Have we lost our minds?

OK, I may have a better idea than a wholesale move to socialism...why would we possibly want to provide federal funding to the "Big Three" when they are poorly run companies? You want to beat AIG knuckleheads up for $400,000 parties after they get billions in federal funds? Why don't you take a look at the US automobile industries financials? SHEESH! ARRGHH! Maybe I am the only one who is distressed about us bankrupting our children and grandchildren, becauses it certainly doesn't look like the US Congress and incoming Administration gives a &%!@ about them!....

...the reality of the auto industry is that over the past twenty years or so Detroit made contractual concessions to the UAW which slowed hourly wages in return for benefit concessions...well, slowing is relative when we are speaking about hourly wages in the range of $65-$75 per hour for line workers....and guaranteed pension and health benefits for auto workers and retirees...which have fundamentally destroyed the companies...

...and so now we have GM trading below $3...and running out of cash...and holding out their hand to the Feds/each of us....to cover these outrageous management decisions....the reality is that now the US auto industry are health care and retirement companies (seriously here!) that happen to make cars...plain and simple...and if you think that a cash infusion is going to save them we are kidding ourselves...because they will be back for more in 2009...don't believe me?...two words to remember....British Leyland....check out this link http://www.nytimes.com/2008/11/18/business/economy/18car.html from Tuesday's NY Times...for a sobering view of what happens in government bailouts for auto makers who fail to fundamentally address the underlying economic problems....and try to cover over it with dire warnings of a loss of jobs....did I mention this story is from the New York Times?...I found that very interesting....

...So my great idea is if we are going to bail out every industry (with political power, that is)...why don't we simply pay off every mortgage in the US...which will immediately restore the housing market....build wealth...restore confidence....and then we would likely go refinance our homes, take the money, by hot-tubs, jewelry and take a vacation to relieve the stress of the past months and the hit to our 401(k)'s....and begin the cycle again....

....hmmm....maybe my idea won't work in the long run....

Gas Bubbles

"In parallel with this lack of flexibility Venezuela is facing a decline in its international monetary reserves since Chavez keeps raiding them. These monetary reserves only represent some six to seven months of imports at the current level since Venezuela is now importing close to $40 billion per year, mostly in food. Therefore, an interruption of oil income derived from the cut off of oil supplies to the United States would most probably cause the Chavez’s regime to collapse in less than a year as the result of internal protests, no outside intervention required. "

(Source: http://www.humanevents.com/article.php?id=23222 )

So we have greatly lower gas prices! Happy days! Let's load up the Bel-Air wagon with the kids and hit the road! God Bless America!

Well, before you pack the picnic basket and go burn that extra tank of gas for a Sunday drive, maybe we should think just a bit deeper on this issue...

Can we think about using this reprieve in gas prices a bit more strategically? Bottom line is we have a couple of real idiots out there who just love sticking it to us...no, not Obama and McCain silly!...I am talking about Hugo Chavez of Venezula and Iranian President Moomad OhMan...err...umm..Mahmoud Amenpunjab...umm....darn....OK....the nutjob who is the President of Iran who gave "loco Gordo Hugo" the highly acclaimed and widely regarded "Islamic Republic Medal" for Hugo's brave support of Iran in its effort to violate the Interntaional Atomic Energy Agencies and the U.N.'s guidelines on nuclear profileration...(and for my Mennonite and Quaker friends, thanks so much for hosting good old Mahmoud for morning coffee...nice move...and I hope that it doesn't portend President Obama's foreign policy strategy...see http://www.scrippsnews.com/node/36622 for details on the dinner....I wonder if they had scones?)...

Anyway...here is my theory...cutting across all political lines for the common good of the world...

NOW IS THE TIME TO 'DOUBLE DOWN' IN THIS OIL ADDICTION POKER GAME!

I think now is the time for us to think beyond the immediate sense of gratification of having lower prices at the pump...which is nice in and of itself...but we should really get after conserving now through carpooling, solar investment, personal conservation, development of our own energy resources (across the board including nuclear)...and help push these oil despots into the drink...because they are held in power by the ability to subsidize their economies through high oil prices...or better yet, how about if we as a country (read, political will and leadership which is in short supply), simply refuse to import any more Venezulan oil? We just say "gracias Hugo, no mas negro oro"...and put an end to it?

Maybe this is just wishful thinking as I hear all of us celebrate the plunge of about a buck a gallon in the last 5 weeks...oh, and by the way, gas is already below $2 a gallon in quite a few places!...well, in Kansas and Oklahoma, at least...I know, I know....Kansas and Oklahoma, but you see my point, right?....

One last thing before I go....for my brothers and sisters in Mennonite Central Committee, the Quakers and others...whom I do indeed love...towards the point that we need to enter into "constructive dialogues with our enemies" so we can "move towards peace"...it just seems to me that even if I could possibly support this altruistic notion of dialogue regardlesss of its practical effect to create change and the tendency to be manipulated both here and abroad by propagandists....laying all of that aside for the moment...

...During the dialogue with Mahmoud when he answered your question about why he challenged the Holocaust...he gave the answer "more historical research needs to be done"...MCC and the others should have called him on it...because if such groups are willing to be unceasing critics of US policies and practices...many of which need to be questioned...you need to be the same with others especially when it comes to issues such as the Holocaust...we must have no arguments or "constructive dialgoues" because on certain topics we must draw the line...to not do so is to be cast as being duped...and not wise...and it is not enough after the event to meekly say "some of his responses were less than satisfying" (true statement)...that last one actually nasueates me..

For more on this "constructive dialogue" see http://mcc.org/news/news/2006/2006-09-22_sponsorsmeeting.html

(glad I finally got that one of my chest--it had been bugging me for a while!)

BUT NOW, WITH THE ELECTION ALREADY OVER (regardless of us pulling the lever on Tuesday), I WANT ALL OF US TO THINK HAPPY THOUGHTS!

A Horse and His Boys

Well, it really isn't about a horse...but there are horses...a couple of really nice chestnuts with prominent blazes...only about 13 hands but nice little ponies...what? You didn't know I was a horseman from the old days? I hung out at all of the tracks from Del Mar to Santa Rosa, including the small town fair circuit...where they broke from a rope...anyway...secrets from my youth...

Appaloosa starring Ed Harris and Viggo Mortensen supported by Rene Zellweger and Jeremy Irons is a splendid little movie...with Ms. Zellweger constantly creating confounding conundrums (not bad, eh?)...that are neatly weaved through the movie and ultimately bring the characters to a point of painful resolution...both physically, emotionally and professionally...and while one could figure things out as it went if you think hard enough on it...these characters make it the best Western I have seen in a long time...and one of the better movies I have seen in a year or so...

worth the watch...I give it four peaches!

So...anything else we should talk about? Hmmmm....

Who is this old guy? Uncle Earl? No, just a dull old economist and philosopher...name of John Maynard Keynes who came up with this little nugget...

"The market can stay irrational longer than you can stay solvent."

...so as we go into this wacky week there are some big questions about the fundamentals of the market which lead us to a couple of serious questions:

*If Keynes is correct it is really pucker up time as we are toast. All of us.

*If Keynes is not correct it is really double down time. Sell the car and the poodle and buy some quality stocks. Very soon.

*Maybe Keynes is half right #1. The market is irrational. But not for long.

*Maybe Keynes is half right #2. We cannot stay solvent. And it has nothing to do with the length of the market crash.

At the moment (a Sunday morning, only one cup of coffee down, so it might change after cup two)...I am leaning towards some combination of options #3 and #4...that he is half right...

...so I think the market will recover...quicker than many suppose...but not quick enough for most...I am thinking that 12-18 months from now we will recover 1/2 of this loss...and then the remaining amount will take another 3 years to get the rest back...which in historical terms will be a "mild depression" and will not be an ordinary economic cycle...

But the solvency thing really gnaws at me...and my point is it is not the stock market that will bring on mass insolvency but rather the unrealistic standard of living most Americans (and other countries as well, namely Europe but even the MidEast oil kingdoms) have created...we have tapped out our homes and saved pennies on the dollar and are awash in debt...and with the housing market we are in a similar situation to oil prices and cars...

What do I mean?

My point is this. When gas prices drop people are going to return to their driving habits of the past...and not learn anything from the pain of $4 rising to $5 and beyond gas prices...and the same will be true of housing prices...

...thus, if housing prices begin to stabilize (which may be happening in some markets) and then slowly recover...people will just put whatever possible advances in equity they make back into silly purchases once again...and we will have learned nothing from this disaster.

I hope I am very wrong on this and that things have changed. We will have to wait and see...

...but in the meantime...go and see a good movie! A BARGAIN MATINEE AND SKIP THE POPCORN!

The Great Repression

Is it the "Great Depression II" or the "Great Repression I?"

Yepper, now that my retirement savings is down to about $6.04 I am having to make some difficult choices...so it is time for some drastic action...I mean everything is on the table...even moving to western Kansas and simply buying a small piece of land for a few thousand bucks...say two or three thousand acres...and sitting on a porch and be angry at the world...but calmer heads have prevailed...and Starbucks is off the list as well...unless I can catch them at a later hour when they are out of decaf and I order that drink and I get it free because they have to brew it...and also get a free coupon for another drink at another trip...

but other than that I am tightening my belt...

And...so now that I have decided to stay put what do I think about this mess?

First off, I heard several smart folks recently (meaning they moved to an all cash position in March)...say that we are in the "Great Repression" meaning that government is not allowing us to get to the actual bottom of this thing like Grandma Esther and Uncle Andy did in the 30's...so that is a fairly interesting and provocative statement...and is therefore obscuring what is really going on...

Here are some comments I heard at a conference from some pretty smart folks.

First, the good, courtesy of Jeff Immelt, CEO of General Electric:
*“I am pretty optimistic. If I put my head on the pillow and am beat up I have to get up the next morning, look in the mirror and say ‘Hello Handsome!’ ”

* “We will have 2 ¼’s negative growth & then grow.”

*“Some of what has happened is good.”

Now, the bad, from Meg Whitman, former EBay CEO & current McCain Advisor:

*“We are in a severe crisis of leadership.”

*““Our past recessions we saw the consumer continue to spend—that is not going to happen in this one.”

And of course, the ugly, kudos to James Wolfensohn, famed investor & Citigroup advisor:

* “The great unknown is the real value of all of these assets. And are they capable of restoring value? No-one knows.”

*“Technology and innovation will save us. We don’t have the wealth any more. China has 1.7 trillion USD foreign reserves; India 400 billion; the USA 70 Billion.”

*“We could previously assume we were competitive. This is no longer a given.”

OUCH! And if we are not really getting to the bottom of the trouble doesn't it follow that we are not at the bottom of the stock market? That we really don't know what assets are worth? Which leads back to the "Great Repression I" metaphor.

The reality is none of us know where this thing is going to really end...and while I don't really agree with Jeffrey Immelt of a fairly quick end to the recession I do think we are in for some very difficult times...

So old Jim Cramer says in an interview the other day that "We are going to have to begin to live like our parents did. We cannot sustain the standard of living we have had."

Ouch again!

Here is what I think I am going to do:

1) Kansas is off the table. Cheap land and cost of living but way too windy.

2) Double down on my retirement plan. I might as well. It is the only chance I have of recovering what has been lost over the past few months. The financial system is actually much safer than it was 30 days ago. Really.

3) Get used to enormous volatility in the markets. It goes up 500 points? No big deal. Down 500 points? No big deal. Especially when it happens all in 20 minutes.

3) Not buy anything. Anything. It is time to be frugal. Conservative. Cheap.

4) Read history more. We have been here before. We could learn a lot from the "Great Panic of 1908." (See the article at: https://mail.pointloma.edu/exchweb/bin/redir.asp?URL=http://www.newsday.com/news/opinion/ny-opbru5851076sep21,0,5813124.story )

5) Stay focused on the long term. We have to think 5-10 years here kids.

Hang in there. Confidence will eventually return. The market will go up. Things will stabilize.

And as an entrepreneur, I will tell you that I fully believe we are now entering the "Era of the entrepreneur." More to come on that topic.

But here is something else Meg Whitman had to say this past week:

“Business Schools need to focus their grads away from

Wall Street and look to Main Street.”

This or That?

Hmmmm....this..........



OR....

PETA Urges Ben & Jerry's To Use Human Milk
POSTED: 1:48 pm EDT September 23, 2008
UPDATED: 11:51 pm EDT September 23, 2008

WATERBURY, Vt. -- People for the Ethical Treatment of Animals sent a letter to Ben Cohen and Jerry Greenfield, cofounders of Ben & Jerry's Homemade Inc., urging them to replace cow's milk they use in their ice cream products with human breast milk, according to a statement recently released by a PETA spokeswoman.
"PETA's request comes in the wake of news reports that a Swiss restaurant owner will begin purchasing breast milk from nursing mothers and substituting breast milk for 75 percent of the cow's milk in the food he serves," the statement says.
PETA officials say a move to human breast milk would lessen the suffering of dairy cows and their babies on factory farms and benefit human health.
"The fact that human adults consume huge quantities of dairy products made from milk that was meant for a baby cow just doesn't make sense," says PETA Executive Vice President Tracy Reiman. "Everyone knows that 'the breast is best,' so Ben & Jerry's could do consumers and cows a big favor by making the switch to breast milk."
"We applaud PETA's novel approach to bringing attention to an issue, but we believe a mother's milk is best used for her child," said a spokesperson for Ben and Jerry's.

For the complete letter from PETA see http://www.wptz.com/news/17539127/detail.html

Honest! I am not making this up! Viva leche!

I Miss Silver

"Turn on the TV, shut out the lights, for Roy Rogers is riding tonight..."

Black and White (Under age 40? You won't understand.) You could hardly see for all the snow, Spread the rabbit ears as far as they go. Pull a chair up to the TV set, 'Good Night, David. Good Night, Chet.'

My mom used to cut chicken, chop eggs and spread mayo on the same cutting board
with the same knife and no bleach, but we didn't seem to get food poisoning. My mom used to defrost hamburger on the counter AND I used to eat it raw sometimes, too.

Our school sandwiches were wrapped in wax paper in a brown paper bag, not in ice-pack coolers, but I can't remember getting e.coli. Almost all of us would have rather gone swimming in the lake instead of a pristine pool (talk about boring)-- no beach closures then. The term cell phone would have conjured up a phone in a jail cell, and a pager was the school PA
system. We all took gym, not PE, and risked permanent injury with a pair of high top Ked's (only worn in gym) instead of having cross-training athletic shoes with air cushion soles and built in light reflectors. I can't recall any injuries, but they must have happened because they tell us how
much safer we are now. Flunking gym was not an option, even for stupid kids! I guess PE must be much harder than gym.

Speaking of school, we all said prayers and sang the national anthem, and staying in detention after school caught all sorts of negative attention. We must have had horribly damaged psyches. What an archaic health system we had then. Remember school nurses? Ours wore a hat and everything. I thought that I was supposed to accomplish something before I was allowed to be proud of myself. I just can't recall how bored we were without computers, Play Station, Nintendo, X-box or 270 digital TV cable stations.

Oh yeah ... and where was the Benadryl and sterilization kit when I got that bee sting? I could have been killed! We played 'king of the hill' on piles of gravel left on vacant construction sites, and when we got hurt, Mom pulled out the 48-cent bottle of Mercurochrome (kids liked it better because it didn't sting like iodine did) and then we got our butt spanked. Now it's a trip to the emergency room, followed by a 10-day dose of a $49 bottle of antibiotics, and then Mom calls the attorney to sue the contractor for leaving a horribly vicious pile of gravel where it was such a threat.

We didn't act up at the neighbor's house either because if we did, we got our butt spanked there and then we got butt spanked again when we got home. I recall Donny Reynolds from next door coming over and doing his tricks on the front step, just before he fell off. Little did his Mom know that she could have owned our house. Instead, she picked him up and swatted him for being such a goof. It was a neighborhood run amuck.

To top it off, not a single person I knew had ever been told that they were from a dysfunctional family. How could we possibly have known that we needed to get into group therapy and anger management classes? We were obviously so duped by so many societal ills that we didn't even notice that the entire country wasn't taking Prozac!

(anonymous...sorry I didn't write it!)

How did we ever survive?

.....A song for all of us over 40....ummm...even 50+.....a wistful look back....

http://www.youtube.com/watch?v=dJurH2LG1XI

So Sue Me!

So sue me! It's been since last month to jump on and regale the web with my earnest wisdom...just a few things have been occupying my time...really...but with school starting and a big event that happened this past Friday..... and grading papers... and trying to keep my entrepreneur students awake after they eat lunch at the PLNU caf...it has been a busy few weeks...but there is much to talk about!

Yepper depper we had about 425 good folks for our Dealmakers of the Year Business Breakast last Friday at the Kona Kai on Shelter Island...and the morning sun was beautiful coming up over the city of San Diego and the boats in the marina looked great...and we spent a few hours honoring value creators in the community...good finalists and winners all...but I am very proud of the many students engaging and taking care of business...they looked great and presented the school very well...so nicely done to all of you...you can read more at...

http://www.sandiegometro.com/2008/sep/dealmakers.php and http://www.navycompass.com/content/view/809/321/ and http://www.pointloma.edu/News/Headlines/2008__DEALMAKERS_OF_YEAR__ANNOUNCED.htm

but onto other things...

SUCH AS WHAT IN THE &$?!#@ HAS HAPPENED TO MY RETIREMENT FUNDS! Arghhh!

I mean just the other day I was worth almost enough to get my 1975 AMC Pacer repainted...but now this is going to have to wait for another day...well...decade...until my accounts begin to recover...so what happened?

...it really is rather simple...we just spend too much...me included...and this country is up to its ears in debt...how much you ask?...try this on for size...

U.S. Financial Sector owes............................$16 TRILLION!

U.S. Households owe.....................................$14 TRILLION!

U.S. Non-financial business sectors owe......$11 TRILLION!

U.S. Federal Debt...........................................$5.3 TRILLION!

U.S. State and Local Governments Debt.......$2.2 TRILLION!

(reference SD Union Tribune, p. A1, 9/21/08)

We are approaching 50 TRILLION IN DEBT! And we are arguing about silly trivial things in our government...all the while other countries hostile to the U.S. are buying our debt up and...someday....someway....somehow...can act as a bully landlord to us...

....so at the end of the day we need to start blaming ourselves...for this awful mess...and yes there is plenty of blame to go around from inept SEC regulators who emphasize academic solutions over practical realities...and corrupt financial service firms and their leaders who bulked up on debt like heroin addicts...and greedy homeowners who watched "Flip This House" too many times...

WHAT TO DO?

...I really think we need to start rethinking this...and because I am a teacher I think that our colleges and universities have been failing our students miserably in this area...we are proficient at having them learn management principles and 18th century poets and attending chapel and articles of the constitution...

...but very few that I meet in college can balance a checkbook or have any idea what debt is doing to them...and why they need to wait until they have cash to buy the next thing they think they need (if we cannot persuade them that they don't really need it)...and we do nothing to emphasize the value of investing and saving and legacy creation over buying the latest X Box update...

...but we have to do this in creative ways...and I think business profs and entrepreneurs and small business owners and banks and financial institutions need to rethink this whole topic together...and develop better tools and approaches to explaing the value of delayed gratification to our youth...

...and parents need to pull their heads out of....errr...ummm....the sand...and stop modeling terrible financial habits to their families...

SO THUS ENDS THE RANT OF THE DAY!

I have posted a small article (400 words...sheesh! Tough to do!) that the PLNU newspaper asked me to write on the global crisis...I hope it helps in some small way...

We will talk later...I am going to stand by my mailbox and wait for my Schwab statements...probably postage due!

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++

All of us—not just those involved in business either as students, academics or in practice—need to be deeply concerned about what is going on in the financial markets. What is occurring is the destruction of over 100 years of the financial system of the United States. This is no mere academic exercise, as I have heard the phrase used by several commentators this past week that we are “on the verge of a Depression.” Couple this market turmoil with the protracted California state budget deadlock and the issue is driven home even further, for grants, reimbursements and government services are drying up.
What caused this? While there are many nuances to the crisis there are several prime culprits including greed (not just on Wall Street but among all of us in accumulating entirely too much debt for homes, cars, vacations, etc.); lack of governmental oversight and leadership through the Securities and Exchange Commission especially as relates to trading abuses; woefully inadequate lending standards for home purchases through much of this decade with little concern for the ability of the borrower to pay the loan back; and the lack of fiscal transparency by some investment banking firms. All of this had led to a “perfect storm” of economic woes. None of us are even beginning to think about the slowing European economy and housing deflation and their own mounting woes. It is an escalating global crisis.
When the economy is in crisis this manifests itself in uncertainty among all of us. We will see this crisis play itself out on many fronts including a rapidly slowing job market, lack of loans retirement and investment accounts. There will be a rebound, perhaps sooner rather than later, but it is too soon to determine if we are at a solid bottom.
For the typical student, faculty or staff member of the PLNU community, what can we do in this time of turmoil? Here are some practical suggestions:
· Cut back on excess spending. Brew your own coffee. Use coupons. Car pool.
· If you are a junior or senior get busy now to prepare for graduation. Network. Attend events. Take advantage of career resources. Get an internship. Volunteer.
· If you have a job now, re-assert your interest and value in your position and the company. Stand out from the crowd. Excel. This will provide security.
· Vote for leadership. We are in an election year. Look for leadership and not pithy statements from candidates. Demand political accountability from all parties.
· Remain grateful and faithful. We are people who have a deeper calling. We must look beyond this moment and keep fixed on eternal things.