An Auto Company Allowed To Fail

At a time when our lawmakers are trying to save our auto industry, there is no such luck in Serbia for the Yugo. The last, hapless Yugo recently rolled off the production line (See Full Story). When shipped to the United States, it had a you-get-what-you-paid for price of about $4,500. It was only sold in this country from 1985 to 1991; and, because of its propensity for breaking down, it was the brunt of several jokes:

Yugo is really short for: "Honey, "You" better "Go" find a mechanic.

A Yugo comes with a 3-speed transmission: Park, Tow, or Push.

Yugo owners are sure to go to heaven because they spent their hell on earth.

Why does a Yugo come with a rear window defroster? So you
can keep your hands warm while pushing it.

What do you call a Yugo with dual tailpipes? A wheelbarrow!

Certainly, this is just a sampling of the jokes I've heard over the years. So, if the "Big Three of Detroit" want to say that no country will allow their auto industry to fail, they should be careful with that statement. Obviously, there is one country out there, Serbia, that said no to their auto industry.

Image by axoplasm's photostream on Flickr with Creative Commons Licensing. All rights retained. (Click to View Other Works).

Oil In Free Fall

It seems like the price of oil is falling faster than a rock thrown into the abyss. A few months ago, when oil broke $100, I thought oil would fall to $60 or even $50 a barrel. I said that at a time when the oil expert, T. Boone Pickens, was predicting that oil would only fall to $80 before rising again. When oil broke $60, I wrote in this blog that oil could hit $45. Well, oil just blew through that level and is now trading at a little over $43. Recently, the brokerage firm of Merrill-Lynch predicted a level of $25 a barrel (See Full Story). If prices were to fall that low, gasoline would easily go below $1 a gallon.

With prices this low, all the chatter of pushing for alternative energy sources has pretty much been put aside. Further, the average "Joe" and his family is getting a much-needed break on their monthly expenses; especially the cab drivers and truckers of the world. Better than that, some of our biggest enemies in the world are getting hosed with these low prices. Iran, Russia, and Venezuela are the ones that are getting hurt the most.

In a way, oil coming down has been a win, win situation for everyone except the environmentalists and global warmists. Further, the economy has put any forced carbon taxation on hold. That means your energy prices will continue to fall without our government forcing higher prices due to any "carbon" restricted measures. Before all this happened, a lump of coal for Christmas was getting to be out of the price range for most Americans. Now, it appears that there might be something to be happy about during this Holiday Season.

Unemployment at 6.7%: 533k Jobs Lost In One Month

Anytime more than 1/2 million people lose their jobs in a single month, you are looking at bad times, and that's what we saw with this morning's unemployment number (See Full Story). However, the unemployment rate is now at a "relatively" low 6.7 percent as compared to other recessionary times.

Unfortunately, the press is trying to make this number worse than need be by having headlines that state: "Worst Job Losses Since 1974" or "The Highest Loss of Jobs in 34 Years". My problem with those kind of statements is that they are misleading and they paint a more dire picture than the reality.

In 1974, the population of the United States was 213 million people. Today, it is almost 50% higher at a level of over 300 million people. The loss of 1/2 million jobs in 1974 was a bigger thing then. An equivalent loss of jobs today would have to be a loss of near 800,000 jobs to have the same impact on the economy as it did in 1974. That is why most "sane" people use percentages and not actual numbers in making comparisons over such a long period of time. For that reason it is important to also note that in December of 1974, the unemployment rate was 7.2 percent and not hardly the 6.7 percent of today (Click to See 50-year Unemployment Rates per Month).

The most disconcerting number, that is buried within this morning's job's numbers, was the fact that 370,000 people in the service sector (franchises, hospitality, news, consulting, legal, real estate, healthcare, etc) lost jobs. This means that people are not spending money on what they would consider to be non-essential services. This number notably reflects the consumer's fear about our economy. It shows that people are substantially protecting the money that they have. This economy, for decades, has grown on the backs of the service sector. As a country, we have moved away from manufacturing and have moved into services as a majority and broad-based producer of jobs. Now, that mainstay of our low unemployment numbers of recent decades, the service sector, is starting to falter, so we need to worry.

The press has a responsibility to report the facts. However, bad comparisons to 1974 are a distortion and just feeds into the fear that may have caused more job losses than need be. If unchecked, each month of reporting can spiral the job losses out of control. The fog that I am trying to cut through on this issue is the sensationalism of the news that may be contributing to the psychological impact on our economy. This is a time of 24/7 news coverage. Now, more than ever, there is a responsibility to temper reporting. The headlines have to be responsible. Even, saying that "The Unemployment Rate Rises to 6.7%" or "533,000 Lose Jobs" is more reasonable than overstating the 1974 comparison. Just my opinion.

It's Worth Noting

Not much is being said about the Iraq war these days. It seems that when the deaths are way down, it's not worth noting. However, it should be. In the last five months the military deaths (combat and non-combat) have averaged at only about a single death every two days. There was a time, just last year, when some months saw an average of nearly 4 U.S. military deaths per day. In most months this year, the non-combat deaths are actually higher than those caused by hostile fire. Quite a change since the surge.

I just thought you should know.

David Gregory and "Meet the Press"

Personally, I think the people at NBC/Universal have given up completely on being any kind of a reliable or unbiased source of network news programming. For years, NBC has gone from being a "news leader" to being the "cheerleader" for the Democrats.

The latest example of their failure to provide unbiased news is the seating of David Gregory as the host of the highly popular "Meet the Press" Sunday morning news show. On that imaginary shelf at NBC, the one that contains all the news staff, Gregory is definitely on the far left side of that shelf. Over the years, the center to right side of that shelf has literally fallen down and has never been replaced. Gregory is absolutely not the middle-of-the-road guy like his predecessor, Tim Russert. (Note: Tim Russert was left of center in real life but he did his best to remain politically centered while acting in his role as the fact-finder for "Meet the Press")

During Gregory's stint as the White House correspondent, there was nothing that the Bush Administration could do that would be right in his mind. Time and time again, Gregory reflected his partisan bias by taking a counterpoint position on what the Administration was doing; rather than just ask questions or report the facts as would be expected from any unbiased news reporter. While not as wanna-go-to-bed-with-Barack as Chris Matthews and not hardly the NBC anti-Bush angry-man as in Olbermann, Gregory is still pretty school-girl-giggly over Barack and the Democrats. So, I am sure that he will be serving up as many softballs to Barack's team in his new role as lead marketeer for the new President. And, when the Republicans are on the Meet the Press, expect the hardballs to be aimed at their foreheads by Gregory.

I think, like the entire direction of NBC, "Meet the Press" will slowly (maybe even quickly) go downhill. Gregory is certainly not of the class of those that came before him. The appointment will be the second biggest mistake in less than a week for this floundering major TV network. The prior one was to have a variety show that was hosted by the latest incarnation of the "queen of mean," Rosie O'Donnell. That one day flop proved that the people at the top of NBC are completely out of touch with middle America. Gregory, in a way, is similar in temperament to Rosie and the long-term results will probably be the same. Hasta La Vista, NBC!

There's Bankruptcy and There's Bankruptcy

For political purposes, there seems to be a blurring of the definition of bankruptcy in order to make the auto makers sound as if they will completely go out of business unless they get government funding. You hear comments by some Democratic lawmakers that 3 million American jobs are at stake if the U.S. auto companies fail. That would be true if they did completely fail. However, nothing could be further from the truth in this particular situation.

First and foremost, nobody is talking about Chapter 7 bankruptcy as defined by Title 11 of the United States Code. In a Chapter 7 bankruptcy, a company ceases to be; although, in some cases, a division may be spun off and allowed to continue operations and the funds for selling that division would be used to satisfy any indebtedness of the primary company. The process by which the company is dissolved is governed by the details of this code so that the former company's debtors are fairly dealt with. All operations are ceased and a trustee is appointed to distribute all remaining assets. If the auto companies did file for Chapter 7, then certainly, 3 million jobs would be lost.

However, the form of bankruptcy protection that would be appropriate for a corporation like GM, Ford, or Chrysler who are struggling under contracts and debt is identified as Chapter 11 bankruptcy as defined by Title 11 of the United States Code. This form of bankruptcy prevents debtors from filing suit against a company in order to obtain any complete resolution of what they are owed. Further, it affords a corporation the ability to reorganize and renegotiate all contracts to levels that are more practicable for continuing operations. The whole process is overseen by a Federal court. In essence, the company continues to operate. In this case, cars and auto parts would continue to be sold and dealerships would remain in business. Most definitely, there would be no 3 million jobs being lost.

Sadly, the process of keeping the auto companies alive has been taken out of the realm of reality and practical business tactics, and has been put squarely into the B.S. of Congressional politics. Nobody wants the auto companies to completely go under. But the politicians (especially those indebted to the United Auto Workers Union) are making it sound like there are only two choices: (1) go out business or (2) get the money. Unfortunately for all Americans, this kind of lying is what we consistently get from our politicians.

Greener Than Green

Anyone who has had a fish tank knows how fast algae can build up. Seemingly overnight. There are hundreds of forms of algae. Mostly, we humans consider them all some kind of nuisance stuff that builds up anyplace where you have standing water. Definitely, some are toxic enough to kill you. However, some are actually edible. But, better yet, they just might be the future biofuel of this country.

Some forms of algae, called diatoms or micro algae, have as much as half their composition in what are called lipids or emulsified fats. Prior to the 1800's and the development of kerosene, most people in Europe and early America used oil that was indirectly derived from algae to light their oil lamps. That oil was whale oil. Whales literally pack on the blubber or fat from only eating a salt water form of micro algae known as plankton. The goal of science, today, is to eliminate the whale in getting to the oil from algae.

Interestingly, algae need tons of carbon dioxide, that evil greenhouse gas, to produce their oils. It is possible that our burning of one fuel, like coal for electricity, could be linked to the production of another fuel made from algae to fuel our cars and other vehicles. The carbon output from a coal-fired electric plant could be forced into massive vats of water or other solution where the algae could, in theory, metabolize all that CO2 and happily thrive. Then, the algae could be processed for the production of a diesel-like fuel. The overall process would be a net reduction in the overall amount of CO2 that we are outputting today.

Certainly, green (or brown) algae may be the future form of green energy that awaits us in the years to come. It, along with other forms of energy, could easily get the monkey of imported oil off our backs. To me, the trucks that transport our goods around this country aren't really good candidates for fuel-celled hydrogen or electricity for their fuel. Neither are trains, boat or planes. All those types of vehicles are going to need some type of fuel similar to diesel. Those little micro algae could be the very energy savior that keeps UPS delivering packages to half of America's front doors. That keeps those tanker crossing the oceans. That keeps the airliners transporting millions of Americans from city to city and all over the world.