November 2008

The Truth Behind Proposition 8

by Bill O'Connell on November 29, 2008

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The scene was rather startling, an elderly woman holding a cross in her hand peacefully demonstrating for Proposition 8 in Palm Springs, California and some miscreant viciously slaps it out of her hand.

At another venue in the Castro district of San Francisco a group of evangelicals were peacefully gathered on the street praying and making themselves available to anyone who wanted speak to him.  One young lady’s bible was stolen and when she asked that it be returned, her request was met with kicking and punching. Nice. So much for the city of tolerance.

So what we are hearing now, which is a formula we have seen before, is if you lose at the ballot box pick up your marbles and head off to find a activist judge who will discover within an evolved Constitution, the fundamental right that everyone missed for the last two hundred plus years and declare the will of the people null and void.

What’s This Really All About?

Here is the actual text of Proposition 8 (leaving out the legalese regarding where it fits in the California Constitution to just get to the meat of it):

SEC. 7.5. Only marriage between a man and a woman is valid or recognized in California.

That’s it.  If you landed here from another planet you would probably wonder what’s going on?  If you are a foreign visitor and see this on the news you would probably think we had lost our minds.  Who would propose a constitutional amendment to define what any idiot knows to be true?  What should we look for next?  A constitutional amendment that defines the world as round?  The sky blue?  The grass green?

But this is not about rights. It is not about tolerance. It is not about fairness.  It is about mainstreaming.  It is about a definition. It starts by tearing down a definition that has existed for several millennia, the definition of marriage.

Once that definition is altered, then terms like husband and wife lose their meaning.  After all, if you are talking about the marriage of Jim and Joe, who is the wife?  If you are talking about the marriage of Jane and Mary, who is the husband?  If husband and wife lose their meaning, then what will soon follow is that it will become politically incorrect to use those terms at all.  Any instance of husband and wife will have to be stricken first from any public documents then eventually from all documents.  In the end we will all just be spouses or significant others or some other bland descriptor.

The reason, in my humble opinion, why the battle lines have been so starkly drawn and the fighting is getting so fierce and will continue to do so, is because this is not about adding to the rights of gays.  It is about taking away how the majority of Americans define themselves.  They just don’t see it as an equivalency.

If you took three islands and put all the heterosexuals on one island, all the gay men on another and all the gay women on the third and came back in 100 years, only one of those three islands would be populated.  So how does A=B=C?

What Was the Point of Marriage in the First Place?

Marriage and the laws that eventually gave it protection and encouraged it were for the purpose of bringing children into the world.  A man and a woman would come together, make a commitment to be bound to each other, to be responsible for each other and in that family unit bring children into the world and provide for their protection, care, and upbringing.  It was survival, not only for that family, but for the community as a whole.

Are there exceptions to the rule?  Yes.  There are couples who for biological or other reasons cannot have children and there are couples who do not want children.  For the former group adoption has been an alternative.  In the case of homosexuals, the rule is the exception.  They cannot have children without adoption or by involving a third party.  So again, how is that the equivalent of marriage?

It’s Not About Rights

Prior to 1920, women were not allowed to vote.  But with courageous leaders like Susan B. Anthony they fought for those rights and won them through the legislative process and by amendment to the Constitution.  They didn’t seek out an activist judge to redefine the term “male” to mean both men and women.

In the 1947 movie, “Gentleman’s Agreement,” the character portrayed by Gregory Peck poses as a Jew to write about the discrimination against Jews in America.  What was the solution?  Did Jews find an activist judge who would redefine them as Episcopalians?  Can you imagine them making that case?

“So, Mr. Levine,” the judge asked, “you want to become an Episcopalian?  Then why don’t you just become one?  Why are you here?”

“No, your honor, I’m perfectly happy being a Jew. I don’t want to become an Episcopalian; I just want to be called an Episcopalian.”

“Let me get this straight.  You want to continue to be a Jew, worship like a Jew and live the life of a Jew, you just want to be called an Episcopalian?”

“Right.”

” Why?”

“Life would be so much easier.”

The battle surrounding Proposition 8 is a similar one, gays don’t want to marry someone of the opposite sex in the traditional definition marriage, they just want to be defined the same way.

What Does Sex Have To Do With It?

I think that most Americans are open to the idea that the rights that gays are seeking, such as the right to share and inherit property, the right to visit a sick partner in the hospital, the right to make decisions on the part of a partner that currently go to the next of kin, should be allowed.  But taking it a step further, why should it be limited to those who have sexual relations?

Let’s take a hypothetical case of Felix and Oscar.  Felix and Oscar are heterosexual men.  They are getting on in years, both in their early eighties.  They fought together in WWII.  Their wives are both deceased.  They are not physically attracted to each other.  However, they both feel that at this stage in their lives they would like to look out for each other like they did on the beaches of Normandy and the Ardennes forest.  They want to buy and share a house together, pooling their resources, and look after each others health, and leave whatever financial assets they have to the surviving partner.  Their families, though distant, have no problem with this arrangement.  Why couldn’t these two gentlemen have the same rights that gays are seeking?  Do gays seek a special class that only includes those who are sexually intimate?  Why shouldn’t Felix and Oscar have the same rights?

Stick to the Rights Issue

If gay advocates stick to the rights issue and be inclusive such that any two people, who want to be legally bound and committed, can have the right to share, look after, and care for each other, these rights that gays are seeking would probably be granted quickly.  But if the objective is to tear down something that has existed for several thousand years in order to forcefully mainstream a way of life, then they had better be ready for a battle.  Time and again gays are asking straights to be understanding, to be fair and to be compassionate.  Perhaps it’s time to turn the tables where gays should be understanding, fair and considerate and leave marriage well enough alone.

Most fair minded Americans will support individual rights and oppose discrimination.  But if their way of life, which is not discriminatory, comes under attack you can expect them to battle back.  Marriage is not discriminatory.  It is a loving bound between a husband and a wife.

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Hope and Change, Well, Never Mind

by Bill O'Connell on November 28, 2008

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As Barack Obama builds his Administration team you can sense the frustration starting to build on the left and among those who are still paying attention.  In an article in yesterday’s New York Times, Obama Describes Team as Experienced Yet Fresh, you can anticipate the eloquent gymnastics you are about to read as you would watching the young Chinese girls at the Beijing Olympics.

The Perception of Change

As the agent of hope and change, some people are beginning to wonder that if this is so, why is he populating his administration with so many people from the Clinton administration, causing one pundit to ask if we wanted a return to the Clinton Administration we would have voted for Hillary.  The master politician responded to this line of thinking thusly, “Americans would be ‘rightly troubled’ if he overlooked experience to create the perception of change.’”   Let me see if I have this right.  If you actually change, it is a perception of change, but if you don’t change, it is real change?  I got it.

He went on to elaborate, “What we are going to do is combine experience with fresh thinking.  But understand where the vision for change comes from first and foremost:  It comes from me.”  Okay, let me take a hack at that one.  Barack Obama is bringing together all these people with long resumes in government, with years of experience, and confident in knowing what to do and how to do it, but they are all going to follow Barack Obama’s direction and apply fresh thinking to their settled ways.  Or might they say, yeah kid, go back to the Oval Office and we’ll call you when we need you.

The Voice of Experience

Painting the picture further Obama says, “I suspect that you would be troubled and the American people would be troubled if I selected a Treasury secretary or a chairman of the National Economic Council at one of the most critical economic times in our history who had no experience in government whatsoever.”  But an inexperienced president?  No problem.  Even JFK, who was elected the youngest president in our history, had served one full term in the Senate, was reelected, and was two years into his second term before becoming president.  And he had a pretty rocky time between the Bay of Pigs, his Vienna meeting with Khrushchev, the Cuban Missile Crisis and Viet Nam, in less than three years.  Barack Obama was four years into his first term and half of that time he spent running for president.  Should we not be concerned at the lack of experience at the top?

The Definition of Freshness

To prove his point about the freshness of hope and change, he spoke of Paul Volker.  Now, I think very highly of Paul Volker.  I believe it was he who got inflation under control after the disasterous Carter Administration economic policies.  Obama appointed Volker to lead his economic advisory board.  At 81 years old, he is the epitome of freshness.  How is that you wonder?  Obama masterfully spins it this way, “Paul Volker hasn’t been in Washington for quite some time and that’s part of the reason he can provide a fresh perspective.”  So where does that leave Obama?  Is he stale because he has been in Washington or his he fresh because he has been out campaigning for the last two years?

To cap it off in a question and answer period Obama said, according to the Times, “his [Obama's] call for new ways of thinking on the economy should not be interpreted as a reflection of frustration and disappointment with the Bush administration’s recent economic-recovery efforts.  He signaled his support for the latest $800 billion government bailout plan, which is intended to provide new lending for consumers as well as push down home mortgage rates.”

Anyone Out There Feeling Buyer’s Remorse?

So the purveyor of hope and change wants us all to believe that bringing back the Clinton administration is change; that 81 year old Paul Volker is fresh, but 72 year old John McCain is ancient; that Bush is the cause of all that is wrong with America, but fresh thinking should not be interpreted as frustration with Bush.

My sense has been that Barack Obama was painting himself into a corner.  All the while he believed that with his adroit political and verbal skills he would be able to slip out of the corner unnoticed.

The Democrats have only held the White House for eight of the last twenty-eight years.  So realistically, where else would Obama go for experienced executives?  With no executive experience himself, it’s not like he can bring colleagues in from his past executive positions, like Carter from Georgia, Reagan from California, Clinton from Arkansas, and Bush from Texas.  With only four years in Washington, two of them spent on the road campaigning for president, it’s not like he built a network of experienced executive branch contacts there either.

He is also in the precarious position of having built up expectations so high, there is really no where for his job approval ratings to go, once he takes office, but down.  In addition to all this, he has to watch his left flank.  There are a lot of grumbling noises coming from that direction from a bunch of people with balled up IOUs in their fists, thinking we got you here, where’s the payback?

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Much to be Thankful For

by Bill O'Connell on November 27, 2008

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Despite the economic turmoil, the bruising two year run for the presidency, and the continued danger around the world there is still much to be thankful for.

  • We have not been attacked since 2001 due to the efforts of President Bush and his administration
  • We have had another election, this one a particularly historic one, and we are in the midst of another peaceful transition of power, something that is the marvel of the world that we have been able to do this for over two hundred years.
  • There is talk about the worst economic times since the Great Depression, which is what we typically hear each election season such that it trivializes those hard times.  These are probably the worst economic times since the Carter Administration, but even with that interest rates are no where near the 20%+ they were back then, unemployment is still in single digits, lower than in the Carter years and no where near the 25% of the Great Depression
  • Business is being conducted,  jobs are being posted, and we will get through this

It is a time to reflect on what we have, despite the challenges, and how great this country is.  To help me stay grounded I have always enjoyed reading two articles that are published each year at this time in the Wall Street Journal.  The first tells the story of the Pilgrims and their journey to the New World and how having made that decision there was no turning back. You can follow the link to it here, The Desolate Wilderness.

The second article is called And The Fair Land which was written in 1961.  It seems that a number of the things it mentions are still current.  It is a testament to the fact that we will always have challenges, but as Americans, we will find a way to overcome them.  The key to this is to allow the American people the freedom and liberty to try, experiment, and find solutions.  The less government gets in the way, the more confident I am that we are only limited in by our imagination.

Have a Happy Thanksgiving

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To Go Bankrupt or Not to Go Bankrupt That Is the Question

by Bill O'Connell on November 26, 2008

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The battle lines are being drawn and the factions are jockeying for position.

  • The UAW is standing firm that they are not contributing anything more (but the taxpayers should)
  • Rick Wagoner, CEO of GM, says they are not even planning for bankruptcy (but recently news has come out that the board is now considering it, if they can’t get the taxpayers to step up)
  • Congress wants a plan from the automakers before showing the money (they want to make sure that the auto companies adopt a green agenda and build a lot more cars that they can’t sell at a profit, and palm it off on the taxpayers)
  • Some pundits are claiming that 3 million jobs will be lost if we don’t bail them out (but fail to finish the thought and tell us who is going to build the cars that the market demands but GM, Ford, and Chrysler won’t be building if they completely shut down as some predict)

The louder the hue and cry against bankruptcy and the need to empty my wallet, the more confident I feel that bankruptcy is the right thing to do.  Without fundamental management change, union change, and structural change, no amount of taxpayer funding and bailout upon bailout, will enable the Big Three to crawl off their death bed and once again be giants of American Industry.  Bankruptcy is bitter medicine, but without wrenching change that bankruptcy protection can provide, with a trustee making hard decisions and getting concessions from all sides, this patient on life support will die.

A Sad but True Parody

I came across this excellent joke on Evolving Excellence that was making the rounds a few years ago, but seems sadly relevant today.  As I said it is a few years old, so don’t look too closely at the financials:

A Modern Parable.

A Japanese company ( Toyota ) and an American company (Ford Motors) decided to have a canoe race on the Missouri River Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing.

Feeling a deeper study was in order; American management hired a consulting company and paid them a large amount of money for a second opinion.

They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 2 area steering superintendents and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 2 people rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program,’ with meetings, dinners and free pens for the rowers. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses. The pension program was trimmed to ‘equal the competition’ and some of the resultant savings were channeled into morale boosting programs and teamwork posters.

The next year the Japanese won by two miles.

Humiliated, the American management laid-off one rower, halted development of a new canoe, sold all the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses.

The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles,) so he was laid off for unacceptable performance, all canoe equipment was sold and the next year’s racing team was out-sourced to India.

Sadly, the End.

Here’s something else to think about: Ford has spent the last thirty years moving all its factories out of the US , claiming they can’t make money paying American wages. TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter’s results:

TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.

Ford folks are still scratching their heads, and collecting bonuses…

IF THIS WEREN’T SO TRUE IT MIGHT BE FUNNY

It will be interesting to see when the auto executives go back to Washington, will they fly in three separate corporate jets? will they “jetpool”? will they fly first class?  will they fly coach? or will they drive one of their excellent products to ask for a bailout?  How much trunk space do you need to carry $25 billion?  Remember that’s 25,000 million.

A Modest Proposal

About every three years when the labor contracts between the unions and the auto companies come up for renewal, a target company, Ford, GM or Chrysler is typically chosen.  The purpose is to threaten a strike on that company while allowing UAW members to keep working at the other two (and still pay union dues), rather than striking against all three.

Here’s my proposal.  Since GM seems to be in the worst shape, they should go Chapter 11 right away.  Let Ford and Chrysler stand back and watch the result.  If it works and GM successfully restructures, you can bet Ford and Chrysler will be scrambling to go Chapter 11 to get their houses in order.  If it is a bust, then one of three things can happen.  One, they can learn what GM did wrong in the process and perhaps craft a better and maybe even “prepackaged” Chapter 11 filing.  Two, they can go back to Washington and try again, but at least they would have a stronger case for why bankruptcy is a bad idea.  Three, they can wake up and get all the parties together including management, unions, retirees, suppliers, banks, bondholders, local governments, Congress and make the changes voluntarily that would otherwise be made under a bankruptcy.

What do you think?

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GM’s Big Bet

by Bill O'Connell on November 23, 2008

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He looked nervous.  He curled up the corners of his two hole cards, aces.  He eased them back down on the table and scanned the other players.  Nancy Pelosi had a stack of chips totaling $25 billion and he wanted all of them.  No, he needed all of them.  Desperately.  The other three, all Japanese, sat expressionless behind their dark glasses.  At every hand all they said was “Call”.   No raise.  No drama.  Very cool.  Very dangerous.

He looks again at the four cards on the table.  Nothing to help him there.  He needs another ace. He needs the ace he calls the Volt. Pelosi turns to him. “So, what’s your plan?”  He swallows hard, trying hard not to show it and says, “All in,” and pushes his remaining chips into the center of the table.  The dealer burns another card and then peels off the “river.” And we’ll be right back for the final outcome of tonight’s game.

GM on the Precipice

That must be how Rick Wagoner feels.  It seems he’s betting everything on the Chevy Volt. If he draws that ace, he’s a hero.  If not, he’s history.  So what are his chances?

If that’s all he’s got, they’re pretty long odds.  The Volt is not due to hit the showroom floor until 2010, and at a whopping $40,000 per copy.  Not a bad price for a Cadillac, but for an untested electric car with a 40 mile range?  That’s a tough sell.  Even at that, the $40,000 might not be profitable, just break even.  But, there will be a tax credit of $7,500 to help take the sting out of it.

Without Bankruptcy

Without a major revamping of their cost structure that can probably only be achieved through the bankruptcy courts, GM is still carrying $2,000 per vehicle in labor costs that its competition doesn’t have.  And what about those three players to his right in the dark glasses, do you think they are standing pat?  Although very low key, it is reported that Toyota, Nissan and Mitsubishi are all planning to introduce electric cars in the same time frame.  If they do that and they also have the $2,000 per vehicle edge, it will be very bad for GM and any bailout will go down the drain.

The other factor is the way the Japanese do strategic planning.  They typically do not look to just the next quarter.  They are known for developing 50 and 100 year plans.  That is not a typo.  So if they introduce a vehicle they will do it for the long haul.  Believe it or not the Toyota Prius has been on the market for seven years already.  The Japanese are not afraid to introduce a pretty good model and then continuously improve it and if they believe the direction is right, they are willing to wait for the results.  The Big Three, on the other hand tend to have a shorter planning horizon.  Witness Ford’s announcement that it intended to build 250,000 hybrids and then did a market survey when gasoline was about $2.30 per gallon, and decided that they should not go forward.  When gas prices took off they were caught flatfooted while Toyota was selling Priuses at a premium and they couldn’t make them fast enough.

New Administration, New Congress, New Energy Policy

Then there is the energy issue.  Putting more and more electric cars on the road is a good idea and a way toward energy independence.  However, the new administration and the incoming Democratic Congress want to kill the coal industry.  Coal currently generates 49% of our country’s electricity and when it comes to coal reserves, the U.S. is to coal what Saudi Arabia is to oil.  But the new incoming chairman of the House Energy committee, Henry Waxman of Beverly Hills, California, is more determined than ever to implement a green agenda and kill coal.

So what do you replace the coal with?  Oil? Gas? Nuclear?  On the campaign trail, I heard Barack Obama and Joe Biden mumble some things about nuclear being okay, but it was hardly a ringing endorsement.  Do they think for a minute that wind or solar are anywhere near replacing coal?  So, they actually plan to reduce our electric generating capacity by 49% and then not only replace it but grow it to be able to handle all these electric cars.  Where’s that plan?

If you don’t have enough electricity, you can’t charge up your electric cars.  If good old supply and demand does its usual thing, the price of electricity should skyrocket and I can tell you first hand that in New York, it’s not cheap right now.  If electricity skyrockets, whatever manufacturing is left in New York and other rust belt areas will be pulling up stakes left and right and heading south.  If that population follows the jobs, does that mean more votes for the red states and a shift in Congressional seats as well?

The Democrats better re-think that plan if they want to stay in power.

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Harmful Media Practices

by Bill O'Connell on November 23, 2008

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In an editorial yesterday in the New York Times they demonstrate once again how deep they are in the tank for the Democratic Party.  The title of the editorial is Harmful Lending Practices and it attempts to describe the current financial crisis.  It begins:

“One of the questions lurking beneath the surface of the national debate over the mortgage crisis, which has placed six million Americans at risk of losing their homes this year and next, is who is to blame.”

They proceed to round up the usual suspects

1. Major Share of Responsibility

  • Reckless bankers
  • Feckless regulators
  • Greedy Traders

2. Some Measure of Personal Responsibility

  • People who bought homes with mortgages they could not afford

The editorial goes on to advocate more government intervention, naturally, as the solution.

There has hardly been a more egregious example of government intervention causing a massive problem and hardly a more egregious example of it being uniquely owned by the Democratic Party, going back to FDR.  Here is the history:

  • Franklin Delano Roosevelt (D) creates Fannie Mae to help people get mortgages to buy homes.  This is a classic example of It seemed like a good idea at the time. At its outset it seemed pretty benign, but like most government programs it lived on far beyond its original intent continuing to solve the problem long after the problem didn’t exist.
  • Lyndon Baines Johnson (D) privatizes Fannie Mae.  With his ambitious Great Society programs getting cued up he didn’t want to have Fannie Mae’s debt on the national balance sheet.  It might make the national debt look bad, which it was
  • James Earl Carter (D) created the Community Reinvestment Act – to encourage lenders to make more home loans to low and moderate income people.  The same people, because of their economic circumstances who were more likely to default on their loans.
  • William Jefferson Clinton (D) through his HUD Secretary Andrew Cuomo and Attorney General Janet Reno put more teeth into the Community Reinvestment Act threatening banks with legal action if they didn’t increase lending to low and moderate income borrowers.  Not wanting to be tagged as racists the banks (reckless bankers) comply.
  • Barney Frank (D) and Christopher Dodd (D) block efforts to increase regulation and oversight of Fannie Mae and Freddie Mac saying as recently as mid-summer of 2008 that they were both fine and not only that, but good investments.  Christopher Dodd, meanwhile gets a sweetheart mortgage from Countrywide mortgage.

So while the Times is calling for more regulation and oversight they never once mention any of the above.  They mention lawmakers in general bipartisan language:

“Lawmakers, for their part, missed important chances to curtail some of these problems last year as the scale of the crisis was becoming apparent.”

Missed? Gosh darn it, how did that one slip by?  They didn’t MISS anything, they actively BLOCKED IT!  There is quite a difference between missing something and actively stopping it dead.

It is no wonder that the circulation of newspapers like the New York Times is crashing.  There are other media outlets and the Internet that show just how fallacious these editorials are.  With bigger and bigger government our liberties are being whittled away and the Freedom of the Press, enshrined in the First Amendment was put there to protect us from tyrannical government not to aid and abet it in the process.

That being said, this should brighten your day.  Real Estate Downfall on YouTube

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Freedom to Choose — A Car

by Bill O'Connell on November 22, 2008

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I got the phone call around 7:30AM.  It was my wife and her voice was shaking, choking back tears.  She said she was in an accident and that the truck was totaled. Totaled? I thought to myself, my God, what kind of accident could have totaled a 2 ½ ton, hulking Ford Excursion SUV?  Before I could ask the next question, the one I didn’t want to ask, she said, “The girls and I are alright, just some cuts and bruises.” I was able to start breathing again.  She began to apologize for the SUV and I gently cut her off.  “I don’t care about the truck, as long as you and the girls are okay.”  The girls were my two daughters.

I got the location of the accident, briefly told the lead guy in my shop the situation, light on the details which I didn’t have anyway, and jumped in my truck to find them.  As I approached the accident scene, I saw an ambulance, with siren blaring and lights flashing, going the opposite way.  I called my wife’s cell phone and when I got her I asked, “Did you just pass me in the ambulance?”  She said, “Yes, we’re headed to the hospital to be checked out.”  So I made a U-Turn to go meet them in the emergency room.

The Accident

What had happened was that my wife was crossing an intersection when another car blew through the red light.  According to one witness it looked like he was going 60 mph, according to another it looked like he was going 100 mph.  They said the nearly 19′ long, 2 ½ ton vehicle with a massive V-10 engine that my wife was driving was lifted up in the air, turned 180 degrees and landed on its side.  My wife had to kick out the windshield to crawl out and guide our daughters out behind her to safety.  Thankfully it didn’t catch fire.

Why the other driver was driving the way he was we never found out.  He was pronounced dead at the scene. He was driving a Kia, a small Korean import, and before impact, I’m sure he was getting great gas mileage.  He went from leaving a small carbon footprint to leaving no footprints at all.

My wife was exonerated from any responsibility for the accident.  She and my daughters were completely innocent.  Had Ford been required only to build highly fuel efficient econoboxes, half my family would have been killed that morning.  In fact, the driver who was behind my wife said that if she had not been there, he was sure he would be dead, as it would have been him that was hit by the speeding car in her place.

Freedom to Choose

They are alive because I have the liberty, so far, to buy any vehicle that I choose and can afford.  The choices are many and I have made many choices through my life.  That is primarily because the government has not yet taken away that liberty and demanded what types of vehicles can be built and by whom.

My first car was a Toyota Celica, which I purchased just after graduating from college.  It was well made, well equipped, and although a little expensive at $4,700 brand new, I thought it was worth it.  That car served me well for 105,000 miles. When it was time for a replacement I bought a Plymouth Sapporo and I really liked it. Unfortunately, someone liked it as much and it was stolen when it had just 9,000 miles on it. It was a Chrysler Corporation car, but under the hood it was Japanese.  Still living in the Bronx, I decided to buy something functional but not too attractive.  I remember my friend’s rationale for buying a Subaru while living in the city.  None of the parts fit in a gypsy cab. My next vehicle was a Toyota Corolla.

Cars for a Growing Family

When my wife and I married in 1986 she brought to the marriage her Ford Mustang.  My Corolla was starting to get tired and my wife was pregnant, so it was time to get a new vehicle.  I bought a Ford Probe, with front wheel drive and turbocharged.  It was hard to decide if it was American or Japanese.  It was sold by Ford, built in the United States by Mazda which is a Japanese company, but Ford owned 25% of Mazda at the time.  It made for interesting conversation, but not worth losing any sleep over.

After our second child, the Probe and the Mustang were getting a little cramped.  So we said goodbye to the Mustang and hello to a Volvo 740 Turbo Wagon.  This was my wife’s dream car, owing somewhat to her Swedish heritage.

Things were going well for us and it was time to replace the Probe.  I leased a BMW M Roadster and had more fun behind the wheel of a car than I can remember before or since.  We both thoroughly enjoyed tooling down the road with the top down, turning heads as we went.  Life was good.

My wife and I had two more children and as they grew, the jump seat in the back of the Volvo was less than optimal.  In the winter the heat never seemed to reach back there and in the summer the kids in the back felt like a couple of tomato plants in a hothouse.  So it was time for our next vehicle, which for the first time I bought completely on the Internet.  It was a Ford Expedition.  I had seating for eight and room for some cargo as well, and heat and air conditioning all the way to the back.  The kids could each sit comfortably without bumping into each other and to reach out and smack someone next to them took some effort.  That vehicle served us well for a couple of years and then as they grew, our needs grew and when it was time for the next move, we got the Excursion, bigger, they didn’t come.

Meanwhile things became a little more challenging for us.  When the BMW’s lease was up, back it went.  I took over the Volvo for a while until I started a new construction related business and then I took over my father-in-law’s Chevy pick-up truck which he left for my son when he passed away.  After a year when the business got more established I put the Chevy aside for my son and the company bought a Ford F-350 Super Duty, dual wheel pickup truck with a diesel engine, which I still drive.

The Nest Starts to Empty

Then came the accident.  As soon as we got the insurance money for our totaled vehicle we immediately went out and bought another Excursion, with safety the foremost reason.  Ford wasn’t making them anymore so we bought a used one.  I wanted my family protected.

When my son moved out freeing up a seat on the “bus” and my wife started selling real estate and gas prices started to climb, we reevaluated the Excursion.  The Volvo was gone, and at twelve mpg and my wife driving a lot more, it didn’t make sense.  With five of us at home, at worst we could all fit into the pickup truck with its crew cab.  So she bought a Volkswagon EOS.  The savings on gas would make up for any differences in payments on it.  She now had her own convertible and was very happy.

About six months later, my older daughter got her license and wanted a car.  She didn’t have much money for purchasing it or for gas so she needed something economical.  Her choice, a Volkswagon Jetta.

Individual Liberty or Government Diktat

What’s the point of this stroll down vehicular memory lane?  To demonstrate that with liberty we have a great many choices.  We also have different needs at different times in our lives.  Through a free market I was able to select from a number of vehicles from different manufacturers, from different countries, to find what fit our needs.  Those companies decided what to build to suit the market.  The cars that I eventually chose, though not done conscientiously at the time, were from each of those manufacturer’s strengths, not their weaknesses.  I did not choose an economical car, when I needed one, from one of the Big Three.  We did however, choose some of their sporty models (Mustang, Probe) and their trucks (Excursion, Expedition, F-350, Silverado).

The market should tell them what cars to build and build at a profit.  Government should not require them to build six or eight cars that they have to sell at a loss for each vehicle they can sell at a profit, to meet some government mandate such as CAFE standards. As the market causes fuel prices to rise, the market will react with increased demand for more fuel efficient cars.  We should be able to choose when that works best for us.  If we have a distance to commute, we will more inclined to factor fuel efficiency into the equation.  However, if we want to travel in luxury two miles to our favorite restaurant, who cares if the car that gets us there only gets 8 mpg?  Many families have more than one car for that very reason.  Who is some government bureaucrat to tell us what we can choose among?

This Thanksgiving I can sit down with my family, and be thankful that I had that choice, and I can hug each one of them and pray it stays that way.

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Obama Watch — Week 3

by Bill O'Connell on November 22, 2008

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It’s three weeks since the election.  Where do things stand now?

  1. Appointments – Now it gets interesting.  Some of the less exciting picks, although not without the potential for mischief are Tom Daschle at Health and Human Services, Janet Napolitano at Homeland Security, and Bill Richardson at Commerce.  The more interesting choices are:
    • Eric Holder – Attorney General.  It is reported that Barack Obama asked around about possible problems with this nomination and was satisfied that there would be little.  However, since the announcement the concerns are getting aired.  First, there is his participation in the Marc Rich pardon.  Holder claims that he “never devoted a great deal of time to this matter.”  However, an Op-Ed piece in the NY Times by George Lardner, Jr. paints a very different picture.  Mr. Lardner helped cover the story for the Washington Post at the time.  Second, Holder was involved in the Elian Gonzalez case where the child was taken at gunpoint in violation of a court order.  Holder claimed the child wasn’t taken at gunpoint, however there is a Pulitzer Prize Winning photograph showing just that.  That’s two for two on the mendacity score.  Obama might want to re-think this one before it turns toxic.
    • Hillary Clinton – Secretary of State.  This could be another sign of Obama’s political genius that is only matched by Bill Clinton himself.  He brings his arch rival into his administration thus blunting her ability to be a critic.  He broker’s a deal where Bill Clinton has to come clean on all his wheelings and dealings, disclose to Obama’s team all the donors, foreign and domestic, to the Clinton Library, and promise to keep the new administration advised of his comings and goings.  As Lyndon Johnson famously said of FBI Director J. Edgar Hoover, “I’d rather have him inside the tent pissing out, than outside the tent pissing in.”  This will also be the acid test of his ongoing political skill.  He will have two tigers by the tail.  If Hillary goes off message, or Bill slips his leash, Obama has to decide what to do.  He could fire Hillary, which might be enough of an embarrassment that the threat of doing so would keep her in line.  On the other hand, he would have to face all of those 18 million Hillary supporters in the Democratic Party, if he didn’t have a very good reason to do so, that they also felt was a very good reason.  Bill is even a tougher call.  The only counterweight there is that if he goes off and does something questionable with a foreign government, it could be a greater embarrassment to the Secretary of State, his wife.  Where’s Joe Biden?  Biden was picked for his foreign policy expertise.  By bringing Hillary on board they can now keep Hiden’ Biden for the next four years.
    • Timothy Geithner – Secretary of the Treasury – this might be one of his better picks.  Upon news of this getting out the market jumped up nearly 500 points. That wasn’t enough to save it from another down week, but maybe it will help find a bottom.
  2. Dow Jones Industrial Average Down 445 points.  The Dow which is considered a leading indicator dropped another 5% this week.  It went below 8000 until the announcement of Geithner as Treasury pick.  So in the three weeks since the election the Dow has dropped almost 1,600 points.
  3. School for the Obama Children – The Obama’s have decided where to send their children to school.  Naturally they would choose public school, right?  Since they are always telling us it is bad to have school choice.  It hurts the public school system by taking money away and we need to do more for public schools right?  Wasn’t that the whole reason behind the Department of Education?  Nope.  It will be private school for the Obama children at $28,400 per year.  The Department of Education was created during the Carter Administration.  But Amy Carter, the daughter of President Jimmy Carter, also attended public schools, the first child of a president to do so since Theordore Roosevelt’s son Quentin in 1904.  Parents in the District of Columbia have been begging for school vouchers to be able to send their children to any school public or private, but the Democrats are adamantly opposed them (can you say teacher’s union?).  Apparently, the Democrats believe the public schools are just fine, as long as their children don’t go anywhere near them.

Stay tuned…

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The Auto Bailout Clings to Life

by Bill O'Connell on November 20, 2008

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It’s not over yet folks, although your voice is being heard.  The big sticking point seems to be whether the bailout money should be taken out of our left pocket ($700 billion TARP bailout package) or our right pocket ($25 billion fund to provide re-tooling for green production).  The only people talking about going Chapter 11 are people on the right such as Mitt Romney, who actually knows something about it having watched his father, George Romney, try to save American Motors, as CEO.

Politics Trumps Problem Solving

Barney Frank has weighed in to make sure the class warfare card is played.  He compared the bailout of AIG with the bailout of the auto companies as White Collar (AIG) vs. Blue Collar (GM). A blog by dbeale points this out very well.  This begs the question:  where does it all end?  Where do you draw the line?  If you bail out AIG, you have to bail out GM because they have blue collar workers.  If you bail out GM you have to bail out (fill in the company name) because they have (fill in special interest group).

But if you read the post carefully you can see the true political objectives of the Democrats and their supporters:

  1. Give the auto companies a bailout
  2. Fire most of senior management for mismanagement
  3. Threaten bankruptcy but don’t do it
  4. If the auto companies don’t reinvent themselves (which they can’t do without bankruptcy), nationalize them.  Don’t call it nationalization, call it a “quasi government takeover”
  5. Make sure the focus is on building high mileage cars, and whatever else the green program demands.  Anyone who gets in the way of that goal should be fired. To quote dbeale, “every one involved in undermining gas efficiency standards must go.”
  6. Appoint a automobile czar (don’t call it nationalization) to oversee the companies to make sure that the management isn’t paid too much, that union contracts are reinforced, the “right” kind of cars are built.
  7. Bailout with more government money every 3 years, because the root cause the problem is never addressed.

A Workable Solution

The root of the problem is that the auto companies as they are today, are not competitive.  Here is my proposal

  1. Eliminate the CAFE standards.  The CAFE standards were introduced 1975 in response to the energy crisis.  At least that was the stated objective.  The real objective was to curtail the importation of foreign cars, particularly Japanese cars, which could already meet the standards.  If you wanted to buy a car that got good gas mileage, you could.  This was a attempt by government to force U.S. car companies to make cars of similar economy.  However, their cost structure would not allow them to compete with the imports at the low end of the market.  G.M., Ford, and Chrysler don’t seem to have a problem making a profit on the luxury end of the market, on SUVs, and light trucks.  But if, for example the standard is 27 MPG, and your Cadillac only got 20 MPG.  You would have to sell eight compact cars that get 28 MPG for each Cadillac to comply with the standard.  However, it is estimated that GM is at a cost disadvantage of $2000 per vehicle.  At the luxury end there is enough margin to cover that.  At the low end there isn’t.  So, GM as a direct result of government policy has to sell eight cars at a loss to allow them to sell one car at a profit.  Why not let them sell as many cars at a profit as they can, sell no cars at a loss and let the market decide?  If need a high mileage car to save on gas for your long commute, buy a foreign car.
  2. File bankruptcy.  Reorganize and get rid of those things that are killing you.  That’s what the bankruptcy laws are for.  Yes, shareholders may get wiped out, union contracts will have to be renegotiated, commitments to continue paying revenue bonds for plants that are no longer needed can be renegotiated or voided, pension commitments revisited, etc.
  3. Slim down, come out of bankruptcy, and get competitive again.  The Big three made about 17 million vehicles in 2007.  Does any rational person believe that if the Big Three go into bankruptcy that the people and companies that bought that many vehicles will no longer need cars?  If they still need cars, someone has to build them.  That can either be the foreign makes, the slimmed down Lean Three, or new companies that are formed to take advantage of this huge demand for 17 million vehicles that no one, or not enough are stepping up to the plate to meet it.  People will be re-hired, sub-contractors will have new subcontracts, and the auto industry can actually thrive and not just limp along from bailout to bailout.

The key to this working is to get government out of the mix.  We are facing a plethora of problems and most of them can be traced to government intervention in the market place.  The financial crisis is a direct result of government programs such as Fannie Mae, Freddie Mac, the Community Reinvestment Act, the strong arm tactics of the Clinton Justice Department and HUD to demand more sub-prime lending, and the resistance of Barney Frank and Chris Dodd for more oversight.

The tragedy is that we have problems created by the government and we think that more government is going to fix them.  Keep up the fight.  Let your representatives and senators know, NO BAILOUT

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Taxpayers to GM — Get Yourselves Out of This Mess

by Bill O'Connell on November 18, 2008

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It’s hard to read the news about the auto industry and not clench your fists at the outrage.  GM and to a lesser extent, Ford and Chrysler, are asking the American taxpayer to bail them out, but what is their position?

  • The unions say they are not going to negotiate anything to help the situation
  • The CEO of GM says that they are not filing for Chapter 11 and not preparing to file, despite that they may run out of cash by the end of December.  Not even as a contingency, Mr. Wagoner?
  • Wagoner refused to consider resigning, even if it would help them get aid
  • GM’s board is supportive of Wagoner

This company negotiated an agreement with its union that pays them almost full pay if they are laid off.  Let me get this straight.  You lay people off, as painful as that may be, to cut costs.  GM negotiates an agreement that keeps the costs, but sends the people away.  From their perspective, it’s free labor, they pay for it either way so put them to work!  But no, I’m sure there are union restrictions about what you can put them to work doing.

Remember the Dot.com Bubble?

In 2000 we saw the Dot.com bubble.  What was the fallout?  Millions were lost on Wall Street.  Companies by the bushel basket went out of business.  Thousands were thrown out of work.  How much did taxpayers cough up to bail them out?  Nothing.  The market dealt with it.  The strong companies re-grouped, the weak fell by the wayside.  John Chambers, CEO of Cisco Systems, changed his own salary to $1 per year until he righted his ship.  Today Cisco has $26 billion in the bank and Chambers is still at the helm.  Nice work, John.  It wasn’t done with arrogance and going hat in hand to Washington looking for a hand out.

Deja Vu

In the 1970s and 1980s in the UK, British Leyland, maker of the Triumph, MG, Rover, Jaguar, Austin and five others, was in need of a bailout to keep going.  The British government complied eventually pumping in $16.5 billion in taxpayer money to the company.  It limped along for another few years and then went out of business.  It sold its Jaguar and Land Rover brands to Ford, which then poured $10 billion into Jaguar.  It recently sold both brands to Tata of India, getting back about half of what it paid for the brands.

Did the British economy go under?  Is the British military without tanks?  Let’s not forget that the Jeep was made by American Motors.  Where is American Motors today?  A company named AM General makes the military Hummer.  Guess what the “AM” stands for?  GM, Ford and Chrysler combined made about 17 million vehicles in 2007.  Does anyone think this demand will vanish if GM, Ford and Chrysler vanish?  Of course not.  Either GM, Ford, and Chrysler will re-make themselves, new companies will emerge, or U.S. based foreign companies will grow to take up the slack.  The jobs will move around.  The demand is there, the supply will emerge to satisfy it.

The Way Out

The way out of this mess is to go Chapter 11, reorganize, renegotiate onerous labor contracts, sell off properties no longer needed but tied up in commitments to bonds that were sold to attract a factory, etc.  The government should do their part and dump the CAFE standards.  Americans will still want high mileage cars and companies will build them.  It may not be GM, Ford and Chrysler who build them, but if they trim down, maybe they will.  But they do make a profit on their premium models and light trucks.  Let them.

But keep your hand out of my wallet.

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