GM Bankruptcy looming? Seeing the Light?

It looks like many are starting to see the light – GM: Some Bondholders Want Bankruptcy . Not so much the “light” that bankruptcy for some of the major automakers in Detroit was a given – and has been for some time – but that it is going to take bankruptcy to really get a viable business going there once again.

Interesting, now that the president and all are talking bankruptcy, people accept it and think it is “smart.” Back a few months ago, when just some of us were seeing the same light, from a distance, we were called “right-wing radicals.” 

Take a look at some of my other posts, including the interesting conversations with Scott Monty, the public communications director for Ford Motor Company. The point of those posts was not just that it needed to be done (for GM and Chrysler at least) but that they all – especially Ford –  had a great opportunity to gain the collaboration of the public if they could just lower their pride barrier and talk with people (like they did with us on TCOT). I believe the table is still set for that, but time is lapsing.

In the meantime, the more liberal “thinkers'” of our time seem satisfied just to accept the inevitable and – probably – think that they were the first to recognize it.   Such is life. But it is not the stuff real progress and change are made of.

Susan Boyle – Dreamers, Cynics and Hope

All the world is in love with Susan Boyle. She didn’t just belt out I Dreamed a Dream, she proved that dreamers still can turn cynics around and bring the world to its feet cheering.

Hurrah!

I am convinced that the real problem with the economic turmoil we are in now is not Wall Street and it is not the housing market. Its root cause is not even greed, though that has played a big part.  Greed has been around a long time and we have overcome it before.

The real culprit is cynicism. There is more cynicism than ever and precious few dreamers left to combat it.

But Scotland gave us one.

Susan turned the cynics to believers in seconds, right before our eyes. It is a beautiful thing to behold. That is why we can’t stop watching it.

Note: click this link to see the video or click twice on the image – the play arrow below will not play directly.

Remember the 1980 US Hockey team in the Olympics? Times were bad. After three assassinations, years of riots, Watergate, Vietnam ending in retreat, we were then faced with oil crises, terrorism and Iran imprisoning 52 US diplomats for 444 days while the U.S. seemed totally inept. To add to it all, the USSR invaded Afghanistan and seemed determined to push the world to the brink of war by starting a trail of conquest for territory. The cynics were all over the place.

Then along came a batch of dreamers – the US Hockey team, a bunch of gutsy college kids going up against the invincible Soviet Olympic team. The USSR team, staffed mostly by the Red army “amateurs” (pros were not allowed in the Olympics in those days),  could handily beat any professional hockey team in the world on most days. But not during the days of the 1980 Winter Olympics in Lake Placid.

How I remember sitting up in the middle of the night (I lived in Germany at the time), watching that incredible match – and watching the impossible happen. The US kids laid their hearts on the ice and knocked the USSR out of the games and won the gold medal. I’ll never, ever, forget that feeling. Spunky dreamers overcame the cynics and the unbelievers. Hope was reborn and people began to believe again.

US Hockey team beats USSR - 1980 Olympics

US Hockey team beats USSR - 1980 Olympics

That same year another dreamer and idealist came to the stage, Ronald Reagan. Again the cynics howled and scowled. But he stood up and started preaching optimism and hope. He even dared to voice his belief that communist Russia could be turned toward freedom and Germany could be reunited. In the process of leading the nation to dare to dream, our economic malaise evaporated and the American entrepreneurial spirit led the world into a technological revolution unmatched in history.

It all happened, to the jaw-dropping amazement of cynics worldwide.

As I watched the Britain’s Got Talent video again and again, I tried to remember when I had last felt like I felt watching that video clip. It took me back to 1980.

Perhaps an amazing Scottish spinster has reignited a weary world’s capacity to dream and to hope – once again.

Ford interacts with grassroots conservatives online – Could this be part of a turning point for Detroit – and for other American business?

I’ll lead with a comment I just posted on Redcounty.com – the blog by @Michael Leahy about the amazing interchange that took place yesterday on the Twitter #TCOT (top conservatives on Twitter) forum between him and @ScottMonty – an executive in communications with Ford Motor Company. (read Michael’s amazing article – plus all comments – here).

My comments:

This was a fascinating exchange, and one that gives great hope.

What if a major auto company in an industry in great peril, were to open up to the American people and humbly ask them to help figure out how to make it out of this mess?

What if, rather than asking for money, they asked Americans to contribute their hearts, spirits, minds and experience – in the tens of thousands – to this experiment?

Sound crazy? maybe not —

There is a famous story in the book Wikinomics, How Mass Collaboration Changes Everything, by Dan Tapscot and Anthony Williams. It is about a mining company that was in major trouble called GoldCorp. They were not able to find enough gold and were about to go under. In desperation they humbled themselves, threw their problems out to the public in a plea for help, and a miracle happened.

Here are some quotes from a great summary at http://www.bullnotbull.com/archive/wikinomics.htm

“…If Goldcorp employees couldn’t find the Red Lake gold, maybe someone else could. And maybe the key to finding those people was to open up the exploration process in the same way Torvalds ‘open sourced’ Linux. ”

“McEwen raced back to Toronto to present the idea to his head geologist. ‘I’d like to take all of our geology, all the data we have that goes back to 1948, and put it into a file and share it with the world,’ he said. ‘Then we’ll ask the world to tell us where we’re going to find the next six million ounces of gold…'”

“…more than one thousand virtual prospectors from fifty countries got busy crunching the data….Within weeks, submissions from around the world came flooding in to Goldcorp headquarters. As expected, geologists got involved. But entries came from surprising sources, including graduate students, consultants, mathematicians, and military officers, all seeking a piece of the action. ‘We had applied math, advanced physics, intelligent systems, computer graphics, and organic solutions to inorganic problems. ‘There were capabilities I had never seen before in the industry,’ says McEwen. ”

“‘When I saw the computer graphics I almost fell out of my chair.’ The contestants had identified 110 targets on the Red Lake property, 50 percent of which had not been previously identified by the company. Over 80 percent of the new targets yielded substantial quantities of gold. In fact, since the challenge was initiated an astounding eight million ounces of gold have been found. McEwen estimates the collaborative process shaved two to three years off their exploration time.”

“…McEwen saw things differently. He realized that … by sharing some intellectual property he could harness the power of collective genius and capability. In doing so he stumbled successfully into the future of innovation, business, and how wealth and just about everything else will be created. Welcome to the new world of wikinomics where collaboration on a mass scale is set to change every institution in society.”

Could it be those at #TCOT and Ford might be onto something here?

–end of article comments —

As one who has been on the Web since the beginning and in online community building (BBS’s, The Source, Compuserve etc.) since the early 80’s, this is an astounding moment. To imagine that a major business like an auto manufacturer might open up and ask the American people for real advice –

It has been proven again and again in recent years that the opening up of businesses to the real voice of grassroots people and the ensuing transparency and accountability that comes is revolutionary for businesses which engage. It also transforms society in that regular people feel a part of business – even bigger business.

To think that a grassroots organization – of conservatives, no less – could offer thousands of hands up instead of hands out to one of our most critical industries is nothing short of breathtaking.

It might work!!

Bail out the auto industry? Freedom to fail.

The Detroit auto industry is crying very loudly that government bailouts are needed to save the industry. The problem is that aspects of the industry are doing just fine. These are cars such as Honda, Toyota, Mercedes, Nissan, and others, made in the USA by American workers (mostly in the South) that are thriving. Read very good article on this from WSJ here.

Why?

Could it be that the ones in the South are producing cars that people prefer? Is it possible that they actually made autos that saved their owners a lot of money recently when gas prices went over $4.00 a gallon? Are their (American) workers are more efficient?

I know this does not sound patriotic. Foreign-owned companies doing better than Amerrican? I should wash my mouth out with soap!

Truth be told, I am more patriotic than almost anyone I know. I am so patriotic I believe in tough love for those I love. I am a realist.

I honestly believe – now more than ever – that American businesspeople and entrepreneurs are fully capable of reinventing American industry WITHOUT the patronizing help of government, without bailouts and without a codependent dependency on a dole from Washington.

I also believe that businesses will not do that without the freedom to fail. Freedom to fail. That is right – it is an important part in the development of any person, family or business. It is part of the development of a school kid. We have to have failures. It is how we learn. I failed Chemistry the first quarter of tenth grade in High School. I brought the grade home to my father, a very influential engineer and scientist. His response – he bought me a slide rule and he taught me how to use it. He sat down and explained long formulas to me. Then he sent me back to work my *** off and succeed. I did. That failure became an important part of my development.

Detroit may need some failure experiences. They, and all other American businesses, do not need to be sheltered from the realities of life. If their cars or their efficiency are not up to par – they need to bleakly face it and either fix it so the market supports them or give way to those who can.

While I lived in Germany there was a lively debate about the German Autobahn, probably the world’s finest system of roads – and  no speed limit. They are engineering marvels. Porsches and Mercedes often cruise the system at 90-110 mph. They do it pretty safely and with a very strict driving ethos (unlike here).

The debate was about whether Germany should impose a speed limit on the Autobahn – in the interest of safety. It raged back and forth in Parliament for weeks, with the papers copiously reporting both sides of the question.

It was finally solved by one statement some delegate made. End of debate. Everyone silenced.

The statement?

“If we put speed limits on the autobahns, in 10 years we’ll be making cars as badly as the Americans do.”

That was 1980.

There is still no speed limit on the Autobahn.

Tales from the Socialism side – are we becoming like Europe?

So much has happened so fast in recent months – government intervention in banks, insurance companies, possibly in the huge auto industry. What is next? What is happening? Are we becoming Social Democrats?

I have written several posts on the stark comparison between Republican-style free and unfettered business values and more historical communist societies. Now it is time to start talking about the more subtle nuances of a “Social Democrat” model like much of Europe has.  America has moved in that direction lately (under a Republican president). How far are we along? Where are we going? Do we want to go there?

Yesterday Brian Kilmeade of Fox News interviewed California governor Arnold Scharzenegger (R) and talked about this principle. There are things to be learned from this talk.

Arnold Schwarzenegger in interview where he discusses his experience with socialism in Europe

Arnold Schwarzenegger in interview where he discusses his experience with socialism in Europe

Click it to play.

As we know, governor Schwarzenegger was an Austrian before he came to America and later became a US citizen. He talks about his experience there with European socialism, why he left, how he hopes America does not go down that path, and how this ties in with what is going on today.

Here is a partial typed transcript of the interview above:

Kilmeade: You said you came to America because you wanted to succeed – you felt that Europe was too socialized. Here we are bailing out the banks, we’re bailing out the auto industry, we’re picking different investments, different insurance companies to bail out and not bail out. Are we becoming what you left?

Schwarzenegger: Not, not by any means, but there is always the danger and I have always promised myself that I will do everything that I can, not to become what Europe was four decades ago when I left it. Since then Europe has learned from America how to privatize things, not to have government own everything and run everything, not to have 70% of the people work for government – a lot of countries have changed. But a lot of countries, again, have not.

I don’t want that system in America.. That is the important thing for me”

Tales from the Socialism Side – Part 3 – crisis of capitalism?

I have been promising a joke the Russians used to tell, under their state-socialism (we called it Communism but they always reminded me they had not reached the Communistic ideal yet – it was just socialism).

An old man had been given the job of being a lookout posted atop Lenin Hills in Moscow, watching for the coming of the “Classless Society” (The communist ideal world). He was doing such a good job some Politburo people approached him with another job they thought was important, watching for the next crisis in the capitalist system.

“It sounds good, but no thanks,” he replied. “I don’t want to give up a permanent job for a temporary one.”

With over 50 years of experience in the experiment of state socialism (I heard this one in the seventies) the Russians of that era need to be credited at least with having learned something. To their great credit they could make poignant jokes about it.

But true.

Crisis has been a huge part of the strength of our economy, historically. Good business ideas thrive. Bad ones die. Life goes through cycles.

I was taught in economics that every ten years or so there would be a recession. That was part of the cycle. It has been pretty much true. I was born in 1950 and there have been 6 since then that I remember. This article lists nine.

Guess what? Every recession is a crisis in capitalism. People lose jobs. The value of stock shrinks. People’s retirements lose some of their paper value, if it is in stocks (advisors used to always say never put it all in stocks as you get older – what happened?).

But then what happens after this “crisis?” Businesses and the economy bounce back. People get smarter. Businesses get more innovative and more efficient. Some of the sludge has been burned out of the engine. It runs cleaner.

I know it is painful. Tell me about it. I lost a business in the early nineties partly die to the recession of 89-92. But guess what? I also started another one – one that is still successful. And I re-invented myself, and got ready for a new way of doing business. That is what got me primed for entering the Internet business world in 1995. If the crisis had not come, I would probably still be back there.

I was talking about this with a colleague and we were discussing the horrible years before Reagan was elected president in 1980 and the change that came after that. The economy was in shambles in the late 70’s. Inflation was near 15%. Unemployment meteoric. Business was stagnant. Energy crises were common. Worst of all, people were not starting small businesses.

Contrast that with ten years later – the late eighties. Entrepreneur-ism was everywhere. Businesses were exploding. The stock market had gone from under 1000 to almost 3000, a whole new revolution in Information and Communications was underway, led largely by entrepreneurs. Something clearly was going on.

It DID seem to be related to the Reagan years – the opening up of business opportunities, tax cuts, deregulation, just the “can-do spirit!” The whole world was led into an amazing new economy by the US – that is still going on! And the Democrats and liberals were shouting “Voo-doo economics” all the way!

In our discussion we wondered if, had things kept going under the more state-controlled systems of “The Great Society” years (started by Lyndon Johnson and carried through the Carter years), maybe Bill Gates would have been working for IBM, Steve Jobs have been an insurance salesman and Michael Dell, well, a college drop-out!

Take a look at the chart below and the web site that it links to.

Slice of stock market history

Slice of stock market history

What, exactly, did the approach to socialism that lasted from the mid sixties through the end of the seventies do for the economy? Look at the charts again.

Flat.

Do you see now why some are worried about a turn back towards socialism, of any kind? We can’t be scared by crisis! We also cannot be scared off by the fear mongers who try to push us back under the ‘comforting’ umbrella of state control.

Take a look at these words from the London Daily Telegraph – sober words:

“This is what socialist economics brings. The intervention, or rather interference, of the state in financial and economic matters can only lead to sclerosis, the suppression of enterprise, the raising of taxes, starvation of investment, lack of innovation, technological retardation and the rise of the power of organised labour…If you doubt this analysis, recall what happened in this country between 1945 and 1979, when such an ethos as we are now returning to existed unchallenged, even by Tory governments. The more the state intervened, the more it had to intervene: the appetite grew with eating….”

Then look what the Brits had to say about the truth of America’s example:

…We condemn America as the nation that used capitalism as a weapon against so-called “ordinary people”, but think back and compare America in the 1970s to Britain at the same time: no American had to wait three months for a telephone to be put in, or had only three television channels to choose from, or had to watch rubbish piling up in the streets, the dead going unburied or factories open just three days a week because of industrial action and the failure of the command economy….”

(This is, by the way, the best article I have read that explains what is really going on).

The lesson we need to draw? Take a look at history! learn from it. Do not give in to fear and foolishness.

Ben Franklin used to say:

Experience is a dear teacher; but fools will have none other.

There is another way. Choose it, America!

Tales from the Socialism Side – Part 2 – Sharing toys

This is a continuation from my last post about the real issue of Socialism and what that means.

Here is another story from my years in Europe. I was working in Vienna with a man who had been visiting churches in Eastern Europe (then communist) countries since the days of Stalin. He had a story he often told:

A man came up to me in Berlin who had just gotten out of East Germany, having escaped like many East Germans did. I was preaching in a church there and he wanted to make a comment. “Do you know what the difference is between Communism and Christianity?’ he asked? “No,” I answered. “Communism says – What’s yours is mine – Christianity says – What’s mine is yours.'”

I have often thought of that simple, profound statement, when sorting out any sort of Socialist agenda in government. It is a root issue, when you think about it.  It is all about control. It is also all about boundaries, who owns what, and who has rights to what.

The Socialists (and the Communists as well) often launch their campaigns with high ideals. “It is all about sharing!” They will say. “The goal is that those who have share with those who do not have!”

Noble words.

I am all for sharing. Christ Himself told us to give what we have to those who do not have and to take care of the poor. I have never seen more generous and effective people than those who believe and follow those words with their hearts.

But with Socialism, it is about more than that. It is about who makes the decision that I will share. Is it I that make the decision that I will share and how much I will share; or is it the state that decides I will share and how much?

That is the root issue.

Yesterday in North Carolina Barak Obama made a speech in which he said:

“He’s called me a socialist for wanting to roll back the Bush tax cuts for the wealthiest Americans so we can finally give tax relief to the middle class. I don’t know what’s next,” Obama said at a rally at the Halifax mall here.

“By the end of the week, he’ll be accusing me of being a secret communist because I shared my toys in kindergarten. I shared my peanut butter and jelly sandwich.”

Obama misses the point. When he was a kid HE decided to share his peanut butter sandwiches and his toys. That is noble. That is generous. But what if the school had MANDATED that he share his food and his toys? That would be different. That would be Socialism.

What if Obama had said, ‘When I was a kid, I shared Joe the Plumber’s peanut butter sandwiches and toys with the other kids in school?’ That is VASTLY  DIFFERENT.

Think about it.

On a side note, I promised yesterday to sare a great joke the Russians used to tell about Socialism and Capitalism. I’ll move that on to tomorrow. The Obama quote came up first and I couldn’t pass it up.

Stay tuned.