Email of the Week

Here tiz:

A few years back I stopped at a coin shop in a nearby town.  The owner was an elderly gentleman in his late 70’s.  He was a friendly and knowledgeable  man and I often found myself stopping by to visit with him even if I wasn’t shopping for coins.  Chester was a good story teller and had been around long enough to know plenty of them.

One Saturday I stopped in to visit him and while away some time.  He began to tell me about a man who had stopped in earlier in the week.  This guy was a mayor in a town some distance away and had come to Chester’s shop to sell some coins.  He and Chester sat down at a table and viewed each coin individually before agreeing on a price.  The price was then written down and at the end, all were tallied for a total.

I should state here that Chester was extremely good at his profession.  He knew the value of almost all American coins off the top of his head.  And even though he didn’t always have the highest bid, he usually got to buy the coin because he always paid in cash.  This particular trade was no different with Chester offering at the low end of the market value.  The final tally was made and Chester offered the mayor $2,200 for the coins which he readily accepted.

After counting out the cash to the mayor, Chester decided to be a little nosey, as was his habit.  He asked the mayor how he had come by the coins.  The mayor replied that an old man in his town had passed away recently and he, the mayor, being a coin collector himself, offered to help the widow determine what her husband’s collection was worth.

So he went to her home and they looked over the coins which the mayor purchased from her.  Chester asked him what he had paid for them and he replied, “Fifteen hundred dollars.”

At that point in the story, Chester gave kind of a sideways glance and said, “Now I love the Lord and all that, but them politicians ‘ll f*** ya!”

Chester passed away about a year after that.  He was a good friend and I miss him.  But every time I think of him, I can’t help but laugh as I think about his opinion of politicians.

000

Feeding The Monster

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This week I found myself having lunch with an old friend, and we started talking about the mess in the automobile industry.  We spoke of unions, buy-outs, bail-outs, government charity cases and whatever else they are calling it this week. Used to be at lunchtime the banter was light and cheerful, but here lately, that has been replaced by ugly, frustrating, and hopeless.

I must preface this with “I am an ex-union hand” I belonged to a union for over thirty years before I retired.  And I was an active member, I rocked the boat, I made waves, I was considered a radical by most standards, and it is a badge that I proudly carry to this day.

So this piece is not devoted to the dismantling of the UAW as the current body of Republicans seems bent on doing this week.  It is not about that at all.

I have no axe to grind with union people, the UAW or any other union entity but I believe we should not bail them out.  I believe they should tank and I feel basically the same way about the airlines, who are most surely going to be the next special interest group to approach the government for assistance.

The big three as we refer to the auto companies in this country, who employ about 250,000 people have been struggling for years (decades actually), and they have lost market share to foreign competition.  Now because out outright stupidity and lousy management, they find themselves in the position of paying for the band, but they cannot scrape up the cash.

And on top of that, no one wants to dance with them anymore.

The recession has brought the American auto industry to the precipice; GM for example claims to be hemorrhaging to the tune of one billion dollars per month.  Cash reserves are dwindling, and credit has dried up, most of them cannot pay their bills.  It is for lack of a better word, getting kind of ugly.

So who’s fault is this?

GM while losing market share and going steadily and surely down the drain, kept on board the same management team for over ten years, doesn’t sound like they were trying to alleviate any of their problems to me.  Ford after a bit, decidedly changed management styles and were trying to do something about it, all the while building the Expedition that is so incredibly large it doesn’t fit a normal parking space and can be seen from space.

Not very smart.

Now they need $25 billion just to make it to the end of the year, in normal times this would be unheard of, but these are far from “normal times.”  An estimated one in ten American jobs are tied to the auto industry, if they go down, it could be as much as 1.5 Americans out of a job.  Which the economy cannot stand right now, and this is the dilemma.  Do we let these dinosaurs of commerce tank or save the jobs.  Do we give them the money to keep building 85 different models of cars that in a recession no one is willing to buy?

Might consider this:

  • It has been reported that a GM Worker makes $75 a hour (when all things are factored in, health care, benefits, etc, etc) and a Toyota worker in the same American plant, only $47.
  • My truck recently had to have a new fuel pump, $586 for the part, another $600 in labor to install.
  • When gasoline was selling for $4 a gallon, these are the very same people that told the consumer that their trade in was only worth 1/3 of market value, and in some cases would not even take the trade …. Period.
  • Down payments of $2500 to purchase a new car went out the window, and the consumer was told to bring close to $7,000 or we don’t want to talk to you.
  • lease options were removed and done away with.

Now everyone is crying the blues and want a hand out, and this is a hand out, I doubt very seriously with this pitiful track record, it can be considered a hand up.

These are the same people who sat back for years, and watched GM and the others spend millions building plants outside the country, taking the wages, jobs, and the tax base with them.  Where were the politicians then?  What did the unions do for the workers there, very little, if anything.

So here we are, wandering around in all too familiar territory again.  Caught between a rock and a hard place.  If we allow these inefficient bloated turkey’s to tank, then we are going to have possibly 1.5 million people out of work, the price of addressing such human misery with unemployment benefits, medicaid and other services would make a $25 billion loan seem as if it was truly a bargain.

On the other hand, if we do bail them out, it is more than likely going to set up a dependency factor something akin to a crack addict.  We just keep feeding them and feeding them until they eventually die I guess.

Almost like turning the corner on the drive home from work, and at the end of the street, you view your house and it is engulfed in flames.  Do you let it burn to the ground and start a new or do you try and put it out and salvage what you can for another day.

Hard choices.

000

Related: Why buy GM?