The first problem with the auto industry is that it is based on an assumption of unit sales of 17 m/yr, when demand suddenly fell 40% lower, and for both environmental and energy reasons, allowing demand in that industry to keep at those levels is excellent. It is the best energy independence and environmental policy that could have happened. Website design By BotEap.comIf the volume stays at those levels (which unfortunately it won’t) it translates to a 40% reduction in oil dependency and a 40% reduction in the worst pollution right away; and a 40% reduction in the long-term need for roads and bridges. (Which, by the way, shouldn’t be the main emphasis of the new stimulus package for exactly the above reason; rather, the emphasis should be on technology investments and incentives for the clean energy sector and for other sectors that need technological improvements like information technology for medical records, encryption technology for national security, and infrastructure for schools, particularly urban schools and something, but not as much as Obama has mentioned in the roads and bridges part.To move forward, we need improvements in technology, particularly in hardware (in the broad sense of the word, not just computer hardware) technology that involves manufacturing and therefore well-paying sustainable jobs, and jobs should go to those sectors, not the same old ones). The stimulus package should focus on the strategic areas Obama talked about on the campaign trail, (clean energy, education, manufacturing jobs, and reducing health care costs; while $100 billion of the rest of the TARP funds should be in households), so all stimulus must be “two for.” The measure of the adequacy of specific stimulus programs should not be so much on the immediate impact on employment (which should also be a factor, but not the main factor), but on whether they reduce the need for future public spending (by at least 15%). per year in those areas), so that years 3 and 4 are years of deficit reductions (both federal and commercial) and significant reductions in public spending). If someone had a strategic plan that was worth at least a little more than crap, the stimulus package would be nothing more than bringing about 5% of the investments from years 3 and 4 to years 1 and 2 to provide a stimulus of 1 or 2 years and structurally reduce the necessary and planned investments-expenditures for years 3 and 4, by around 1% of current levels. Website design By BotEap.comThe answer to the first problem of the automotive industry is simple and direct. It implies a 30% cut in the principle value of all bondholders and warrants and placing them second behind the government, by decree of the tsar, and therefore by law confirmed by Congress, a 20% cut. in the labor force. industry, a 30% cut in wages and benefits for new autoworkers, a 30% conversion of current worker and retiree liabilities into stocks, a 20% cut in wages and bonuses for all employees (and can have one day off each week) until businesses are profitable, a 20% increase in the deductible portion of all medical-dental costs, a 30% conversion of vendor liabilities to equity (in all cases capital at low current values ); a 20% cut in the number of dealerships, a 20% reduction in the number of products each sells, a 10% tax on cars and SUVs that go below 25m/gal, a total executive compensation limit up to a maximum of 2m/year, ban on business use of private jets, 50% cut in advertising budgets within which there would be a 30% increase in advertising for the most efficient vehicles and a 70% cut in the current common budget and preferred dividend yields. (And by the way, a mandate to energy companies that at least 30% of their stations have alternative fuel pumps by 2011; and an immediate reduction in sugarcane ethanol rates and a commitment from both manufacturers and of providers to increase their national content by 30%). Website design By BotEap.comSince this is the best opportunity for the industry to move toward greater energy efficiency, 30% of the time of the new increased efficiency (hybrids, plug-in hybrids, natural gas, flex fuel, electric and hydrogen cars and trucks) should go accompanied by government investment which is in preferred convertibles owning 30% of the company and earning a dividend yield of 5%. The investment should be approx. $75 billion ($25 billion already allocated for energy efficiency; $35 billion from TARP for this bailout and $15 billion to finance companies through the Federal Reserve’s commercial paper program). All investments should involve preferred stock ownership in both parent companies and 30% finance companies, except for Chrysler, which should be 70% owned because it is a private company whose owners have money but refused to add money to bail her out and agreed to forgo any benefits on the upside, meaning they’d be happy to convert their debt into stock and keep 30% of the stock in a successful company. The government should also place a limitation on itself that it will sell all of its ownership in these companies within the next 10 years. Website design By BotEap.comOnly within the above dictates can the bottom-up plan of the industry and its individual companies make sense. I know Congress can’t be coherent enough to produce such a simple and coherent neat solution, maybe the caesar you enclose is. These are straightforward and fair across the board, with each stakeholder taking a 30% “cut” to avoid losing much more (and perhaps all) and a chance to share in the companies’ future advantages. (With a little bias toward labor and dealerships, which is the bias toward not losing too many jobs, particularly not at this stage.) If you don’t give the above dictates and try to compromise by topic and group in detail, one is almost in the type of timelines and processes of a bankruptcy case, which is too long and will therefore force bankruptcy. Website design By BotEap.comThis plan achieves an immediate 30% reduction in oil dependency and a 30% reduction in transportation emissions, and a 30% reduction in road infrastructure needs with another 30% annually thereafter for several years; normally doing this would take at least a decade; Do not lose this chance. Website design By BotEap.comIt will also produce a very viable industry because demand will most likely be only 10-20% lower than the level of 17m/yr in 2010 (in fact, it may be as high as 17m/yr), so in reality The companies will be profitable in 2010 and very profitable after that, because Americans, if they get credit, buy like crazy, especially if manufacturers actually use their advanced energy and cost efficient vehicles. Website design By BotEap.comIn a few months, after negotiating tariff reductions between democracies, at least a 20% tax on imported OPEC oil and on Chinese imports (or on Yuan/$ conversions) will significantly help all national OPEC constituents and all industries and it’s necessary to avoid going deeper into the hole, because all the deleveraging of individuals and industry is happening because of the dramatically increased leverage of government, both federal and state and local, that needs these taxes and reductions in trade deficits to avoid becoming the next and biggest bubble ever to burst. As I explained in a previous article, the underlying liquidity and credit crisis is a huge monetary policy mistake, with interest rates still too high and can be fixed quickly without forcing the government to leverage as much. Website design By BotEap.comSince we are in solutions, we could also address the first problem, that is, the housing crisis problem with falling house values and lagging housing demand. It is, as always, a three-pronged solution with a) monetary policy; reduce interest rates on long-term (30-year) mortgages to less than 5%, for good credit, quickly through Federal Reserve action (buying Fannie May paper, financed by far fewer bill auctions short-term Treasury auctions and many more 30-year note auctions) ), for the share of global housing demand; and discount rate drop to .5% b) a “mod” lending program requirement for all banks, prior to any foreclosure, taking 90 days for all involved to commit to allowing banks to take collateral in the home ownership and thus in its appreciation, if the loan is past due for more than 60 days, (for those who can and want to continue staying in their home if the payments were 20% or less), ( This may also be the FDIC’s proposed and implemented plan); and a $100b TARP funded foreclosure program in which the government buys 20% equity in the house from banks who, having gone through the above modification processes, will have to go to foreclosure of anyway because the owner is too backwards. or you have lost too much of your income. The government buys 20% of the capital of the banks at 80% of the value of the mortgage, that is, the banks automatically lose 20% once the government has to intervene, and the government, the banks that own it, are the lenders of these foreclosed properties and have a conversion. management company that rents these properties. (The Federal Government in this case would be assigning the money to the Municipalities and Cities that would implement this program). Thus, the three components of the problem are dealt with directly, the interest rate for all the demand; the “mod” for those who can get away with lower payouts but fewer ownership advantages; and for those who will have to foreclose having at least one rental unit and a larger and therefore more affordable rental market. Website design By BotEap.comThese actions will cause the real estate market to rebound in the second quarter of 2009. Website design By BotEap.comPrevious plans for the crisis in the auto industry and the housing industry start like this but don’t stay like this. This is because these are the backup plans that take effect until the industries (both auto and housing and could also require the financial industry to join them), from the bottom up, submit plans to Congress. that have the relative consensus of all. stakeholders who believe fairer and better for all, before March 1, 2009, knowing that if they do not agree on something better, this is what will stay. (Of course, at that point Congress can refine these plans to refine the details by working with them or independently.) (And knowing that if they don’t agree to make this work now, everyone will lose at least 90%, which is what the lawyers and judges can let them keep after they have their own bankruptcy party, being the only winners, and in this case liquidations of many large, medium and small companies and a very severe recession that lasts until 2009 and maybe longer). Website design By BotEap.comStop sinking the kitchen and get things focused as stated above, because so far Congress and its leadership are proving grossly inadequate and all the change so far is just in the type of BS being dished out.
The housing crisis, the auto industry crisis: canvas funds and the new stimulus package
Website design By BotEap.comI know the temptation to delve into the details but the details are the maze in which the beast hides. It’s wise to stick with the auto industry at the highest level, because this beast is huge.
The first problem with the auto industry is that it is based on an assumption of unit sales of 17 m/yr, when demand suddenly fell 40% lower, and for both environmental and energy reasons, allowing demand in that industry to keep at those levels is excellent. It is the best energy independence and environmental policy that could have happened. Website design By BotEap.comIf the volume stays at those levels (which unfortunately it won’t) it translates to a 40% reduction in oil dependency and a 40% reduction in the worst pollution right away; and a 40% reduction in the long-term need for roads and bridges. (Which, by the way, shouldn’t be the main emphasis of the new stimulus package for exactly the above reason; rather, the emphasis should be on technology investments and incentives for the clean energy sector and for other sectors that need technological improvements like information technology for medical records, encryption technology for national security, and infrastructure for schools, particularly urban schools and something, but not as much as Obama has mentioned in the roads and bridges part.To move forward, we need improvements in technology, particularly in hardware (in the broad sense of the word, not just computer hardware) technology that involves manufacturing and therefore well-paying sustainable jobs, and jobs should go to those sectors, not the same old ones). The stimulus package should focus on the strategic areas Obama talked about on the campaign trail, (clean energy, education, manufacturing jobs, and reducing health care costs; while $100 billion of the rest of the TARP funds should be in households), so all stimulus must be “two for.” The measure of the adequacy of specific stimulus programs should not be so much on the immediate impact on employment (which should also be a factor, but not the main factor), but on whether they reduce the need for future public spending (by at least 15%). per year in those areas), so that years 3 and 4 are years of deficit reductions (both federal and commercial) and significant reductions in public spending). If someone had a strategic plan that was worth at least a little more than crap, the stimulus package would be nothing more than bringing about 5% of the investments from years 3 and 4 to years 1 and 2 to provide a stimulus of 1 or 2 years and structurally reduce the necessary and planned investments-expenditures for years 3 and 4, by around 1% of current levels. Website design By BotEap.comThe answer to the first problem of the automotive industry is simple and direct. It implies a 30% cut in the principle value of all bondholders and warrants and placing them second behind the government, by decree of the tsar, and therefore by law confirmed by Congress, a 20% cut. in the labor force. industry, a 30% cut in wages and benefits for new autoworkers, a 30% conversion of current worker and retiree liabilities into stocks, a 20% cut in wages and bonuses for all employees (and can have one day off each week) until businesses are profitable, a 20% increase in the deductible portion of all medical-dental costs, a 30% conversion of vendor liabilities to equity (in all cases capital at low current values ); a 20% cut in the number of dealerships, a 20% reduction in the number of products each sells, a 10% tax on cars and SUVs that go below 25m/gal, a total executive compensation limit up to a maximum of 2m/year, ban on business use of private jets, 50% cut in advertising budgets within which there would be a 30% increase in advertising for the most efficient vehicles and a 70% cut in the current common budget and preferred dividend yields. (And by the way, a mandate to energy companies that at least 30% of their stations have alternative fuel pumps by 2011; and an immediate reduction in sugarcane ethanol rates and a commitment from both manufacturers and of providers to increase their national content by 30%). Website design By BotEap.comSince this is the best opportunity for the industry to move toward greater energy efficiency, 30% of the time of the new increased efficiency (hybrids, plug-in hybrids, natural gas, flex fuel, electric and hydrogen cars and trucks) should go accompanied by government investment which is in preferred convertibles owning 30% of the company and earning a dividend yield of 5%. The investment should be approx. $75 billion ($25 billion already allocated for energy efficiency; $35 billion from TARP for this bailout and $15 billion to finance companies through the Federal Reserve’s commercial paper program). All investments should involve preferred stock ownership in both parent companies and 30% finance companies, except for Chrysler, which should be 70% owned because it is a private company whose owners have money but refused to add money to bail her out and agreed to forgo any benefits on the upside, meaning they’d be happy to convert their debt into stock and keep 30% of the stock in a successful company. The government should also place a limitation on itself that it will sell all of its ownership in these companies within the next 10 years. Website design By BotEap.comOnly within the above dictates can the bottom-up plan of the industry and its individual companies make sense. I know Congress can’t be coherent enough to produce such a simple and coherent neat solution, maybe the caesar you enclose is. These are straightforward and fair across the board, with each stakeholder taking a 30% “cut” to avoid losing much more (and perhaps all) and a chance to share in the companies’ future advantages. (With a little bias toward labor and dealerships, which is the bias toward not losing too many jobs, particularly not at this stage.) If you don’t give the above dictates and try to compromise by topic and group in detail, one is almost in the type of timelines and processes of a bankruptcy case, which is too long and will therefore force bankruptcy. Website design By BotEap.comThis plan achieves an immediate 30% reduction in oil dependency and a 30% reduction in transportation emissions, and a 30% reduction in road infrastructure needs with another 30% annually thereafter for several years; normally doing this would take at least a decade; Do not lose this chance. Website design By BotEap.comIt will also produce a very viable industry because demand will most likely be only 10-20% lower than the level of 17m/yr in 2010 (in fact, it may be as high as 17m/yr), so in reality The companies will be profitable in 2010 and very profitable after that, because Americans, if they get credit, buy like crazy, especially if manufacturers actually use their advanced energy and cost efficient vehicles. Website design By BotEap.comIn a few months, after negotiating tariff reductions between democracies, at least a 20% tax on imported OPEC oil and on Chinese imports (or on Yuan/$ conversions) will significantly help all national OPEC constituents and all industries and it’s necessary to avoid going deeper into the hole, because all the deleveraging of individuals and industry is happening because of the dramatically increased leverage of government, both federal and state and local, that needs these taxes and reductions in trade deficits to avoid becoming the next and biggest bubble ever to burst. As I explained in a previous article, the underlying liquidity and credit crisis is a huge monetary policy mistake, with interest rates still too high and can be fixed quickly without forcing the government to leverage as much. Website design By BotEap.comSince we are in solutions, we could also address the first problem, that is, the housing crisis problem with falling house values and lagging housing demand. It is, as always, a three-pronged solution with a) monetary policy; reduce interest rates on long-term (30-year) mortgages to less than 5%, for good credit, quickly through Federal Reserve action (buying Fannie May paper, financed by far fewer bill auctions short-term Treasury auctions and many more 30-year note auctions) ), for the share of global housing demand; and discount rate drop to .5% b) a “mod” lending program requirement for all banks, prior to any foreclosure, taking 90 days for all involved to commit to allowing banks to take collateral in the home ownership and thus in its appreciation, if the loan is past due for more than 60 days, (for those who can and want to continue staying in their home if the payments were 20% or less), ( This may also be the FDIC’s proposed and implemented plan); and a $100b TARP funded foreclosure program in which the government buys 20% equity in the house from banks who, having gone through the above modification processes, will have to go to foreclosure of anyway because the owner is too backwards. or you have lost too much of your income. The government buys 20% of the capital of the banks at 80% of the value of the mortgage, that is, the banks automatically lose 20% once the government has to intervene, and the government, the banks that own it, are the lenders of these foreclosed properties and have a conversion. management company that rents these properties. (The Federal Government in this case would be assigning the money to the Municipalities and Cities that would implement this program). Thus, the three components of the problem are dealt with directly, the interest rate for all the demand; the “mod” for those who can get away with lower payouts but fewer ownership advantages; and for those who will have to foreclose having at least one rental unit and a larger and therefore more affordable rental market. Website design By BotEap.comThese actions will cause the real estate market to rebound in the second quarter of 2009. Website design By BotEap.comPrevious plans for the crisis in the auto industry and the housing industry start like this but don’t stay like this. This is because these are the backup plans that take effect until the industries (both auto and housing and could also require the financial industry to join them), from the bottom up, submit plans to Congress. that have the relative consensus of all. stakeholders who believe fairer and better for all, before March 1, 2009, knowing that if they do not agree on something better, this is what will stay. (Of course, at that point Congress can refine these plans to refine the details by working with them or independently.) (And knowing that if they don’t agree to make this work now, everyone will lose at least 90%, which is what the lawyers and judges can let them keep after they have their own bankruptcy party, being the only winners, and in this case liquidations of many large, medium and small companies and a very severe recession that lasts until 2009 and maybe longer). Website design By BotEap.comStop sinking the kitchen and get things focused as stated above, because so far Congress and its leadership are proving grossly inadequate and all the change so far is just in the type of BS being dished out.
The first problem with the auto industry is that it is based on an assumption of unit sales of 17 m/yr, when demand suddenly fell 40% lower, and for both environmental and energy reasons, allowing demand in that industry to keep at those levels is excellent. It is the best energy independence and environmental policy that could have happened. Website design By BotEap.comIf the volume stays at those levels (which unfortunately it won’t) it translates to a 40% reduction in oil dependency and a 40% reduction in the worst pollution right away; and a 40% reduction in the long-term need for roads and bridges. (Which, by the way, shouldn’t be the main emphasis of the new stimulus package for exactly the above reason; rather, the emphasis should be on technology investments and incentives for the clean energy sector and for other sectors that need technological improvements like information technology for medical records, encryption technology for national security, and infrastructure for schools, particularly urban schools and something, but not as much as Obama has mentioned in the roads and bridges part.To move forward, we need improvements in technology, particularly in hardware (in the broad sense of the word, not just computer hardware) technology that involves manufacturing and therefore well-paying sustainable jobs, and jobs should go to those sectors, not the same old ones). The stimulus package should focus on the strategic areas Obama talked about on the campaign trail, (clean energy, education, manufacturing jobs, and reducing health care costs; while $100 billion of the rest of the TARP funds should be in households), so all stimulus must be “two for.” The measure of the adequacy of specific stimulus programs should not be so much on the immediate impact on employment (which should also be a factor, but not the main factor), but on whether they reduce the need for future public spending (by at least 15%). per year in those areas), so that years 3 and 4 are years of deficit reductions (both federal and commercial) and significant reductions in public spending). If someone had a strategic plan that was worth at least a little more than crap, the stimulus package would be nothing more than bringing about 5% of the investments from years 3 and 4 to years 1 and 2 to provide a stimulus of 1 or 2 years and structurally reduce the necessary and planned investments-expenditures for years 3 and 4, by around 1% of current levels. Website design By BotEap.comThe answer to the first problem of the automotive industry is simple and direct. It implies a 30% cut in the principle value of all bondholders and warrants and placing them second behind the government, by decree of the tsar, and therefore by law confirmed by Congress, a 20% cut. in the labor force. industry, a 30% cut in wages and benefits for new autoworkers, a 30% conversion of current worker and retiree liabilities into stocks, a 20% cut in wages and bonuses for all employees (and can have one day off each week) until businesses are profitable, a 20% increase in the deductible portion of all medical-dental costs, a 30% conversion of vendor liabilities to equity (in all cases capital at low current values ); a 20% cut in the number of dealerships, a 20% reduction in the number of products each sells, a 10% tax on cars and SUVs that go below 25m/gal, a total executive compensation limit up to a maximum of 2m/year, ban on business use of private jets, 50% cut in advertising budgets within which there would be a 30% increase in advertising for the most efficient vehicles and a 70% cut in the current common budget and preferred dividend yields. (And by the way, a mandate to energy companies that at least 30% of their stations have alternative fuel pumps by 2011; and an immediate reduction in sugarcane ethanol rates and a commitment from both manufacturers and of providers to increase their national content by 30%). Website design By BotEap.comSince this is the best opportunity for the industry to move toward greater energy efficiency, 30% of the time of the new increased efficiency (hybrids, plug-in hybrids, natural gas, flex fuel, electric and hydrogen cars and trucks) should go accompanied by government investment which is in preferred convertibles owning 30% of the company and earning a dividend yield of 5%. The investment should be approx. $75 billion ($25 billion already allocated for energy efficiency; $35 billion from TARP for this bailout and $15 billion to finance companies through the Federal Reserve’s commercial paper program). All investments should involve preferred stock ownership in both parent companies and 30% finance companies, except for Chrysler, which should be 70% owned because it is a private company whose owners have money but refused to add money to bail her out and agreed to forgo any benefits on the upside, meaning they’d be happy to convert their debt into stock and keep 30% of the stock in a successful company. The government should also place a limitation on itself that it will sell all of its ownership in these companies within the next 10 years. Website design By BotEap.comOnly within the above dictates can the bottom-up plan of the industry and its individual companies make sense. I know Congress can’t be coherent enough to produce such a simple and coherent neat solution, maybe the caesar you enclose is. These are straightforward and fair across the board, with each stakeholder taking a 30% “cut” to avoid losing much more (and perhaps all) and a chance to share in the companies’ future advantages. (With a little bias toward labor and dealerships, which is the bias toward not losing too many jobs, particularly not at this stage.) If you don’t give the above dictates and try to compromise by topic and group in detail, one is almost in the type of timelines and processes of a bankruptcy case, which is too long and will therefore force bankruptcy. Website design By BotEap.comThis plan achieves an immediate 30% reduction in oil dependency and a 30% reduction in transportation emissions, and a 30% reduction in road infrastructure needs with another 30% annually thereafter for several years; normally doing this would take at least a decade; Do not lose this chance. Website design By BotEap.comIt will also produce a very viable industry because demand will most likely be only 10-20% lower than the level of 17m/yr in 2010 (in fact, it may be as high as 17m/yr), so in reality The companies will be profitable in 2010 and very profitable after that, because Americans, if they get credit, buy like crazy, especially if manufacturers actually use their advanced energy and cost efficient vehicles. Website design By BotEap.comIn a few months, after negotiating tariff reductions between democracies, at least a 20% tax on imported OPEC oil and on Chinese imports (or on Yuan/$ conversions) will significantly help all national OPEC constituents and all industries and it’s necessary to avoid going deeper into the hole, because all the deleveraging of individuals and industry is happening because of the dramatically increased leverage of government, both federal and state and local, that needs these taxes and reductions in trade deficits to avoid becoming the next and biggest bubble ever to burst. As I explained in a previous article, the underlying liquidity and credit crisis is a huge monetary policy mistake, with interest rates still too high and can be fixed quickly without forcing the government to leverage as much. Website design By BotEap.comSince we are in solutions, we could also address the first problem, that is, the housing crisis problem with falling house values and lagging housing demand. It is, as always, a three-pronged solution with a) monetary policy; reduce interest rates on long-term (30-year) mortgages to less than 5%, for good credit, quickly through Federal Reserve action (buying Fannie May paper, financed by far fewer bill auctions short-term Treasury auctions and many more 30-year note auctions) ), for the share of global housing demand; and discount rate drop to .5% b) a “mod” lending program requirement for all banks, prior to any foreclosure, taking 90 days for all involved to commit to allowing banks to take collateral in the home ownership and thus in its appreciation, if the loan is past due for more than 60 days, (for those who can and want to continue staying in their home if the payments were 20% or less), ( This may also be the FDIC’s proposed and implemented plan); and a $100b TARP funded foreclosure program in which the government buys 20% equity in the house from banks who, having gone through the above modification processes, will have to go to foreclosure of anyway because the owner is too backwards. or you have lost too much of your income. The government buys 20% of the capital of the banks at 80% of the value of the mortgage, that is, the banks automatically lose 20% once the government has to intervene, and the government, the banks that own it, are the lenders of these foreclosed properties and have a conversion. management company that rents these properties. (The Federal Government in this case would be assigning the money to the Municipalities and Cities that would implement this program). Thus, the three components of the problem are dealt with directly, the interest rate for all the demand; the “mod” for those who can get away with lower payouts but fewer ownership advantages; and for those who will have to foreclose having at least one rental unit and a larger and therefore more affordable rental market. Website design By BotEap.comThese actions will cause the real estate market to rebound in the second quarter of 2009. Website design By BotEap.comPrevious plans for the crisis in the auto industry and the housing industry start like this but don’t stay like this. This is because these are the backup plans that take effect until the industries (both auto and housing and could also require the financial industry to join them), from the bottom up, submit plans to Congress. that have the relative consensus of all. stakeholders who believe fairer and better for all, before March 1, 2009, knowing that if they do not agree on something better, this is what will stay. (Of course, at that point Congress can refine these plans to refine the details by working with them or independently.) (And knowing that if they don’t agree to make this work now, everyone will lose at least 90%, which is what the lawyers and judges can let them keep after they have their own bankruptcy party, being the only winners, and in this case liquidations of many large, medium and small companies and a very severe recession that lasts until 2009 and maybe longer). Website design By BotEap.comStop sinking the kitchen and get things focused as stated above, because so far Congress and its leadership are proving grossly inadequate and all the change so far is just in the type of BS being dished out.