Business advice


Auto union contracts are being talked about
October 26, 2007, 1:33 am
Filed under: Uncategorized

The only positive side of a ratified contract is the absence of a strike. That would put hundreds of thousands out of work at the year-end and slow a good portion of the economy down when it doesn’t need it

The New York Times discussed the ins and outs of it with several workers poised to vote Wednesday, Oct. 24, 2007. A couple of workers were wearing shirts with VOTE and NO on the back. I hate to resort to clichés, but there is a good portion of the population who lives in denial. One male, who was questioned, said that he wasn’t going to vote to ratify since there was something in the contract which indicated jobs were going to be lost. Get a grip. No company in today’s market can ever guarantee that there will be work down the road.

This brings in the efficiency question. I ran around the Web trying to find some numbers, but the one fact I came up with is that American manufacturers are simply not as efficient as foreign automakers. This boils down to an old axiom that if factors of productions and other resources are not used efficiently, they will eventually end up in someone else’s hands. This is the bottom line explanation for why future plant closings are predicted

We are no longer living in the decades of ongoing cost-of-living wages. We have an automobile industry in this country struggling to stay alive against the amount of manufacturing going on outside of our borders. The competition the auto industry deals with doesn’t play fair. Then, to top it off, it has workers threatening to walk out. I wouldn’t want to be overseeing that situation for any amount.

It all boils to something very simple. The role for unions has just about died in this country. Don’t get me wrong, I have been a white collar worker who could have used someone fighting for my rights. I just dealt with the problems myself. There were times when the workers in many industries needed the union to ensure they got a fair shake. I am not saying corporate America has changed its colors. There is no guarantee that any employee is ever going to be treated fairly. However, that’s what we have labor laws for. We also have Workers’ Comp and other federal guidelines and agencies out in the market to take care of our workers.

Unions in this particular case are what no one wants to admit, because the reaction would be too explosive for the marketplace to handle. The auto union is a middleman who has become obsolete. The sooner the workers realize this, the sooner there will be a better workplace for workers and management, as it will eliminate tension.

The American auto industry has been in a mess for decades. There is no easy or short answer. There is a step that would take them in the right direction, however. Workers and management need to realize they are no longer on opposite sides, but need to take a step that will make industry history. They need to figure out how to work together as team.

Working efficiently, using those resources to produce a profit, is the only thing that will save this industry. If changes aren’t implemented, the shift to a complete monopoly by foreign manufacturers will continue. Then, the only way to stop the complete collapse of the American auto industry will be governmental intervention.

It’s too bad one is not allowed to force feed information to those intertwined in this mess. The only other idea is to think back on a television movie I saw decades ago about a similar situation. It was about two brothers who worked in a steel plant about to close One was full of hatred for the ‘foreign workers’ he saw stealing his job. The other saw the picture for what it was.

They end up arguing outside of a bar, the angry brother rants, “What’s do they have (the foreign workers) that I don’t have?”

His brother’s retort was, “Your job.” And, that, folks, tells the whole story. Let’s just hope those involved in the auto industry can see the truth before it is too late. A continued slowdown of the auto industry will have damaging effects on this country we may never recover from.

-30-

For more examples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

Advertisements


Should we sticking our fingers in where we shouldn’t be messing?
October 23, 2007, 7:41 am
Filed under: Uncategorized

Alan Greenspan is being quoted frequently as of late. Too bad there isn’t some listening going on.

“Former Federal Reserve chairman Alan Greenspan has warned that plans announced this week to launch a so-called “super fund” – a dramatic attempt by major investment banks to ease the crisis facing credit markets – could have dire repercussions. (This is referring the mortgage credit markets.)

In an exclusive interview with Emerging Markets, Greenspan said that the $75 billion so-called Master Liquidity Enhancement Conduit (MLEC) – proposed by Citigroup, Bank of America, JP Morgan and Wachovia to take on the assets of troubled investments – runs the risk of further undermining already brittle confidence in besieged markets.”

“It’s not clear to me that the benefits exceed the risks,” Greenspan said. “The experiences I’ve had with that sort of intervention are two-sided.” (End of Emerging Market’s material.)

This warning from Greenspan has merit. Tinkering with the ups and downs of the free market is prickly. His two sided inference relates to what happens now and further effects down the road. The investment companies will be thrilled for the help. But someone, somewhere is still going to be stuck with these securities backed by homes, on which the prices may be decreasing, instead of the hoped for increase.

Those companies are stuck if they don’t find a way to obey the general rule of investment: keep your portfolio diversified.

Monkeying around with troubled markets comes in several forms. We saw an example of an outside group pumping monies into a sagging niche. But this can be done in a roundabout way. This is also known as deregulation. I was just beginning to study money and banking in the 80s when the news was full of stories about disappearing banks, the stage of interest rates, and how poor the savings and loan industry was doing. So, along came the Deregulation and Monetary Act of 1980. It opened doors for both banks and S&Ls in changing the game plan.

This can’t be compared exactly to plumping up a market niche with extra funds, but the end run is very close. The act gave both the banks and savings and loans license to do business there were not allowed before. This act even had phased-in steps so that it wouldn’t be such a shock to the system. If you were paying attention to the business news back then, or have studied it in school, you know the end result was a mess. This is not to say that the savings and loans might not have disappeared anyway.. The S&L industry was plagued by scandals because the idiots managing them was caught with their paints down, sort to speak, with the cheating that went on in an effort to save a dying industry. It ended up costing buckets of cash, not only in fraud cases but Congressional investigations. The end result was one of the biggest messes in our financial history. Mind, you there is no way to predict what effect deregulation is going to have on a market. But the bottom line, is the government messing around in a market.

Then, there are subsidies. The farming industry wasn’t going to be around if FDR hadn’t provided help. They were awarded subsidies and were given new technology to help with the weather conditions at the time. However, that time is over and the government still has its fingers in the farming industry.

The following is from the web page of the “Heritage Foundations,” (This was dated 2002)

“Members of Congress are poised to spend at least $171 billion on direct farm subsidies over the next decade …” The American farming industry is addicted to its subsidies. FDR did not create these programs for the purpose of shoring up the American economy down through the rest of its history. The long term effect of messing around in this market was to create an industry who hasn’t a clue as how to use its resources efficiently. (Efficient use of resources means producing a profit.)

Interfering in the market is a big eye sore in the southern California real estate market. I am talking bout Santa Monica rent control. I just went online and read some of the red tape landlords have to go through in order to do business in that city. There isn’t enough tea in China to make consider such a prospect.

What happens when you interfere in markets for more than short term is: trouble. The interference amounts to moving funds around. Money is also a scarce commodity. When you move funds to one group, you can’t know the repercussions until later. When that time comes, it is too late.

I had a professor explain scarcity (not enough to go around to everyone) in a very quaint manner. Think of a partially inflated balloon spread over the entire nation. If you stamp down on the portion covering the west coast you don’t know where the rippling effect is going to end. This is an apt description for the long run effects of propping up markets.

Of course, the only way to do anything about this issue is to vote in legislators who know better.

For more samples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

-30-



Should we sticking our fingers in where we shouldn’t be messing?
October 23, 2007, 7:37 am
Filed under: Uncategorized

Alan Greenspan is being quoted frequently as of late. Too bad there isn’t some listening going on.

“Former Federal Reserve chairman Alan Greenspan has warned that plans announced this week to launch a so-called “super fund” – a dramatic attempt by major investment banks to ease the crisis facing credit markets – could have dire repercussions. (This is referring the mortgage credit markets.)

In an exclusive interview with Emerging Markets, Greenspan said that the $75 billion so-called Master Liquidity Enhancement Conduit (MLEC) – proposed by Citigroup, Bank of America, JP Morgan and Wachovia to take on the assets of troubled investments – runs the risk of further undermining already brittle confidence in besieged markets.”

“It’s not clear to me that the benefits exceed the risks,” Greenspan said. “The experiences I’ve had with that sort of intervention are two-sided.” (End of Emerging Market’s material.)

This warning from Greenspan has merit. Tinkering with the ups and downs of the free market is prickly. His two sided inference relates to what happens now and further effects down the road. The investment companies will be thrilled for the help. But someone, somewhere is still going to be stuck with these securities backed by homes, on which the prices may be decreasing, instead of the hoped for increase.

Those companies are stuck if they don’t find a way to obey the general rule of investment: keep your portfolio diversified.

Monkeying around with troubled markets comes in several forms. We saw an example of an outside group pumping monies into a sagging niche. But this can be done in a roundabout way. This is also known as deregulation. I was just beginning to study money and banking in the 80s when the news was full of stories about disappearing banks, the stage of interest rates, and how poor the savings and loan industry was doing. So, along came the Deregulation and Monetary Act of 1980. It opened doors for both banks and S&Ls in changing the game plan.

This can’t be compared exactly to plumping up a market niche with extra funds, but the end run is very close. The act gave both the banks and savings and loans license to do business there were not allowed before. This act even had phased-in steps so that it wouldn’t be such a shock to the system. If you were paying attention to the business news back then, or have studied it in school, you know the end result was a mess. This is not to say that the savings and loans might not have disappeared anyway.. The S&L industry was plagued by scandals because the idiots managing them was caught with their paints down, sort to speak, with the cheating that went on in an effort to save a dying industry. It ended up costing buckets of cash, not only in fraud cases but Congressional investigations. The end result was one of the biggest messes in our financial history. Mind, you there is no way to predict what effect deregulation is going to have on a market. But the bottom line, is the government messing around in a market.

Then, there are subsidies. The farming industry wasn’t going to be around if FDR hadn’t provided help. They were awarded subsidies and were given new technology to help with the weather conditions at the time. However, that time is over and the government still has its fingers in the farming industry.

The following is from the web page of the “Heritage Foundations,” (This was dated 2002)

“Members of Congress are poised to spend at least $171 billion on direct farm subsidies over the next decade …” The American farming industry is addicted to its subsidies. FDR did not create these programs for the purpose of shoring up the American economy down through the rest of its history. The long term effect of messing around in this market was to create an industry who hasn’t a clue as how to use its resources efficiently. (Efficient use of resources means producing a profit.)

Interfering in the market is a big eye sore in the southern California real estate market. I am talking bout Santa Monica rent control. I just went online and read some of the red tape landlords have to go through in order to do business in that city. There isn’t enough tea in China to make consider such a prospect.

What happens when you interfere in markets for more than short term is: trouble. The interference amounts to moving funds around. Money is also a scarce commodity. When you move funds to one group, you can’t know the repercussions until later. When that time comes, it is too late.

I had a professor explain scarcity (not enough to go around to everyone) in a very quaint manner. Think of a partially inflated balloon spread over the entire nation. If you stamp down on the portion covering the west coast you don’t know where the rippling effect is going to end. This is an apt description for the long run effects of propping up markets.

Of course, the only way to do anything about this issue is to vote in legislators who know better.

For more samples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

-30-



Should we sticking our fingers in where we shouldn’t be messing?
October 23, 2007, 7:35 am
Filed under: Uncategorized

Alan Greenspan is being quoted frequently as of late. Too bad there isn’t some listening going on.

“Former Federal Reserve chairman Alan Greenspan has warned that plans announced this week to launch a so-called “super fund” – a dramatic attempt by major investment banks to ease the crisis facing credit markets – could have dire repercussions. (This is referring the mortgage credit markets.)

In an exclusive interview with Emerging Markets, Greenspan said that the $75 billion so-called Master Liquidity Enhancement Conduit (MLEC) – proposed by Citigroup, Bank of America, JP Morgan and Wachovia to take on the assets of troubled investments – runs the risk of further undermining already brittle confidence in besieged markets.”

“It’s not clear to me that the benefits exceed the risks,” Greenspan said. “The experiences I’ve had with that sort of intervention are two-sided.” (End of Emerging Market’s material.)

This warning from Greenspan has merit. Tinkering with the ups and downs of the free market is prickly. His two sided inference relates to what happens now and further effects down the road. The investment companies will be thrilled for the help. But someone, somewhere is still going to be stuck with these securities backed by homes, on which the prices may be decreasing, instead of the hoped for increase.

Those companies are stuck if they don’t find a way to obey the general rule of investment: keep your portfolio diversified.

Monkeying around with troubled markets comes in several forms. We saw an example of an outside group pumping monies into a sagging niche. But this can be done in a roundabout way. This is also known as deregulation. I was just beginning to study money and banking in the 80s when the news was full of stories about disappearing banks, the stage of interest rates, and how poor the savings and loan industry was doing. So, along came the Deregulation and Monetary Act of 1980. It opened doors for both banks and S&Ls in changing the game plan.

This can’t be compared exactly to plumping up a market niche with extra funds, but the end run is very close. The act gave both the banks and savings and loans license to do business there were not allowed before. This act even had phased-in steps so that it wouldn’t be such a shock to the system. If you were paying attention to the business news back then, or have studied it in school, you know the end result was a mess. This is not to say that the savings and loans might not have disappeared anyway.. The S&L industry was plagued by scandals because the idiots managing them was caught with their paints down, sort to speak, with the cheating that went on in an effort to save a dying industry. It ended up costing buckets of cash, not only in fraud cases but Congressional investigations. The end result was one of the biggest messes in our financial history. Mind, you there is no way to predict what effect deregulation is going to have on a market. But the bottom line, is the government messing around in a market.

Then, there are subsidies. The farming industry wasn’t going to be around if FDR hadn’t provided help. They were awarded subsidies and were given new technology to help with the weather conditions at the time. However, that time is over and the government still has its fingers in the farming industry.

The following is from the web page of the “Heritage Foundations,” (This was dated 2002)

“Members of Congress are poised to spend at least $171 billion on direct farm subsidies over the next decade …” The American farming industry is addicted to its subsidies. FDR did not create these programs for the purpose of shoring up the American economy down through the rest of its history. The long term effect of messing around in this market was to create an industry who hasn’t a clue as how to use its resources efficiently. (Efficient use of resources means producing a profit.)

Interfering in the market is a big eye sore in the southern California real estate market. I am talking bout Santa Monica rent control. I just went online and read some of the red tape landlords have to go through in order to do business in that city. There isn’t enough tea in China to make consider such a prospect.

What happens when you interfere in markets for more than short term is: trouble. The interference amounts to moving funds around. Money is also a scarce commodity. When you move funds to one group, you can’t know the repercussions until later. When that time comes, it is too late.

I had a professor explain scarcity (not enough to go around to everyone) in a very quaint manner. Think of a partially inflated balloon spread over the entire nation. If you stamp down on the portion covering the west coast you don’t know where the rippling effect is going to end. This is an apt description for the long run effects of propping up markets.

Of course, the only way to do anything about this issue is to vote in legislators who know better.

For more samples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

-30-



Competition is good for the marketplace
October 16, 2007, 6:34 am
Filed under: Uncategorized

Competition in the market doesn’t mean there is a winner and a loser. It simply means that it is the opposite of a monopoly or another controlled market.

There are, as with all rules, exceptions. Companies coexisting in a competitive market are suppose to play by the rules. That includes no unfair pricing policies and deliberately eliminating middle men. Some do so well they are accused by others who can’t seem to keep up. I will leave it at that since I am not in the mood to get sued.

If you are in a fairly small community, which are fewer these days because of the Net, you need to learn to play well with others if you want this competition thing to work to you. Dog-eat-dog competition only works well in a wrestling ring.

This doesn’t mean that more stores selling your product line will be easy. You will have more work. You will have to keep up with the guy’s tactics down the street to ensure you keep your customers.

You do not need to panic because you find out someone else has opened a similar business nearby. I had a friend many moons ago who owned a franchise which amounted to an interior decorating service on wheels. This was a new concept back then and she had difficulties convincing new clients this was a viable option for updating their living space. She came to me one day panicked because she found out there was a new franchise owner in our neighborhood city. It turned out well for both business owners. The other owner did her part in raising brand name recognition in the region and it made it easier for both of them.

I understand that most aren’t operating the same franchise, but the lesson is still the same. Find out that a new shop has opened and do your research. Find out what he is doing that you are not. It will now be your first priority in life to make sure you offer some service that the others don’t. No one business can be all things to all people. Sears tried in the 70s and 80s and it almost saw them closing their doors for good. They ended up selling some of the companies they had purchased. Their retails section suffered terribly. I know because I had a temp job in those years processing the paperwork for does who had been downsized.

Growing markets inspire new vendors to start up. Shrinking markets see doors closing. It was only a few years back that saw the doors of many small booksellers slamming shut. We all know the booksellers now either operate on the Net or through big chains. If you are determined that you have a niche that has not been covered, try it. I would advise doing so, however, on a very small scale. Consider it a test run.

There is always a way to find your own corner in any given market. You may, now a days, just have to work harder at it. You may also need to have more than one target group. If one slow , you can boost your efforts on the group. In fact, I would suggest that no one consider launching a business with the uncertainty in the aggregate market, unless they have at least three different niches as potential customers.

Use logic when exploring your competitive tactics. Don’t open a store next to one of the biggest guys in the market. Don’t be so brash as to think you will find a way to outdo Microsoft. You might as well being throwing bricks at a prison gate. You will annoy the nearby guards and wear yourself out and that’s about it.

In our time, competition is trickier than ever. It doesn’t mean it can’t be done or that a competitive market is to be frowned on. It just means you have to be on the ‘top of your game’ at all times.

For more examples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

-30-



Monkeying around with prices
October 13, 2007, 9:07 pm
Filed under: Business Advice

This is always a subject of great discussion when it comes to business owners It is just as important for those who sell products as for those who sell their services.

This sounds like a clean-cut discussion, but nothing could be farther from the truth. Economists like to deal with straight facts and they chose to forget the human characteristics and habits play into this situation

The basic concept is simple. You can raise prices on goods and services people really want for awhile without decreasing sales. The unanswered question, of course, is how long before customers start going elsewhere to get the same thing.

A great story was told by my first econ prof to get the general principle across to a class who was bored out of their mind. (This is discussion is also known as the second law of supply and demand.)

He described walking into his bedroom and finding his young daughter on top of his chest of drawers poised to dive bomb onto his bed. He said, “If you do that, I am going to hit you.” She responded, “How hard?”

That defines how customers react to a rise of most price increases. Now, let’s break it down some more. How hard customers are willing to be hit depends on what products are in the mix. When it comes to gasoline, they are willing to go a long way. Everyone wants to complain, but they keep filling up. Try to deny them gas because of alleged shortages and they show their willingness to stand in lines for hours. There are products customers are simply in the habit of buying. Alternatives exist, but you have to push them so hard they are screaming before they will think about changing. One choice is public transportation. When the BART system first started up in San Francisco, lo this many years ago, they had a horrible time trying to get drivers to switch over. Changing consumers’ transportation habits is nigh to impossible.

There are other niches which are addictive. Alcohol, cigarettes and fast food comes to mind. Prices have skyrocketed in all those markets over the past 20 years. I don’t know about you, but every McDonalds I go to is crowded. Now, mind you, push too hard and customers may be inspired to cut back.

When luxury goods prices start creeping up, folks will stick for awhile. However, it wouldn’t be too long before steak eaters, will go back to hamburger. Luxury car owners might decide to hold onto the old model for another couple of years. Those who get their hair done may decide to revert to buying a new set of clippers.

Items necessary to keep us alive make shifting our habits more difficult. Think about those who need insulin and babies who need milk. Buyers of these items will probably suffer awhile longer. Their only choice is to hunt out another supplier. Easier said than done.

When it comes to those offering services, there are other things to consider. You need to be aware of what is happening in your particular market. If you move up, will you make your new customer nervous enough to find another supplier?

Bottom line is that all of this requires research and staying on top of your market. The best advice is to take it slowly. Wait and watch. The true answer of what happens when you monkey around with prices is you don’t know until you try.

For more examples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

-30-



Pres candiates and biz/economy
October 10, 2007, 9:00 pm
Filed under: Uncategorized

–the buzz

I went to one of the big social networks and asked who they thought among the front runners would be a plus for business and the economy.

This is a hot topic for those really concerned about business. Answers popped up so fast I had to close the question in a few hours. Many were thinking more remote candidates would be better for the job than the front runners. As one of those answering pointed out, that wasn’t the question. It does, however, bring up an interesting thought. It means there isn’t too much confidence in those who seem to be getting the limelight for the time being

Several were sure that Rudy Giuliani would be good at handling the job because what he was able to accomplish in New York Not saying that isn’t all good, but the presidency is a horse of another color.

They all thought Clinton had been friendly to business. More are hoping that if Hilary wins, we will see more of the same. Clinton did cut the deficit and lower taxes for the middle class.

Then, the question came up as to whether or not we might see someone back in office who is willing to follow Keynesian economics. For those, who this mystifies, the basics are someone who believes in demand-side economics. He advised that the government was responsible for getting the country out of the depression. So, we know they provided work projects that put people to work. Unfortunately, we are in a different time The government since Reagan has been against the government being too involved in business. Let’s hope the pendulum doesn’t swing back the other way. (For those who might want to know: a supply-side economics simply means production should be stimulated and it will make things better. A monetarist believes everything can be better if the money supply and the interest rates are carefully controlled.)

As it gets closer to the election, there will be non-stop speculation as to what candidate is going to do what and whether or not the actions will be a plus or a negative for business and the country. This speculation will generate ups and downs in Wall Street. Keep in mind they will all be short-lived. If you are diligent and into trading, you can probably make a nifty profit.

The long haul is a little more complicated. There are two big flaws in any new President’s role as far as planning for economy goes. They usually say one thing and do another. Now, mind you, it wouldn’t hurt if the country has a head-start with either Hilary or Giuliani, whose history seems to show they can take the bull by the horns and get things done. We all want to see a healthier economy, but no business owner wants to see the government stick its hands deeper into their pockets than they already do. So, we can only hope for the best.

The long run would be smoother if politicians could come to understand one basic concept. Economic decisions have short and long term consequences They usually don’t stick around for the long term. Nor, do they think they will be held responsible for the ensuing problems.

Tax cuts are good for people who have more money in their pocket as a result. What isn’t good are the projects that go wanting because the funds are no long available to fund them. Thus is the ongoing lament as to what has happened to state community college and University system in California ever since Prop 13 passed I restarted my college education the year that happened. I am very familiar with the consequences. I also know that our property taxes were rather stable after that time period. If property taxes could no longer support the system as it was known, other arrangements should have made. Perhaps, even a phase-out of the tax cut would have made it easier to contend with.

If the national government could land an economic advisor or a team of them that could teach this lesson, then it really wouldn’t matter what economic theory was being used.

For more examples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

-30-