One year later, I return

Another year away from the Politics blog.  Sorry about that. Wasted a lot of time over on Facebook during the 2012 election cycle.

To sum up the 2012 election results.  No president should have been re-elected with the economy in as bad a shape as ours has been.  As it was, President Obama is the first president to be re-elected to a second term with a smaller vote percentage than he had received during his first campaign.  Not that the media is doing anything other than have declared that he had a huge mandate, despite losing popular support from 2008 to 2012.

Aftermath of Mass. Election

Great news that Massachusetts elected Scott Brown to replace the late Ted Kennedy in the U. S. Senate. I had been surprised that more prominent candidates did not run for the Republican nomination because I thought this seat was winnable. The experts thought otherwise. But Mitt Romney gave Ted Kennedy a great battle in 1994 and then he later was elected governor. So, I thought he would be a good candidate. Romney's sights are set higher and a loss in a Senate race would be crushing for his ambitions so he played it safe. Perhaps a new face like Scott Brown's was what was needed though.

Interestingly, the White House is saying that the American people are frustrated and upset about the economy. To which I say, well what did you guys do about it? Well, their plan was enacted in February 2009 and look at the results. FaIlure! Why? Because it was a nonsensical plan that was created more to please various constituencies and members of Congress than to get the economy moving again. While Ronald Reagan also faced a terrible economy in 1981, he enacted a plan that made sense and in time it paid off. Does anyone believe that throwing money at CASH FOR CLUNKERS or TAX CREDITS FOR BUYING HOUSES is going to solve the problems in the overall economy?

I was young and opposed Ronald Reagan in the early 1980s but as I watched the results of his presidency I saw that he was right, in both his understanding of the economy and in his understanding of defense policy. Now we have been given one year of Obama, and the results are coming in and they are not good. 10 % unemployment -- about double the rate during the presidency of George W. Bush who had to deal with both the aftermath of the 2000 NASDAQ crash and the 9/11 attacks.

"During the 8 years of the George W. Bush Presidency the lowest annual unemployment rate was 4.61% in 2007, the highest annual unemployment rate was 5.76% in 2008. During Bush’s 8 years as President the average unemployment rate was 5.27%, roughly 1/2 half of what the unemployment rate is today."

Why I'm No Longer A Democrat

1) Foreign Policy -- During the Cold War, liberal Democrats (yes, there used to be conservatives in the Democratic Party) continually sought to downplay the harshness of communism and attempted to accommodate rather than confront the Soviet Union.

Today, Democrats again seek to accommodate rather than confront terrorism.  The Ft. Hood shooting was clearly a case of Islamic jihad and yet the President and his supporters strongly resist the obvious.  

Yesterday, a friend on Facebook posted something observing the 20th Anniversary of the fall of the Berlin Wall. Someone commented that the fall of the wall was probably a good thing, but that the "trillionaire" politicians needed to create a "War on Terror" to keep the military industrial complex making money.  Thankfully, my friend could write from real experience in living in Germany in the 1970s that there was terrorism and that the communist countries made their citizens terrified.  

Oh, for the clarity on the war on terror that George W. Bush had!  

2) Economic Policy -- Democrats are insistent that the free market is flawed and must have so many governmental intrusions and regulations for it to function fairly.  The health insurance debate, the "cash for clunkers" program, the $8,000 House Purchase Tax Credit are just three recent examples.

3) Social Policy -- Democrats believe that government should be intruding on most aspects of your life, except when it comes to traditional values like life ("abortion rights") and marriage ("gay marriage").  In those areas, they are eager to let everyone do whatever they want to!

The New American Car Company?

A few weeks ago I opined that no entrepreneur would start up a new car company today in the face of so much government regulation.  Well, the cover story of the latest Forbes disagrees with that assessment.  They write:

"The implosion of General Motors and Chrysler has sparked a flurry of innovators like [Henrik] Fisker. They are reminiscent of the entrepreneurs in the car industry's early days, when Henry Ford, Ransom E. Olds, Henry Studebaker and many now forgotten dreamers competed for technological leadership with steam-, electricity- and gasoline-powered cars. By the early 1910s the internal combustion engine won out. Amazingly, the means of propulsion--indeed the car business itself--has changed little since then."

I read the article to learn if I had been wrong.  Yes, it is true that Henrik Fisker has a solid plan to deliver new vehicles to American consumers in the next three years.  But, he's looking at selling $88,000 hybrid sports cars.  Later, he expects to have a $50,000 plug-in available.  

I submit that the development of these specialty concept cars will not make a significant impact on the marketplace.  In my mind, the whole problem with the auto industry is that the vehicles are simply too expensive.  Fisker and the other entrepreneurs mentioned will do nothing to achieve broad appeal.  The startup costs for his company are very high.  In addition, he is seeking financial aid from U.S. government program.  So, is he really an entrepreneur?  

Chrysler Axes Its Dealers

Earlier, I discussed the Chrysler bankruptcy.  Yesterday, one of the results of the bankruptcy was announced.  Chrysler would sever its relationships with one quarter of its franchises.  Nearly 1000 dealerships will be shut down.  This is something that would be very difficult to do if not for the filing of bankruptcy.  Chrysler believes that they have too many dealerships.  But from what I understand, the dealerships are not a cost to Chrysler.  What they really want to do -- long term --- is reduce the competition that now exists when there are so many dealerships for the same make of automobile.  Which means higher prices.  The reality is that the margin for most dealers is very slim on the sale of new cars.  They really depend on repairs and used cars to make money.  But without the Dealership imprimatur, most of these businesses will probably go out of business.

We have been Dodge customers for many years.  Although we have only purchased one vehicle from a new car dealer, we were continually shopping and looking at cars for much of the last 15 years.  We spent a lot of time stopping in at Chrysler/Dodge dealerships in the Washington area.  A lot of those dealers will no longer be associated with Dodge.  

As I stated in my earlier posting, I have a real hard time envisioning us buying a new Dodge in the future.  And if we, loyal customers, cannot be counted on, what future does this company really have?  The cutting of dealerships may or may not help the bottom line, but when I have to go farther to get my car serviced and have to compete with more customers to get parts or to have my car serviced, I am sure that I will not be a happy camper.

Sadly, I predict that, like Circuit City last year, these bankruptcy measures have only begun the process of the eventual liquidation of the Chrysler company.  It would take an incredibly creative and talented individual along the likes of a Steve Jobs or a Lee Iacocca to remake this into a successful company.   And with the government and unions so heavily involved in all automobile manufacturing, but especially GM and Chrysler these days, I just cannot see anybody ever having enough freedom to run this car company successfully.

Chrysler's Bankruptcy

Last week, Chrysler began the process of declaring bankruptcy.  Or, should I say that President Obama declared bankruptcy for Chrysler.  How weird was that, I thought.  The President of the U.S. is declaring that a private company is going bankrupt.  Shouldn't the president be making statements about a company after the declaration is made in a court?  But such is where we find America today.  The May 7, 2009 edition of the Detroit News has an article which reinforces some of my points.

My then-fiance set us on the road to being a Chrysler family in April of 1985.  Her grandparents offered to buy her a  car for her college graduation.  After trying out various cars at the Hertz sales offices in Burlingame, she decided to buy the 1984 Red Plymouth Horizon.  A car that still is with us today.  The car served us well -- taking us cross-country numerous times.  It sits at 240,000 miles.  (Yes it mostly just sits these days.)  The Chrysler rebound from their 1979 bailout was remarkable.  Lee Iaccoca had transformed the image of the company.  In 1991, I had learned that a Carroll Shelby version of the Omni/Horizon had been produced in the mid-80's and that those cars were becoming collectors items.  So, I sought one out and bought a pristine one for about $3200.  Later, I found another one in more tattered condition for $300.  I soon felt buyers remorse for spending so much on the first Omni GLH Turbo, so I put an ad in the paper and sold it for the same price as I had paid for it a few months earlier.  I decided that it would be too hard to keep the pretty GLH in such good condition when we did not have a garage.  It felt like it would be a waste of money. So, we kept the $300 car and eventually got it running well.  

Since then, we have purchased two more Chrysler vehicles.  The sedan has been all right, but probably has had too many repairs to be considered a good value.  The van has been just about perfect for 6 plus years.  Since I do a lot of the maintenance and repairs of the vehicles, it does make sense to own similar makes.  

But this bankruptcy and especially the government involvement in the company makes it highly unlikely that this loyal Chrysler consumer will buy his next car from that company.  Admittedly, I have been a poor consumer by limiting my choices to one domestic automobile manufacturer.  It was bad enough when my 1983-1984 Democratic presidential primary experience had convinced me that I always needed to buy American.  Now I had limited myself to just one of those three companies.  Not very smart.

Hopefully, we are still a few years away from needing to buy a new car. But when we are, you can bet that all makes will contend for my dollar next time.  

GM

Okay, so I have become a day trader.  Yesterday, I bought a stock at 10:20 AM and then sold it at 12:20 PM.  GM.  

Here's how it all led up to becoming a day trader.  Two weeks ago I saw that GM had put out an earnings report that was very negative.  The stock went down that day to about $4.40 a share. I figured the bad report was already figured into the price.  So, I thought, I'll just put in a lowball bid for $4.00 a share and maybe it will dip down to that level for a brief time some day.  Well, the following Monday I turn on the TV and see that at 9:33AM GM stock is trading at $3.35.  WHAT!  I check my account online and sure enough, right at 9:30AM, I had bought GM shares at $4.00.  And within seconds that price kept tumbling.  Apparently, earlier in the morning a respected DeutscheBank analyst had put a price target on GM of $0.00.  That's right -- Nothing!  Bankruptcy was expected by Deutsche Bank.  I had listened and believed when GM's chairman and others had said that bankruptcy was not an option because it would kill consumer confidence in the company and it would not be able to sell any cars.  But even if GM believed that, it doesn't mean it's necessarily true that it won't go bankrupt.  So, the stock could become worthless.  I hadn't considered that possibility.  A company that has been around for about a century could just go under.  

Well, I learned that if I'm gong to be investing these days, I need to pay close attention to the business news.  This week, the carmakers came to Capitol Hill asking for loans to keep their businesses running during these tough times.  Unfortunately, the Congress was unsympathetic and even angry at these carmakers.  So, the prospect of a bailout loan looked increasingly less likely and my GM stock price had dropped all the way down to $2.60.  

Yesterday was amazing, though, and a perfect example of how the news can manipulate the market so rapidly.  I'm on the computer at 10:00 AM and see that GM had just traded at $1.71!  WHAT!  Oh no.  What do I do?  I put in a BUY order for 250 more shares at Market Price, which turned out to be $1.99.  My theory was that maybe I could make a little profit on the $1.99 shares to offset the loss on the $4.00 shares.  Or I could lose it all if the bankruptcy fears are realized.  Then at Noon, the UAW has a press conference and while the spokesman is talking, a bipartisan deal is supposedly reached.  The GM stock starts rising.  2.30, 2.35.  I put in a SELL order.  Sell 250 at 2.40  Lock in a 20% gain on the 10:20 AM stock buy.  And it executes at $2.40.  Then the price keeps rising.  But I don't mind.  I'm just glad to be ahead of the game a little.  But I still own 250 shares at $4.00.  So, I calculate how much I would need to get to break even from all the buys I made this month on GM.  After all the commissions I need $3.92 a share.  So, I put in a Limit order to sell at 3.92 any time over the next 90 days.  I then go have lunch and come back to the computer at 1:01 PM.  But I can't get internet access.  After about an hour of finagling with it, I finally get back online.  I had wanted to lower my price goal for GM from 3.92 down to 3.40 and just get out, but I couldn't get online!  Arggh!  And I see on TV that the latest price fort GM was 2.65.  I missed it!

But once I was finally back online, I saw that GM shares for the day had traded in the range of 1.71 - 4.00.  That's right!  More than my 3.92 goal.  So, I try to get into my broker's account and after much difficulty, I get in there and see that YES, the trade was executed for 3.92!  The price was at the 3.92 -4.00 level for only about a minute or so. Then it started sinking.  But, I'm FREE of the GM stock.  Total profit on $1,500 of purchases -- 61 cents.  Yes, I could have regrets that I did not buy $5000 of GM at 2.00 and then sell them at 4.00 three hours later and make a sweet $5000 profit.  But, the very real possibility of bankruptcy is still there, so I'm just glad to be done with all this.

What happened was that two Democrat Senators and two Republican Senators agreed on a plan to shift the $25 Billion already allocated to help carmakers retool and refit their factories for better fuel efficient vehicle manufacture.  Their point being that if these companies don't survive, this $25 Billion for fuel efficient vehicles would never get used anyway.  Made sense and the President was onboard with it.  That's what caused the stock price to surge.  Well, the new leaders in the Democratic party look at blue collar Democrats with askance and they were not about to let the Rust Belt do anything that would offend the Green Belt -- aka the environmentalists in the party.  That very day, Michigan Dem John Dingell had been supplanted as head of Energy and Commerce Chair by California's Henry Waxman.  So, it leaked out that Senate Majority Leader Harry Reid and Speaker Nancy Pelosi would not allow this bipartisan bill to see the light of day.  And the stock sank.  And then so did the whole stock market -- Dow down 444.  Thanks Democrats.  

Good luck to GM and the other automakers.  I'm just glad that my own personal investment won't be riding on the whims of politicians. 

  

a separate place

I have a lot of stuff out on the internet in websites and blogs.  But I always try to keep my political views out of my other endeavors.  So, I thought I'd create this space here to blab on about my views.  

It's a little late right now, so I won't write much.  But what's up with Henry Paulson announcing that he IS NOT going to be buying Troubled Assets after all.  You know the TA in the TARP program.  Geez!  Does anyone know what they are doing here in D.C.?  Did congress really give him that much power to change his strategy like that?  I'm not saying he's doing the wrong thing, but it just seems like it's a little odd to be told one thing and have something else altogether being done a month later, doesn't it?