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GM is going bankrupt…or not

Yesterday I saw an article in Forbes entitled General Motors Is Headed For Bankruptcy – Again in which author Louis Woodhill makes the case that even after the bailout of GM it is headed for bankruptcy.  He points to the redesign of the 2013 Chevy Malibu as one reason.  He points out that in 2008 Chevy redesigned the Malibu and improved it.  When it was tested by Car and Driver against other D-Class vehicles, it came in a respectable 3rd behind the Honda Accord and the Nissan Altima.  It trailed the lead car by just 6% on the tests.

The new 2013 Chevy Malibu Eco (aggressively promoted during the Olympics) actually scores worse than the 2008 Malibu and is dead last in the competition (won by the 2012 Passat).

In their March 2012 issue, Car and Driver published another D-Segment comparison test, pitting the 2013 Chevy Malibu Eco against five competing vehicles.  This time, the Malibu came in dead last.

Not only was the 2013 Malibu (183 points) crushed by the winning 2012 Volkswagen Passat (211 points), it was soundly beaten by the 2012 Honda Accord (198 points), a 5-model-year-old design due for replacement this fall. Worst of all, the 2013 Malibu scored (and placed) lower than the 2008 Malibu would have in the same test.

He goes on to point out that not only does the new “eco” model with its partial hybrid technology actually get worse mileage than the conventionally powered alternatives, it accomplishes this by forcing you to give up trunk space and because of a shortened wheelbase 107.5” as opposed to the 2008 models 112.3” which means that the occupants have less legroom and feel more cramped.

So, with a car that is dead last in its class in head to head comparisons (actually being beaten by the Accord which is at the end of its 5 year model run.  How can Chevy expect to compete and sell Malibus until the redesign it in 2018?  Well they are going to have to sell it cheaper than its competitors, this for a company that is already saddled with high operating costs.  Woodhill closes by looking at the leadership of GM as opposed to Volkswagon.  GM’s CEO Dan Akerson has helmed MCI (defunct), General Instrument (defunct), Nextel (defunct), and XO Communication bankrupt in 2002.

Woodhill closes with this story about Volkswagon CEO Martin Winterkorn at a recent auto show in Europe.

At the 2011 Frankfurt Auto Show, Winterkorn was caught on amateur video sitting in, and studying Hyundai’s newly introduced i30, a competitor to VW’s best-selling family car, the Golf.  Here is an excerpt from a story about this incident published along with the video by The Truth About Cars, an auto industry blog:

“(Martin Winterkorn) pulled on the adjuster of the steering column, and heard – nothing. At Volkswagen, there is an audible (“klonk!) feedback whenever the steering column is adjusted.

Immediately, Klaus Bischoff, head of Volkswagen Brand Design was summoned. He pulled on the adjuster: No sound. “Da scheppert nix,” exclaimed Winterkorn in his heavy Bavarian accent. “There is no rattle!”

Winterkorn was livid: “How did he pull that off?” He, the blasted Korean. “BMW doesn’t know how. We don’t know how.” He, the blasted Korean, must have found out how to battle the dreaded Scheppern.

Tension is high. This could affect careers. Someone quickly explains that there had been a solution, “but it was too expensive.” That gets Winterkorn even more enraged. “Then, why does he know how?” For less money. He, the Korean. There is no answer. Hyundai has beaten Volkswagen at the Scheppern front.

Winterkorn measures the A-pillar, runs his hands over the plastic. He walks away, his entourage trots after him. Deeply in thought and very worried.”

Uh-oh.  While Dan Akerson is busy rearranging the deck chairs on GM’s Titanic, Martin Winterkorn is leading VW to world domination via technical excellence.

 

Does this mean that GM will go bankrupt?  No.  Its certainly possible that Akerson may actually turn things around…but he is headed into some strong headwinds.  They very from the labor contracts that add thousands to every car that GM sells to a culture that appears to not be focused on technical and stylistic innovation. 

To balance this doom and gloom I will offer this counter argument also from Forbes, Leadership, Not Another Bailout, Will Fix GM (And No, It Is Not Going Bankrupt) by Joanne Muller.  The important section is:

GM is a global company with a strong balance sheet, and not in any danger of going bankrupt again. It has $33 billion in cash and $5 billion in debt on its balance sheet; posted $2.5 billion in net income so far this year, and generated $1.7 billion in automotive free cash flow in the second quarter.

I think that Ms Muller has a point in that GM is still relatively cash rich even with bad losses this year and declining market share.  She also points out that GM is ahead of competitors in China which is a burgeoning market.  I doubt that GM is about to go under in the next 12-24 months…but I do think that Mr Woodhill’s article points out that they are not headed the right direction, a point that Ms Muller agrees with.

Whose deficit is it anyway?

My wife recently posted some political thoughts on Facebook…something she rarely does and in the discussion thread there was a talk about who is more fiscally conservative the Republicans or the Democrats.  One of our friends had said that Clinton had balanced the budget and my wife responded that there was a Republican control of the House and Senate during that time.  Another friend of hers had said that it was Republican military spending that caused the Republicans to spend more than Democrats.  I did some statistical analysis on the numbers and you might want to read my prior post How to Lie With Statistics to realize that this is often a losing proposition.  Still, I felt that I had to…yes I do resemble Don Quixote at times.

Lots of graphs and charts showing who is responsible for the deficitCollapse )
Dropped one person from LJ...when you refer to a former Senator and Presidential Candidate as "Frothy Mix" I have no place in my life for you.  Not that this person cares as they did not follow me (and like I ever post here).

Filtering my life

Of late I have found that certain of my friends and acquaintances have taken a tack in their conversations that cannot abide any longer.  That is their unalienable right and I won't infringe upon it.  However...I am tired of reading about it.  It serves no purpose in my life and has gotten to the point that it is detrimental to my personal happiness and conduct to read and respond to some peoples words.  LJ isn't the issue as no one posts here and the couple of communities that still do are fine as they appear to still engage in polite conversation.

So, I have adopted a policy for this calendar year (at least).  If you say something that offends me and makes me angry...am an going to unfriend you on FB (and LJ...well only if you post there).  I will very likely add people back that are truly friends in 2013 (assuming that I decide that FB/LJ is how I want to stay in touch with people still in 2013).  I am not asking anyone to stop saying what they desire, but I do not have to listen to it, and I won't.  If you want to think that this is my problem...then so be it...It is my problem, and this is my solution.  It comes from the actions of a friend in 2008 who did the same thing when his friends ticked him off that election year.  It appeared to work for him and so, that is why I am doing it.

So, since I don't lock anything...you should all be able to see this...but I may or may not be reading you.  

How to lie with Statistics

When I was in high school our AP Biology teach (Mr Patterson) assigned us a book entitled How to Lie With Statistics.  The book started with the infamous 4 out of 5 dentists recommend sugarless gum for their patients who chew gum and proceeded to introduce students to statistics and how they can easily be manipulated.  I was reminded of this when I saw a friend posting an infographic on Facebook.

This graphic (put out by the White House) is based on BLS statistics that can be found at BLS.Gov.  Go to the Database and Tools and select the Data Retrieval Tools, then Select Employment and the Top Picks for Employment, Hours, and Earnings (National).  The specific data being looked at is Manufacturing Employment.

All well and good, and the 334K number does reflect the variance from the Jan 2010 number 11,465K manufacturing jobs and the Dec2011 number of 11,790K manufacturing jobs.  This is a nice improvement of 334K jobs.  Of course this is down from the Jan 2001 number of 17,114K manufacturing jobs which was the high point for such jobs (the high point was 17,637K jobs in March of 1998…so from its high point, the number had slipped just over 500K jobs.

image

This chart starts in 1991 and goes to 2011.

A while back I had seen a similar graphic that touted how President Obama had turned around the job creation debacle and things were rosy.

Note that how when President Obama took office, that the economy is losing close to 800K jobs a month and by mid 2010 it is creating jobs at 50-200K a month.  I noted that the chart only goes back to Dec 2007 and doesn’t show job creation in the mid years of President Bush’s administration.  So I created a chart that went back further.

Note, that this chart shows that when President Bush came into office in Jan of 2001 the economy was hemorrhaging jobs and by 2003 it was turned around and creating at a clip that is a bit better (not much, just a bit) than current trends.  Then there is the 08 crash and it gets very nasty.  I did this to show that taking a snapshot in time can be illustrative, but often exaggerates something that may, or may not be important.  In this case it shows that while the recession of 08-09 was bad…it came on the heels of a five year job growth span that it turn came on the heels of a two year recession.  So, I did the same chart back 40 years for comparison.

image

We see that the normal state is growth, and the dips are short, relatively severe, but offset by long periods of growth.  This is true until the 21st century when growth is lessened and the dips longer.  At the time I mentioned to my friend that it would be interested to see how this compared to who controlled Congress/The White House.

After he posted the 334K infographic I decided to do a quick run using number from 2001-2011.  I took the job creation numbers and I gave credit to each party for what they had control of.  For example in Jan 2001 the GOP controlled the House and the Dems controlled the Senate.  Thus in that month 16K jobs were lost and each party got credit for half (-8K each).  In May of 2006 the GOP controlled both houses and thus got full credit for all 11K jobs created that month.  In December of 2007 there were 84K jobs created and the Dems controlled both houses and got full credit for both.  here is what that chart looks like

image

Pardon the X axis but it was a mess trying to get that right.  As you can see this chart is designed to share the credit and split the blame.  Overall from 2001 the numbers look like this:

GOP Job Creation: 6,281K jobs

Democrat Job Creation: –7,058K jobs.

OK, so, this is just as bad because it ignores the President, so I modified the formula to give the President half the credit and Congress half the Credit (each house getting 1/4 of the total).  When you graph that data it looks like this…

image

OK, that looks the same, but the numbers change a bit:

GOP Job Creation: 3,140.5K jobs

Democrat Job Creation: –3,529L jobs

Presidential Impact: –388K jobs (which is 949K for President Bush and –1,337.5K for President Obama).

My friend would say that the first year shouldn’t count against President Obama (I don't necessarily agree, but we will also slice of 2001 for President Bush) and the numbers look like this:

President Bush: –701K jobs created.

President Obama: 1,194K jobs created

What does all that mean?  Not much if you think back to the title of this post…or everything if you are trying to make a political point using said statistics.  The big problem is that too many people are not willing to actually look at the full data, or think about other reasons why things happened.  Should the President be blamed for everything?  Likely not, but, much like a Quarterback…they will end up taking the heat when times are bad the credit when things are good.  Was President Clinton responsible for the boom of the 90s…or was it the GOP Congress?  Your answer will depend upon your politics.

Is this on?

I haven't seen anything much posted lately...has LJ just died completely...or am I just not cool anymore?

Writer's Block: American Censorship Day!

What a fair, unbiased, and neutral way to ask a question.  I suppose one could alternatively ask if we support the right for people to steal the words, music, digital assets, code, photos, artwork, etc from others and profit by them.
Today, Congress holds hearings on the first American Internet censorship system. This bill can pass. If it does the Internet and free speech will never be the same. [Learn more here.] Do you support this bill?

Why U.S. is not a Christian nation

http://www.cnn.com/2011/OPINION/07/04/davis.jefferson.other.words/

As America celebrates its birthday on July 4, the timeless words of Thomas Jefferson will surely be invoked to remind us of our founding ideals -- that "All men are created equal" and are "endowed by their Creator" with the right to "Life, Liberty and the pursuit of Happiness." These phrases, a cherished part of our history, have rightly been called "American Scripture."

Professor Davis is a historian (author of Don’t Know Much About History), and as with most historical works, it tries to prove a point by showing part of the truth.  The US was not founded as a Christian Nation, but rather was created as a nation of Christians.  A major and fundamental difference, that is at the heart of the debate.  The Founders did not want the Federal gov't to have a religion...but they were OK with the States having one.  The Letter to the Danbury Baptists was Jefferson telling them that he would not intervene in helping them to overturn Connecticut’s requirement that its citizens be Congregationalists because that was not the Federal gov'ts purview.

But all of that is secondary to the fact that the goal of the Founders was to allow people to exercise their religion freely...not have it removed.  This inherent debate is at the heart of most of the debates that we see today.  Gay Marriage - a debate on if the gov't can mandate to a religion how it operates.  Welfare - is it private charity, or the gov't that should take care of people?  When the Founders create the US gov't, and the 10th Amendment still had power, freedom of religion was a given...the individual and the States could do what they wanted.  But as the Federal gov't has grown in size and scope...no longer is that true...now the Federal gov't's primacy in all things (as a result of the 14th Amendment) coupled with a 20th century drive towards a totalitarian gov't (meaning a gov't that is the totality) means that religion must be purged from life because all life is now part of the public square.  From cradle to grave the gov't will manage us...and since the gov't can't have religion (it would be threat to that cradle to grave notion after all) we cannot have religion.

So, no, the US is not, nor was it ever a Christian nation...it was a nation of Christians...but that has to be purged in the new way of things else the gov’t cannot be the supreme master of all things.

Memorial Thoughts

It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth.

These words spoken by Abraham Lincoln almost 150 years ago still ring true with power today.  For the past 235 years men and women have stepped forward and laid their lives down to the cause of the noble democratic experiment called the United States.  Same call it a sacrifice, but it is much more than that…Lincoln’s phrase “last full measure of devotion” strikes most truly to me.  Soldiers don’t sign up to die for their country, they don’t sign up to die for their unit, or their buddies…but die they do, for it is demanded of soldiers to die.

"Forward, the Light Brigade!"
Was there a man dismay'd?
Not tho' the soldier knew
Someone had blunder'd:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die:
Into the valley of Death
Rode the six hundred.

Yes, soldiers die because war is the extension of diplomacy by other means…they die because of blunders…they die even when everything goes right.  They die so that we can enjoy the blessings of liberty, blessings that we don’t always appreciate.

Recently our small city had an election, only 519 people voted (in a city with roughly 9-10 thousand registered voters).  More than that turned out for the rally for the football team as they went off to play in the state championship game.

But all is not grim.  Be it for a single day, we try and honor those who secured our liberty with that last full measure…who did not reason why, but did and died…so that we may be free…even if it is free to be apathetic.

So, I have enjoyed my day bought with the blood of men the like of Marine 2LT James Cathey whom I read about in 2005.  If you have not read his story Final Salute, please do so…it is one of the most moving stories I have read.

Passengers aboard the commercial flight bringing home the body of 2nd Lt. Jim Cathey watch as his casket is unloaded by a Marine honor guard at Reno-Tahoe International Airport. Maj. Steve Beck described a similar scene last year at Denver International Airport on the arrival of another fallen Marine:

This photo and another from the story won a Pulitzer prize for photojournalism.

As I said, I have enjoyed my day off from work.  I spend some time this day thinking of Soldiers like Lt Caffey, Lt Daniel Riordan, LTC Eric Kruger, and more than I can ever list here.  I was lucky to never have to fight, and lucky that my Father came through WWII and Korea.  That my Father-In-Law served safely as well.  I hope that my memorial…to live…honors their lives spent for my freedom…and if it does not, then I am sorry.

Debt and Taxes - The Atlantic

An interesting take from the left.  Each election cycle we delay making substantive changes in our budget makes the oncoming disaster worse.  I read an article by Mark Steyn a while back in which he raised the question as to why we even bother to have a debt ceiling...or why it isn't $14 gazillion dollars.  His point is that we argue about making small changes that reduce the rate of growth which is never going to get us going in the right direction.  The other problem we have is that if we instituted a program to balance the budget in say 10 years with mandated spending caps that took the budget from $1.7T now and capped it at say $1.53T next year and $1.36T the following year until in 10 years the budget was balanced.  Now, the big problem with that is that this assumes that the projections for revenue are correct (they never are)...but if you cap the spending, then you control that issue.  This would likely have to be offset with some way to increase revenue (yes raising taxes).  However, my suggestion would be to expand the rolls of the tax payers as opposed to trying to bleed the wealthy.  This can happen via a flat tax, or the fair tax (though I admit that is a pipe dream).  A flat tax with a poverty line cut off and no deductions would work (though its effect on the economy would be bad,especially in the home market).  But, in the end...we are all going to have to pay more and accept less if this is ever going to get turned around.  Oh...and I would also suggest that the gov't sell bonds for programs that they want to do above budgeted spending.  This would allow them to fund programs and people could buy bonds to make it happen.  Want to fund a space program...sell bonds.  Want to fund Iraq or Afghanistan...bonds.  Want a welfare program or student loans...bonds.  Let people pay for the services they think are necessary and reduce the gov't to the bare minimum...at least until we balance the budget and pay down some debt.
 
Either that or we should draft Dave Ramsey to be President.

Debt and Taxes - The Atlantic