Latest GM SUV: Big and 30MPG

I don’t have all the details, but a quick look at this article shows that GM’s plight was, at least in part, avoidable. The base model comes with a 182 horse power 2.4 liter engine, and gets you 30 mpg. There is no reason in the world that GM could not have produced this vehicle two years ago. In doing so, they would have seen demand shift from some of their other lines, but also from Ford, Toyota, and Dodge. In addition, they could have easily picked up some gas guzzler trade-ins. Why did they wait? It’s quite simple: they have absolutely no foresight. The GM motto could be “what works today will work tomorrow”. Of course, that motto doesn’t work.

This to me supports the Obama position that if these guys want help they have to change. I remain uncomfortable about the government running a company, and when this administration can force out long time CEO Rick Wagoner, that is what is happening.

Where then is the balance? When should the government not use its coercive power when it doles out money to broken companies? When should it let them fail? And what does one do with the thousands upon thousands of individuals who have been mishandled by bad leadership? I don’t know, but somewhere somehow they have to shoulder some of the burden. Some of this is their poor decision to tie their fates to people like Wagoner, who really did need to go.

Time to change time

Welcome to International “Screw up your calendar week”, otherwise known as the changing of the clocks to Daylight Savings Time (DST) in America. For those elsewhere, or if you happen to live in Arizona, Hawaii, or certain parts of Indiana, or if you happen to live elsewhere in America and have appointments with those living in AZ, HI, or IA, or anywhere else in the world, be sure to check that your appointments haven’t shifted by an hour. For the next two weeks, though, America will be one hour closer to Europe. Oh, and then check again in two weeks.

This debacle is brought to you by the last Republican U.S. Congress who somehow thought that shifting DST would actually save energy. It didn’t, according to one blog and a report on NPR. Whatever.

My beef with this semi-annual nonsense is simply this: don’t change the rule again. Doing so causes chaos to everyone’s schedules, requiring software updates on numerous platforms. It’s a mini-Y2K bug that gets periodically legislated into our programs.

Misadventures with taxes

I began my tax preparation this year with my mind on President Obama looking to tax the wealthiest Americans a bit more to pay for a reduction in taxes on the rest of us. For expatriates, taxes are a sore subject. American expatriates, unlike citizens of just about any other country, are required to file tax returns no matter where we live in the world, an we have to claim back foreign taxes, as either a credit or a deduction. The notion behind all of this is that you can’t simply move off shore to avoid paying U.S. taxes. Fair enough, except that of course you don’t get to avail yourself of nearly any of the services you are paying for.

The way this works is that we get a deduction for housing and a credit for tax paid. In the end the idea is still that if you’re not working in the U.S., you shouldn’t have to really pay much. The deduction for housing was limited based on where you lived. This year, we in Europe are treated to an extra insult. Because the American dollar did so poorly overall in 2008, we all expected that the Department of Treasury would adjust the housing limit accordingly – but they didn’t. That amounts to about a 10% additional tax on us. And of course there are penalties for not prepaying based on the currency fluctuation.

I might not mind so much, except that as an American citizen I still cannot buy mutual funds, just because I live outside the U.S. There are many other services I don’t get, that perhaps I would enjoy. Like courtesy at the American consulate in Zurich.

Should I renew the WSJ?

I have enjoyed the Wall Street Journal online edition for many years. Their reporting was poignant, accurate, and generally kept within the scope of how a particular effort would have some economic impact on peoples’ lives. There weren’t excessive numbers of fluffy stories, and the right wing bent of the editors was largely kept to the editorial page. The web site itself wasn’t flashy (pun intended), and gave me a pretty good understanding of the important events of the day.

Seemingly with the takeover of the News Corporation, however, the web site has taken a turn for the worse. With more flash, more video, and more interactive grahics, it has become hard to actually find the news stories. With me reading less and less, I wonder, therefore, why I should pay more and more. The price of the Online Journal this year is going up by a honking 50%.

With the former editor of the Wall Street Journal under the previous ownership now at the Washington Post, I wonder if I should read that web site instead. And so my question to you; what is your primary news source? And what is your primary online news source in print? Aside from the WSJ, I also read the New York Times and Google News. Of course, one can always count on CNN for the “Man bites dog” stories…

Should we limit bankers’ salaries?

Bureau of Economics Today the Voice of America reported (amongst others) that President Obama will seek to cap executive pay at $500,000 for any company that accepts bailout money. This after a storm of criticism has washed over Citigroup and Bank of America about bonuses, corporate planes, and my favorite, trips to Las Vegas.

While it certainly seems to me that anyone who requires a bailout should at least have some humility, few CEOs in my own experience do. What they have is a competitive urge and drive to succeed. While in theory humility and drive do not conflict, in practice I am hard pressed to name a CEO who has both, with one exception that proves the rule, Warren Buffett.

Were we to impose humility on CEOs I would be concerned that we would end up with second string players in a Superbowl situation. On the other hand, bonuses in the face of a bailout are insulting to those taxpayers who effectively have paid them. And so some balance should be struck. My own thinking is that these guys should be capped so long as (a) they’re taking money, and (b) their company is not profitable. Shareholders shouldn’t get bonuses either, however. And so while a company is taking money it should not issue a dividend, and the money it takes shouldn’t come for free. I wonder whether the U.S. should require options of a certain amount or actual stock. This way we share in the company’s successes as well as failures.

What are your thoughts?