Wednesday, December 31, 2008

Some Suggestions

My colleague, partner and friend Rashid Ashraf excellently suggested that while I am wailing away at how bad things are, that I should equally try to provide some answers, insight or at least approaches. I think that Rashid is spot-on right, so let's review the situation in another light.

1. If we are going to socialize, and it appears that we are long down that road, let's do it the right way; admit it, and get on with it. What that means is that if we give money to banks, they need to be accountable to the taxpayers who have, ultimately, provided this funding. Whoever we give money to needs to adhere to the same standards...we can't have a quasi-capitalist system...either this is social support or it isn't, and if it is, then information must flow freely.

2. The car companies, worldwide, need to start consolidating; meaning merger, and whatnot. How many factories do we need anyway? What's more, Rashid's astute observation is that GM et al have to liquidate their inventory even if this means virtually giving it away. This will generate cash, reduce government responsibility, possibly help stimulate the consumer economy and so forth. Zero percent interest, as recently reported doesn't do this because of all the hidden costs associated with new car ownership. 2 for 1 programs would be far more effective. Let's admit it, the new car inventory is a declining asset so whatever you can get for it is better than what you have now.

3. Bankruptcy is not the "f-word." The car companies for one, should embrace this so that they can repudiate their disastrous labor situation...airlines have been doing this for years. The lame excuse used thus far is that people won't buy a car from a bankrupt company. Well guess what, right now people will not buy a car from anyone.

4. We should immediately halt ALL real estate foreclosures, again in the spirit of socialism (and I hate this concept, but it is, in my view inevitable.) This means than any residential or commercial owner/lessor who is willing to pay a reasonable, market-adjusted rent should be allowed to stay in the property. There is nothing worse than an empty house or factory...when and if things realign, these rent payments should be credited to restoring the equity positions. The residential problem has been detailed ad nauseam in the press...the commercial problem hasn't hit us yet but it will soon.

5. Pro activity is a virtue and we should use it mercilessly. For example, forget about health care in general...hospitals all over the country are about to go bust. Let's get on top of that one before we have to enter reactive mode again and run the Monopoly printing presses again.

5. In the same spirit as #5 above, we have to start planning for hyper-inflation, which is the ultimate consequence that attends printing Monopoly money. If we get on this problem right away, we may be able to abate it somewhat. Ideas include privatizing public properties, possibly even including the national parks. Hell, the Garden State Parkway is up for sale so why exempt Yellowstone?

6. We should pay people extra to work more years. In order to alleviate the growing Social Security problem, why not have a "tax-free" zone wherein, under a certain earnings amount (I have not studied numbers enough to suggest a threshold) whatever you earn beyond, say, age 55, is tax free, as long as you don't draw on your SS account.

7. The United Nations is an obsolete, derelict organization. Disband it and in its place install a World Government Organization whose goal is to coordinate information exchange, and police world affairs. The point is that the Arabs (and Russia) need to realize that oil may hit $25 per barrel soon, and that there are worldwide repercussions to this. China needs to understand that people are going to be buying fewer things, and by the way, please stop being the major polluter on the planet...then the rest of us can stop spending all this money to Greenify things. Oh and India, education doesn't guarantee a job. Europe, vacations cost money, you don't get them as generously as before. Finally, in the USA, the message is get your ass out of bed (as I have to tell myself every day) go to work wherever, and innovate the crap out of whatever you do.

8. The only thing in my view that will save us ultimately is innovation. Already people are talking about MSFT, GOOG and YHOO being the next "Big Three (except there's no way the government will bail them out.") This is because they have long ago stopped being innovative...ask yourself this...what was the last MSFT product that you learned? I already know the answer. And like IBM before it, when people stop buying computers (as they have done, just like cars) the "guaranteed" income disappears.

9. My partners and I have (crazily, perhaps) rededicated ourselves to restoring innovation in America. Maybe we should move to Switzerland or Ireland instead (and maybe we will still do so, it is a legitimate option for us) but here we are putting out this stuff for your perusal.


John A.

1 comment:

  1. John, this is in response to several of your postings, so hopefully it is not confusing. Seems like you have your rap down for a job on a cable news or financial channel or at least you agree with them.

    Having visited several international Ford Motor locations in recent months I believe you will be shocked at how well they are doing two years from now. They are doing well internationally and have great products in the international market and are moving production here.

    Oil at $25, maybe, but it will not stay there long. As you point out, all things run in cycles and $25 is one end of the cycle.