The Commerce Department just announced our economy shrunk at a much faster rate than expected in the first quarter. The annualized GDP rate was down 6.1%, which The Wall Street Journal Online reports was a higher rate than the 4.6% economists they surveyed had expected.
Also, this is the first time in 34 years that GDP has been down three quarters in a row. Consumer spending was actually up, but that could not make up for cuts in business spending. Federal government spending, in spite of all the hype in the media, was actually DOWN 4% for the quarter.
This indicates the economy is not recovering and we face significantly more layoffs in the near future.
Even a relatively small change of our massive consumption of foreign goods would help our economy at no cost to us. If every American shifted just one single $30 purchase a year to an American-made product, it would directly create 115,000 real jobs right here in the USA.
We can do something. We can make a real difference.
Spies have broken into and stolen copies of key files regarding the $300 Billion Joint Strike Fighter, the F-35 Lightning II, according to this morning’s Wall Street Journal.
Experts indicate the attacks appear to have originated in China over the Internet.
According to the government, there were over 18,000 known cyber security breaches in 2008 alone at government computers and networks. As these Internet spies track not just defense targets, but also our utility, transportation, private companies, and other computer network systems.
Mr. Brenner, the US Counterintelligence Chief also spoke of his concern to our air traffic control computer systems are open to cyber attack. “Our networks are being mapped” he said warning of a situation where “our fighter pilots cannot trust their radar”.
What are these spies after? Clearly if we had some sort of military issue with China, etc., the vast majority of our computer networks would be rendered inactive or purposely showing the wrong data. This could ground, or worse our entire commercial fleet, shutdown our electricity, introduce mega-viruses to millions of computers, etc.
These thousands of intrusions into our computer networks are not an accident. The punishment for doing this as a criminal act in China is death, therefore clearly it is an activity approved by their government.
Who is funding all of this? We are indirectly through purchases of products from the countries in question at Wal-Mart, etc.
According to a recently published AP article (http://www.msnbc.msn.com/id/30169267//) , potentially a 100,000 American homes or more have tainted drywall imported from China. Drywall is the plasterboard used to make walls within homes and apartments.
The effects have been most quickly noticed in moist areas, namely the southeast, including Florida and Louisiana, but will eventually appear all over the country. The Florida Health Department has found “volatile sulfur compounds” in Chinese drywall, while a professor in Louisiana has found toxic chemicals including “…including hydrogen sulfide, sulfuric acid, sulfur dioxide and carbon disulfide.”
This drywall started coming into the USA in 2004, but really started coming in bulk in 2006. Anyone with a home built since that timeframe should check with the builder about the source of their home’s drywall.
Unfortunately for the homeowners, many of the builders involved have already gone bankrupt and with the difficulty suing Chinese overseas corporations they do not have many positive choices. Tearing out the tainted drywall is quite expensive, while living in these homes could pose a health risk.
This is the latest in a long line of tainted products from China. The 83,000,000 toys recalled in 2007 comes to mind.
When will our government actually move to protect us by testing products at the border?
Don’t get me wrong, I am in favor of folks being paid fairly for an honest day’s work, but as a former corporate ladder climber, I can say from firsthand observation that executive pay has gone WAY, WAY beyond their worth.
The list below is shameful in that several have “led” their companies into sharp decline, one company took tens of billions in bailout money from the government, and another depends on additive products. All saw sharp stock declines, meaning massive shareholder wealth destroyed, yet these men are all compensated about a thousand of times the national average or more. None of these men founded the companies they are presently taking tens of millions of dollars from.
Most companies will argue that a big chunk of this compensation is based on stock options and grants, and as their stock is down, the CEO is “hurting” like the rest of us. That is not only hard to swallow, that argument is financially invalid, because each company had to expense that stock compensation like it would any cash compensation. Meaning Motorola’s loss was this amount bigger during last year by standard accounting standards. The compensation data is from the Wall Street Journal.
Executive excess is a big reason why the USA is having so many issues, which is why I put the investor relations contact information for each, if I could locate it. Even if you don’t own the stock directly, anyone with a stock mutual fund or pension fund probably owns some, so it is worth a call. They get such a small amount of feedback from shareholders that they feel people do not care. That gives them a license to pay themselves these ridiculous packages. Better yet, contacting mutual funds or pension funds you are involved with to push them to vote against ridiculous executive pay actually has a real effect as so few folks care enough to give them feedback. When the number of people contacting them goes from zero to dozens, they assume thousands feel a certain way.
First Annual Hall of Shame — Top Five Paid CEO’s in 2008:
Number One: Sanjay Jha, co-CEO of Motorola at total direct compensation of $104,000,000 in 2007.
Motorola is in an advanced state of decline with no backup for their fading “Razor” phones. The stock was down about 75% in 2007 (from $16 to about $4), yet Mr. Jha won the lottery.
PLUS, I know for a fact this amount does not include Mr. Jha’s private jet use. Since he could not be bothered to move to Motorola’s Chicago area headquarters, the company jets him back and forth to La Jolla, California by private jet EVERY week.
I would almost say a Board of Directors this stupid deserves their fate, except for the damage they are doing to their employees, shareholders, and our country. Their investor relations number is 1-847-576-6899.
Number Two: Ray Irani, CEO of Occidental Petroleum at $49,900,000 in 2008.
Mr. Irani shows his utter control over the Occidental Petroleum Board of Directors in that he alone of the top five received ALL his millions in cash instead of a big portion company stock. What did he do that was worth one million dollars a week in cash at the same time the USA was losing four millions jobs?
Occidental Petroleum’s stock was down from $77 to $60 in 2008. Their investor relations number is 212-603-9231.
Number Three: Robert Iger, CEO of Walt Disney at $49,700,000 in 2008.
Disney is coming off another challenging year both at their parks (used heavy discounting to boost attendance) and the once great film studios forced to outsource to the likes of Pixar, rather than produce their own hit movies. However, that did not stop Mr. Iger from taking nearly a million dollars a week compensation – I wonder what Walt Disney would think of his corporate heirs?
Plus, I challenge you to find ANY Disney toy or product that is actually made in the USA.
Disney stock has gone from $32 to under $23 in 2008. Their investor relations number is 818-553-7200. Press the * key to get past the recording.
Number Four: Citigroups’s Vikram Pandit at $38,200,000 in 2008.
Citigroup, the world’s largest bank, has become the USA’s poster boy for weak management leading to our financial crisis. Forcing the federal government to bail them out to the tune of tens of billions of dollars. That did not stop Mr. Pandit from earning over $38 million last year.
Plus, when he was recruited, Citibank bought his venture capital firm, which it later had to close due to losses of hundreds of millions of dollars. In spite of every fiasco, Mr. Pandit remains at the helm.
Citibank’s stock went from a whopping $29 to under $7 in 2008. I can’t find an investor relations number on their website, but the e-mail address is firstname.lastname@example.org.
Number Five: Philip Morris International CEO Louis Camilleri at $36,400,000 in 2008.
Another good reason to quit smoking – this cigarette maker’s CEO gets $100,000 a day, all seven days of the week. I wonder what he did last Tuesday, etc. to earn his $100,000? The reality is it is about politics and his control over the board of directors.
The stock has gone from about $50 (since it split off from Altria) to just over $43 in 2008 (presently down to near $35).
The sad fact is instead of the leaders we need, so many companies are led by those that only want to enrich themselves with no thought of tomorrow.
The latest spin in the media is that bankrupting GM and Chrysler is a good thing, apparently because it would allow them to “get out of” debts to creditors.
Who are these creditors? Yes, banks and pension funds that either loaned GM money or were unfortunate enough to buy their bonds, BUT by far the largest commercial group of creditors to any industrial company is their suppliers.
Big and small alike, most of the hundreds of suppliers to the automobile industry are already on very thin ice. They are not only just in Detroit, but actually in nearly every state of the country. Some are huge, like Dana, but many others are a few hundred people or less.
Suppliers are owed money not from loans or investing in GM, but because they sold GM something. The supplier long since paid its own employees and their own suppliers for that product sent, but now they face a huge loss if GM or Chrysler goes bankrupt.
This shockwave through our industry could wipe out hundreds of suppliers, causing them to lay-off employees, close facilities, and further default on debt to their local banks and suppliers. This would rick-a-shay through the economy damaging companies that have little to do with the automobile industry, further sending our economy towards depression.
The media and Washington is not discussing (or has not considered) the damage beyond GM employees, bondholders, and shareholders, but not to their hundreds of suppliers, the supplier’s employees, the supplier’s suppliers, etc.
One Solution: Perhaps Washington could consider something beyond the obvious, like transferring part of the automobile industry’s retiree obligation to the government entity that insures pensions without forcing the companies through bankruptcy. Though that would probably lower those pension and medical benefits for those retirees, at least they would be protected and be sure of future benefits. Transferring those costs would save the automobile industry several thousand dollars of costs per vehicle, making them much more likely to return to stability and able to compete with foreign automobile makers.