Audacity of” Bailouts breed Entitlement
It is with the utmost respect that we, the taxpayers, humbly ask what was the purpose of the Senate meetings with General Motors, Ford and Chrysler two weeks ago?
At the onset it appeared to us that the Big 3 were in town to receive what they referred to as a bridge loan of $25,000,000,000 (note all the zeros).
What we, the tax payers refer to as a bailout. Please note, in this context, we are using the term bridge loan as a synonym for bail out and government as a synonym for bank.
They came with hope, their hands outstretched (Audacity).
They brought nothing with them to the table to justify the loan (Audacity).
They left a large carbon footprint, shadowing their tail, (Audacity).
We understand their perspective. They felt entitled.
The actions of the government the past few months have been to “rescue” (another synonym for bailout) the financial institutions.
Well, why not? The Big 3. American icons, employing directly and indirectly millions of American workers. They support the economy of several mid west states with their taxes. They support the local economies with the bloated salaries of their unionized workers. How could the government let them fail?
After all, they are not the airlines or the steel companies. Entitlement?
Did you, Ms. Speaker or you, Mr. Senate Majority Leader lead them to believe and therefore expect that it would be easy for them to come to Washington with nothing and leave with $25 Billion? Did they really believe that they could come empty handed and walk away with a cheque? No strings attached?
Was that inferred? If only it was that easy for a business to get a loan.
It was suggested by Mr. Senate Majority Leader that it would be easy to take $25 BILLION, from the $700 BILLION. Mr. Paulson, said NO!
Several of your duly elected senators voted with much trepidation to extend $700 BILLLION to rescue the banks. Those who voted for the $700 Billion may not support a re-allocation of $25 BILLION to the Big 3.
Especially, we would imagine, those senators who hail from the southern states, where the healthy car manufacturers (with foreign ownership) have multiple plants, and support the economies of several states and towns. They employ thousands of American taxpayers, both directly and indirectly without bloated salaries…. yet still generating a profit.
Sir, if the decision is made to bailout the Big 3 using money from the $700 Billion, then please, respect our elected senator's positions and have a separate vote. We would like to know how they voted! .
With all the forecasted job losses, coming from the financial sector, perhaps some of the unemployed can be put to work keeping the printing pre$$e$ running.
Date: November 28th, 2008
To: Speaker of the House
Senate Majority Leader
From: The Taxpayer
Subject: “Audacity of” Bailouts breed Entitlement
It is with the utmost respect that we, the taxpayers, humbly ask what was the purpose of the Senate meetings with General Motors, Ford and Chrysler two weeks ago?
At the onset it appeared to us that the Big 3 were in town to receive what they referred to as a bridge loan of $25,000,000,000 (note all the zeros).
What we, the tax payers refer to as a bailout. Please note, in this context, we are using the term bridge loan as a synonym for bail out and government as a synonym for bank.
They came with hope, their hands outstretched (Audacity).
They brought nothing with them to the table to justify the loan (Audacity).
They left a large carbon footprint, shadowing their tail, (Audacity).
We understand their perspective. They felt entitled.
The actions of the government the past few months have been to “rescue” (another synonym for bailout) the financial institutions.
Well, why not? The Big 3. American icons, employing directly and indirectly millions of American workers. They support the economy of several mid west states with their taxes. They support the local economies with the bloated salaries of their unionized workers. How could the government let them fail?
After all, they are not the airlines or the steel companies. Entitlement?
Did you, Ms. Speaker or you, Mr. Senate Majority Leader lead them to believe and therefore expect that it would be easy for them to come to Washington with nothing and leave with $25 Billion? Did they really believe that they could come empty handed and walk away with a cheque? No strings attached?
Was that inferred? If only it was that easy for a business to get a loan.
It was suggested by Mr. Senate Majority Leader that it would be easy to take $25 BILLION, from the $700 BILLION. Mr. Paulson, said NO!
Several of your duly elected senators voted with much trepidation to extend $700 BILLLION to rescue the banks. Those who voted for the $700 Billion may not support a re-allocation of $25 BILLION to the Big 3.
Especially, we would imagine, those senators who hail from the southern states, where the healthy car manufacturers (with foreign ownership) have multiple plants, and support the economies of several states and towns. They employ thousands of American taxpayers, both directly and indirectly without bloated salaries…. yet still generating a profit.
Sir, if the decision is made to bailout the Big 3 using money from the $700 Billion, then please, respect our elected senator's positions and have a separate vote. We would like to know how they voted! .
With all the forecasted job losses, coming from the financial sector, perhaps some of the unemployed can be put to work keeping the printing pre$$e$ running.
Monday, November 24, 2008
Obama and the Economy
One would hope, since the election, President elect Obama has been spending a significant amount of time studying fiscal and social economic theory, along with its practises and impact on the US economy.
Once the selection of his cabinet has been completed, his next priority must be to put into place policies which will help to restore the confidence of the American citizen. It is questionable that a stimulus package, formatted along the same lines as the first, would be successful not only in meeting expectations but with its desired impact.
The American consumer does not have the level of comfort or confidence that is necessary to allow them to spend money, in turn jump starting the economy. It appears that the average American used the proceeds of the first package to pay down debt or banked the cheque for a rainier day.
It is not the responsibility of the government to utilize part of the $700 billion, which is earmarked for the rescue of the financial institutions, to bail out domestic corporations. If companies such as GM cannot obtain either debt or equity financing from the private sector, there is just reason.
Listening to the media forecast severe job loss along with other doomsday prognostications as a result of an insolvency filing of GM fosters fear in the average American. Many hold a deep psychological and emotional attachment to GM, an American icon, who, this year is celebrating its centennial. How would a government bailout be structured? Loan or equity or both. What happens, in a few months when the $25 billion isn’t sufficient? The government is not geared up to be in the finance business.
The American automobile industry has been in a downward spiral for over a decade. They have not as yet addressed or defined the real problems.
The talk about appointing an automotive Czar for the car industry doesn’t make sense. Does he/she merge GM, Ford and Chrysler and then rule with government financing creating a monopoly? What about the other car companies who are manufacturing in the US, using American labour? How does the government make things equitable?
Chapter 11 could ultimately save jobs. Labour, legacy costs and inefficiency have led to an uncompetitive product. With GM’s shares in the vicinity of $3, the shareholders have already lost a very significant portion of their investment. The suppliers to GM have been closely monitoring and reviewing their credit risk and exposures. If trade credit is being extended to GM, it is being done so on a well defined basis, with acceptable risk to the vendor.
Chapter 11 enables decisions to be made by the trustee and new management in conjunction with a strong creditors committee. This will help to give them much needed time to review all areas of the company and implement appropriate action plans. Leases and contractual obligations (both vendor and employee) can be re-negotiated with more favourable terms.
There will be layoffs, potential facility closings and the possibility of shuttering or selling divisions. If that is what ultimately saves the company and a stronger and perhaps smaller General Motors emerges, then they will not only be more competitive, but will probably have generated positive public support, which might translate into purchases. If done properly, the automobile consumer will not run from GM cars but to them.
The tightening of credit in the markets may impede the ability of GM and others to procure DIP financing. Perhaps the alternative to a government bailout might be to allow GM and the others in the auto industry to go into Chapter 11 and have the government guarantee part of the DIP financing. This is still a dangerous route to take as it sets a precedent.
It is imperative that the government and media stop referring to the next two months as a lame duck period. The consumer does not need to hear this every time they turn on the television or radio. It frightens the average person.
Yes, there is only one president of the United States at a time. Yet, as the next two months are so critical to retailers, manufacturers and their supply chains, this might be an opportune time to have an immediate joint prime time address with both the President and the President elect. A bipartisan breaking of paradigms and an opportune time to explain to the people what the government is doing during this transition period, where they want to go with the new administration and how they are going to get there.
Perhaps, as an idealistic Canadian, I may not be seeing the entire picture but a strong America is important to the world.
By: Myra Dodick,
Sent: 01:48 PM Sun Nov.16.2008 - US
Once the selection of his cabinet has been completed, his next priority must be to put into place policies which will help to restore the confidence of the American citizen. It is questionable that a stimulus package, formatted along the same lines as the first, would be successful not only in meeting expectations but with its desired impact.
The American consumer does not have the level of comfort or confidence that is necessary to allow them to spend money, in turn jump starting the economy. It appears that the average American used the proceeds of the first package to pay down debt or banked the cheque for a rainier day.
It is not the responsibility of the government to utilize part of the $700 billion, which is earmarked for the rescue of the financial institutions, to bail out domestic corporations. If companies such as GM cannot obtain either debt or equity financing from the private sector, there is just reason.
Listening to the media forecast severe job loss along with other doomsday prognostications as a result of an insolvency filing of GM fosters fear in the average American. Many hold a deep psychological and emotional attachment to GM, an American icon, who, this year is celebrating its centennial. How would a government bailout be structured? Loan or equity or both. What happens, in a few months when the $25 billion isn’t sufficient? The government is not geared up to be in the finance business.
The American automobile industry has been in a downward spiral for over a decade. They have not as yet addressed or defined the real problems.
The talk about appointing an automotive Czar for the car industry doesn’t make sense. Does he/she merge GM, Ford and Chrysler and then rule with government financing creating a monopoly? What about the other car companies who are manufacturing in the US, using American labour? How does the government make things equitable?
Chapter 11 could ultimately save jobs. Labour, legacy costs and inefficiency have led to an uncompetitive product. With GM’s shares in the vicinity of $3, the shareholders have already lost a very significant portion of their investment. The suppliers to GM have been closely monitoring and reviewing their credit risk and exposures. If trade credit is being extended to GM, it is being done so on a well defined basis, with acceptable risk to the vendor.
Chapter 11 enables decisions to be made by the trustee and new management in conjunction with a strong creditors committee. This will help to give them much needed time to review all areas of the company and implement appropriate action plans. Leases and contractual obligations (both vendor and employee) can be re-negotiated with more favourable terms.
There will be layoffs, potential facility closings and the possibility of shuttering or selling divisions. If that is what ultimately saves the company and a stronger and perhaps smaller General Motors emerges, then they will not only be more competitive, but will probably have generated positive public support, which might translate into purchases. If done properly, the automobile consumer will not run from GM cars but to them.
The tightening of credit in the markets may impede the ability of GM and others to procure DIP financing. Perhaps the alternative to a government bailout might be to allow GM and the others in the auto industry to go into Chapter 11 and have the government guarantee part of the DIP financing. This is still a dangerous route to take as it sets a precedent.
It is imperative that the government and media stop referring to the next two months as a lame duck period. The consumer does not need to hear this every time they turn on the television or radio. It frightens the average person.
Yes, there is only one president of the United States at a time. Yet, as the next two months are so critical to retailers, manufacturers and their supply chains, this might be an opportune time to have an immediate joint prime time address with both the President and the President elect. A bipartisan breaking of paradigms and an opportune time to explain to the people what the government is doing during this transition period, where they want to go with the new administration and how they are going to get there.
Perhaps, as an idealistic Canadian, I may not be seeing the entire picture but a strong America is important to the world.
By: Myra Dodick,
Sent: 01:48 PM Sun Nov.16.2008 - US
Subscribe to:
Comments (Atom)
