Monday, March 30, 2009

Obama to get lean and mean

President Obama stated that the auto industry needs to get lean and mean to compete. The head of GM resigned and President Obama with no experience in the automotive industry, no idea about energy, manufacturing or a lot of other things is going to choose someone to the position.

The part I liked was to get lean and mean. I like that. We could certainly use some of that leadership now from the Executive office. Get lean by not allowing bills with pork to come for his signature and to be mean by using the veto to enforce the leanness.

The problem with the auto industry is it has become fat, dumb and happy. Workers demanded insurance benefits, retirement benefits, more vacation, job security and more. The result of these contracts was passed along to the consumer who was free to just say no by buying another makers automobile. The result is a declining market share, higher prices and sky rocketing contract costs, mostly retiree. Does this sound familiar? Medicare and Social Security have the same built in “contract costs” though we call them promised benefits. Congress has promised benefits far in excess of what any workers contributions could have provided.

Congress like Bernie Madof took not $65 billion from contributors, but $10.071 Trillion from workers paychecks, paid $9.215 Trillion in benefits, setting aside $856.068 Billion for these workers future. Divided among 160 million contributor’s amounts to $5,350 each. The difference is that in the case of the Madof Ponzi scheme just over $1 Billion of the $65 Billion has been recovered or 1.54%. For Social Security Ponzi scheme the recoverable amount is 8.5%. However, if we wait much longer, the amount will be zero unless our elected representatives vote to raise taxes and expand the Social Security Ponzi scheme.

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