Debt Stupid

There isn’t much for me to report on, I am still working diligently on my debt. But since I promised to keep posting more often I decided to post this response to the President of General Motors from Gregory Knox of Knox Machinery, Inc., concerning the auto industry bailout.

The man really understands what’s ailing the USA, as well. He seems to be listening to the right economists.

Abbreviated letter from Troy Clarke, President of General Motors:

Dear Employee,

Next week, Congress and the current Administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation’s history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis. As an employee, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard.

Thank you for your urgent action and ongoing support.

Troy Clarke
General Motors North America

The famous response from Gregory Knox of Knox Machinery, Inc.

From Gregory Knox,

In response to your request to call legislators and ask for a bailout for the United States automakers please consider the following, and please also pass this onto Troy Clark, the president of General Motors North America for me.

You are both infected with the same entitlement mentality that has bred like cancerous germs in UAW halls for the last countless decades, and
whose plague is now sweeping the nation, awaiting our new “messiah” to wave his magical wand and make all our problems go away, while at the same time allowing our once great nation to keep “living the dream”.

The dream is over!

The dream that we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded “laborers” without paying the price for these atrocities, and that still the masses will line up to buy our products

Don’t tell me I’m wrong. Don’t accuse me of not knowing of what I speak. I have called on Ford, GM, Chrysler, TRW, Delphi, Kelsey Hayes, American Axle and countless other automotive OEM’s and Tier ones for 3 decades now throughout the Midwest and what I’ve seen over the years in these union shops can only be described as disgusting.

Mr Clark, the president of General Motors, states:

“There is widespread sentiment in this country, our government and especially in the media that the current crisis is completely the result of bad management. It is not.”

You’re right, it’s not JUST management, ¦how about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass ¦so they can come in on the weekend and make double and triple time for a job they easily could have done within their normal 40 hour week.

How about the line workers who threaten newbies with all kinds of scare tactics for putting out too many parts on a shift and for being too productive (mustn’t expose the lazy bums who have been getting overpaid for decades for their horrific underproduction, must we?!?) Do you really not know about this stuff?!?

How about this great sentiment abridged from Mr. Clarke’s sad plea:

“over the last few years we have closed the quality and efficiency gaps with our competitors.”

What the hell has Detroit been doing for the last 40 years?!?

Did we really JUST wake up to the gaps in quality and efficiency between us and them?

The K car vs. the Accord?

The Pinto vs. the Civic?!?

Do I need to go on?

We are living through the inevitable outcome of the actions of the United States auto industry for decades.

Time to pay for your sins, Detroit.

I attended an economic summit last week where a brilliant economist, Alan Beaulieu surprised the crowd when he said he would not have given the banks a penny of “bailout money”. Yes, he said, this would cause short term problems, but despite what people like George Bush and Troy Clark would have us believe, the sun would in fact rise the next day and something else would happen where there had been greedy and sloppy banks, new efficient ones would pop up. That is how a free market system works. It does work if we would let it work.

But for some reason we are now deciding that the rest of the world is right and that capitalism doesn’t work that we need the government to step in and “save us”. Save us, hell! We’re nationalizing and unfortunately too many of this once fine nations citizens don’t even have a clue that this is what’s really happening but they sure can tell you the stats on their favorite sports teams. Yeah, THAT’S important!

Does it occur to ANYONE that the “competition” has been producing vehicles, EXTREMELY PROFITABLY, for decades now in this country?…

How can that be???

Let’s see:

Fuel efficient…

Listening to customers…

Investing in the proper tooling and automation for the long haul…

Not being too complacent or arrogant to listen to Dr W Edwards Deming 4 decades ago…

Ever increased productivity through quality, lean and six sigma plans…

Treating vendors like strategic partners, rather than like “the enemy”…

Efficient front and back offices….

Non union environment!

Again, I could go on and on, but I really wouldn’t be telling anyone anything they really don’t already know in their hearts.

I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into. My children do this on a weekly, if not daily basis, as I did at their age. I do for them what my parents did for me (one of their greatest gifts, by the way), I make them stand on their own two feet and accept the consequences of their actions and work them through.

Radical concept, huh?

Am I there for them in the wings? Of course, but only until such time as they need to be fully on their own as adults.

I don’t want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and government.

Detroit and the United States need to pay for their sins.

Bad news people, it’s coming whether we like it or not.

The newly elected Messiah really doesn’t have a magic wand big enough to “make it all go away” I laughed as I heard Obama “reeling it back in” almost immediately after the vote count was tallied. We might not do it in a year or in four. Where was that kind of talk when he was RUNNING for the office?

Stop trying to put off the inevitable.

That house in Florida really isn’t worth $750,000.

People who jump across a border really don’t deserve free health care benefits.

That job driving that forklift for the big 3 really isn’t worth $85,000 a year.

We really shouldn’t allow Wal-Mart to stock their shelves with products acquired from a country that unfairly manipulates their currency and has the most atrocious human rights infractions on the face of the globe.

That couple whose combined income is less than $50,000 really shouldn’t be living in that $485,000 home!

Let the market correct itself people. It will. Yes it will be painful, but it’s gonna be painful either way, and the bright side of my proposal is that on the other side of it is a nation that appreciates what is has and doesn’t live beyond its means. Gets back to basics, and redevelops the work ethic that made it the greatest nation in the history of the world and probably turns back to God.

Sorry don’t cut my head off, I’m just the messenger sharing with you the “bad news”.

Gregory J Knox
President
Knox Machinery, Inc.
Franklin, Ohio 45005

You know what? No pain, no gain! This is the direction this nation needs to go in. We need to start saving and borrowing less. If this attitude is going to cause short term discomfort, I say we hang in there and in the long run will be much better for it.

Hard-Hit Families Finally Start Saving, Aggravating Nation’s Economic Woes
By KELLY EVANS for the Wall Street Journal

BOISE, Idaho — Rick and Noreen Capp recently reduced their credit-card debt, opened a savings account and stopped taking their two children to restaurants. Jessica and Alan Muir have started buying children’s clothes at steep markdowns, splitting bulk-food purchases with other families and gathering their firewood instead of buying it for $200 a cord.

As layoffs and store closures grip Boise, these two local families hope their newfound frugality will see them through the economic downturn. But this same thriftiness, embraced by families across the U.S., is also a major reason the downturn may not soon end. Americans, fresh off a decadeslong buying spree, are finally saving more and spending less — just as the economy needs their dollars the most.

Usually, frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation’s standard of living. But in a recession, increased saving — or its flip side, decreased spending — can exacerbate the economy’s woes. It’s what economists call the “paradox of thrift.”

I want to wish everyone who reads my blog a Happy New Year!

I think 2009 is going to be a much better year for me—economically, that is. I have lined up several “ducks in a row” for the new year.

I hope you have as well, and will be making things better for yourself in the new year!

See you next year!

One of the websites I like to visit often is the Daily Reckoning. These guys are the author of the book Empire Of Debt. A book I recommended on my blog post titled Paper Money.

This I think sums up how bad government bailouts are for the economy:

It is amazing to us that so many people have so much faith in so much humbug.

We’re talking about the bailout…the fix…the save…the plan to revive the world economy by giving it more of what it least needs — more debt. The idea is to make the pain of the correction go away by encouraging people to act as though they had nothing to correct. They’ve borrowed too much. And they’ve spent too much. But the feds aim to make them borrow more — by bringing the cost of borrowing down to an all-time low — and make them spend more…by causing prices to rise. (When money loses its value…they’ll be glad to get rid of it.)

This is akin to giving a drug overdose victim more of the drug that almost killed him in an attempt to save him!

Joe Nocera has a post on his blog by an anonymous banker who tells the truth about the incoming credit card business crash.

The Worst Is Yet To Come: Anonymous Banker Weighs In On The Coming Credit Card Debacle

The line that I like best about that article is when the anonymous banker wrote:

And credit card rates, which are quite often above 22 percent, is piracy.

Piracy indeed, and now the government has sanctioned this piracy for another 18-months. See my previous post.

Just imagine an interest rate that high (or at 31%) and then the bank turns around and uses the double-billing method to screw you even more.

Sorry consumer, no justice for you for another 18-months — complimets of your humble servants, the Congress. LOL! Sorry, I just couldn’t help myself.

New Bankruptcy Law

Well, greed can also be detrimental to the person or institution that practices it. As the banks have found out. In their zeal to force consumers to keep paying their credit cards while in bankruptcy they forgot to include mortgages.

So guess what people who have gone into bankcruptcy did?

You guessed it (come on that was easy). According to a recent post on Creditbloggers.com: Bankruptcy Law Forces Consumers Into Foreclosure

After a $25-million lobbying campaign in 2005 by Bank of America, Citigroup, JP Morgan & Chase and Washington Mutual, Congress passed a law forcing people to continue paying their credit card debt even after they file for bankruptcy.  The banks got what they had wanted…and more than they had bargained for.

What wasn’t protected under the new bankruptcy code were mortgage payments. So now, instead of defaulting on their credit cards to keep their house, hundreds of thousands of Americans may be forced into home foreclosure, according to a story by Bloomberg News.

But! “regulators would give card issuers until mid-2010 to comply with the rules.”

Just like the government to finally move to take care of an egregious problem but not put protections in place until 18-months later!

New Limits Imposed on Credit Card Companies

This is the reason why the voters always get shafted by those we vote for. It doesn’t matter what party they are from. These rules are coming but not after the big banks, who have Congress, The House, and the President in their pockets to allow them almost two more years of indiscriminate theft.

Makes you wonder doesn’t it? The economy has already collapsed, people are loosing their jobs and are being harassed by collection agencies, etc., but yet these protections, which were needed yesterday!, are going to be put in place in 18-months from now. You know what? Lobbying really works.

Back in May I posted about the new changes being proposed by the Office of Thrift Supervision and Congress to curb credit card abuses by credit card issuers: Do I Dare Hope?

Today I read this news:

Fed moves on credit card crackdown
Bank regulators approve proposal to eliminate industry practices like ‘double-cycle billing’ as banks push back. New rules could be in place by end of year.

If approved, the Fed’s rules will mean an end to double-cycle billing, which averages out the balance from two previous bills. That means that consumers who carry a balance can get hit with retroactive interest on their previous month’s bill – even if they’ve already paid that off.

Consumers would also be given a reasonable amount of time to make payments, and payments would be applied to higher-rate balances first to reduce interest penalties and fees.

Credit card statements would clearly list the time of day that a payment is due, and any changes to accounts would be in bold or listed separately.

And, finally, no more universal defaults, a policy which allows credit card issuers to increase the interest rate on one card if a customer misses a payment on another card.

— Click here to read the full story.

The biggest changes discourage piggybacking and penalizing infrequent delinquencies.

By next spring, two of three credit reporting bureaus will use a new model. Fair Isaac, the developer of FICO scores, has made the biggest change to its mathematical credit score model since it was introduced in 1989. Scores will still be on a 350- to 800-point scale. But the company estimates that 40% to 50% of borrowers’ scores could go up or down by more than 20 points because of how the new model fine-tunes the variables it uses to evaluate consumers’ credit use behavior.

For creditors, the new FICO score promises to reduce the risk of defaults, improving the predictability of defaults by 5% to 15%. Delinquencies are at their highest rate since 1992, when the economy was also in a recession. The revised scoring method “has a few more gray areas fleshed out so it gives us confidence in credit scoring models,” says Ginny Ferguson, a member of the board of the National Association of Mortgage Brokers.

Continue reading at The Kiplinger Letter…

Recently my server got hit with three nasty rootkits.

I know how it got infected, I turned off the firewall to help me setup a particular program and I forgot about it. I also opened up the ports to use with that software on the hardware router. Oops.

I know, I should be shot.

To help me clean my computers of nasty spyware and malware I always use Spybot Search & Destroy in combination with Ad-Aware. But after using these several times the nasty rootkits would continue to download stuff to my server. That’s because Spybot Search & Destroy and Ad-Aware were not finding the rootkits.

After finally understanding that something else was still creating havoc with my server, I went searching for an antispyware that could help me remove whatever it was.

I am happy to say that I found it in Super Antispyware. This software can find rootkits and eliminate those as well as spyware and malware. Click here for an updated list of what Super Antispyware can find and eliminate. Do a search for rootkits on this list and you will see the number of rootkits Super Antispyware can find and eliminate.

Rootkits are notorious for being difficult to remove from a computer once it’s infected. The best course of action, if one isn’t so stressed for time is to just reinstall Windows (or whatever the operating system that got infected).

I am satisfied that my server is clean and I kept a close eye on the services that are running on the server via the Task Manager and I don’t see the nasty rootkits there anymore. The makers of Super Antispyware claim that it can remove over a million threats, it sounds like an exaggeration, but I am satisfied with the results and I saved time not having to reinstall Windows.

Super Antispyware offers a free version, which is the one that I am using.

Just like the big banks to take TARP money and then not even use that money for what Congress had intended it for; extend credit to the markets and small businesses. Instead the big banks, like Bank Of America, have taken that money to buy other banks in trouble and they have played Congress just like they have played with their credit card holders’ livelihoods.

Too bad Congress is not going to even get a clue and not do these stupid deals in the future. But Congress will always be members of the “club of the inept.”

I am of course talking about Republic Windows and Doors in Chicago having to close its doors because Bank Of America “, our country’s second largest bank, did indeed take $25 billion dollars of ‘bailout cash’, then gave the shaft to that company and its workers by refusing to renew and extend it any operating credit to stay in business through the economic downturn.”

Well I’ll be damned! Isn’t that what the TARP money they received was for? To help the economy?

I bet Congress is feeling just like a credit card holder whose interest was raised simply because Bank Of America decided to squeeze the livelihood out of their victim… I mean customer.

Do yourself a favor, forget the big banks, find a small bank and work a relationship with that bank and get the respect you deserve. That’s exactly what I have done and I haven’t looked back.

Update (Dec 18th, 2008): OK, I was incorrect. It seems that TARP was created to purchase illiquid, difficult to value assets from banks and other financial institutions. TARP also allow the Treasury to purchase whole loans and make direct equity investments in banks themselves. The targeted assets are securities backed by mortgages, sometimes described by the government, media, and others as “troubled” or “toxic” assets. It was never intended for the banks to loan this money. Except that Paulson has been changing his stragety and changing what the function of this money is to help with.