Tag Archives: ford

Business/Economics, U.S.

What Economic Recovery? Average Consumers are blamed for not spending, but it’s the Elites that are hoarding the cash, minimum wage earners are losing money by working

Basic economics views an economy like a cash flow circle.  Economies are doing good when a lot of money is being circulated.  When money stops flowing the economy goes down.  This is the basic idea of a consumer based economy.

For at least the past two years I’ve heard “experts” whine about consumers not spending.  Some even blame the average consumer for keeping the economy down.  But there’s good reason the average consumer isn’t spending; they don’t have the money (disposable income)!

According to the cash flow circle, people holding onto money put the brakes on a growing economy.  This is one reason why saving money was actually discouraged in the past, because money sitting in a bank is doing nothing for the consumer economy.  It does slowly get out, in the form of loans issued by the banks (yes, your money in your savings account is loaned out by the bank).

But there is a more dangerous form of holding onto money, it’s called money hoarding.  The average person doesn’t money hoard, the average person loves to spend money, it’s the elites that money hoard.  Why do you think the super rich get super rich?  You can’t get super rich by spending your money.

The latest numbers show that 90% of the money/wealth in the U.S. is being held by only 10% of the people.  In fact, according to Edward Wolff, the New York University economist, by the end of 2009 the top 1% (yes, that’s one percent!) of elites held 35.6% of the wealth!  Those people are the elites, the super rich, and the too big to fail corporations (corporations are legal entities or “persons”).  They are not spending that money!

By the way, studies have been done that show the average person in the U.S. is totally ignorant of the wealth inequality in their country.

90% of the people, have only 10% of the money/wealth in the U.S.  How can anyone expect the 90% of the population, with only 10% of the wealth, to spend enough money to save the economy?!?

Don’t think the bad economy is hurting the elites, it’s not.  Here’s some facts showing how the average person is making less money, and the elites are making more money:  By 2005, the Federal Minimum Wage, when adjusted for inflation, actually went negative; -9.3%.  The average “production” worker’s pay, when adjusted for inflation, has remained stagnant since 1990, seeing a piddly 4.3% increase by 2005.  Corporate profits soared 106.7% by 2005, adjusted for inflation.  The median salary for Chief Executive Officers exploded to 298.2%, from 1990 to 2005, and that’s adjusted for inflation.  Source:Executive Excess 2006, the 13th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy

So, corporate execs get an almost 300% increase in pay, while the average worker gets a measly 4.3% increase (over 15 years!!!), and those on minimum wage are actually losing money by working!  Yet we average consumers are expected to save the economy?!?

Those stats prove that only a minority of U.S. citizens (10%) are actually “making” money.  The rest of us are going broke, are broke, or are digging a financial grave.

Here’s proof those 10% who’re making money are not spending it: General Electric (GE), ended the second quarter of 2011 with $91 billion in profits, but they’re not going to spend it: “Our main protection against something like that not going well, or having a rocky outcome, is to have a lot of liquidity.”-Keith Sharin, CFO

Liquidity means cash.  To “have a lot of liquidity” means you’re not going to spend any money, your going to hoard it.

Goldman Sachs announced second quarter profits up 57%.  JPMorgan profits up by 13%.  Citigroup reported a profit of 24%.  The list goes on an on. Yet corporate America is not only not spending those profits, they keep laying off employees.

Bank of New York Mellon will layoff 1,500 workers, despite making a $77 million profit.

Here’s a real doozey of an example: Navistar. They reported a profit of 72% for the second half of this year, yet they say they have to close two U.S. plants, and one Canadian plant.  Navistar said closing the factories will save them up to $30 million per year, yet it will cost up to $230 million to close all the factories (actually they’re calling it a charge off, so they can deduct it from the corporate taxes they try not to pay)!

The big drugmaker, Merck, reported more than $1 billion in profits, yet will layoff another 14% of their employees, on top of the thousands they’ve already laid off.

Again, the list goes on and on.

One reason corporate America is getting rid of good paying jobs is because they can hire cheap prison labor.  This has been going on since the late 1990s, thanks to the ALEC prison labor program, and it’s growing.  So far 37 U.S. states allow prisoners to be used for labor other than public works.  Even Toys R Us uses prison labor!

Several of the huge meat recalls in the U.S. have been connected to prison labor being used at the meat packing plants.  Add to that the fact that foreign exchange students are being exploited as cheap labor for corporate America.

The bottom line is that those elites running corporate are doing everything they can not to spend money.  Some officials say they’re hoarding cash because they don’t think the economy will get better.  No shit Sherlock, if you’re not going to spend the money on hiring more workers, who then can spend the money buying your products or service, as well as pay their taxes, then yeah, the economy is going to get worse!!!

Remember the economic cash flow circle?  It’s the elites/corporations that are putting the brakes on any economic recovery, by sucking money out of the cash flow.

Corporate icon, and pioneer of welfare capitalism, Henry Ford hired lots of people and paid them well ($5.00 per day in 1914, that’s $114 per day now!), because he wanted them to buy his Model T.  It worked!

Ford also has a warning for us average Joes: “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

 

 

 

 

 

Business/Economics, U.S.

What Economic Recovery? Ford, GM, Chrysler; can we trust their sales and profit reports? U.S. auto sales actually stagnating

Ford and GM reported profits in July.  They also reported increased U.S. sales.  Ford claims 9% increase, GM an 8% increase, while Chrysler claims an incredible 20% increase in U.S. sales.

This while Japanese car makers Toyota and Honda reported that their U.S. sales crashed by more than 20% each.

Despite Chrysler reporting a 20% increase in sales, they claimed a net loss in profits, from buying back stocks from the U.S. taxpayers (interestingly the U.S. taxpayer also lost money).

Ford reported a small 9% increase in sales, but a big increase in profits.  One reason is because they jacked up the prices of their cars.  According to one report, the price increases accounted for $900 million of Ford’s profit.  Profiting by inflation.  Ford’s Chief Financial Officer, Lewis Booth, said they expect a drop in U.S. sales in the second half of 2011.

GM reported a small 8% increase in July sales, with a profit of $2.5 billion.  Remember GM still owes U.S. taxpayers for the bailout.  However analysts say now would be a bad time for taxpayers if GM decided to buy back its taxpayer (U.S. Treasury Department) held stock.  Just like the Chrysler buy back taxpayers would lose big time.  Most of GM’s sales came from pickup trucks.  The problem is that GM still has a surplus of pickup trucks, equal to a 115 day supply.  In order to get the surplus inventories down GM will continue with planned factory shut downs, that means more people out of work.  GM officials also expect the second half of 2011 to be hard on sales.

Mitsubishi reported an amazing 41% increase in July sales, while sales for most other Japanese companies stalled or crashed.

German car makers did well: Volkswagen reported a respectable 21% increase (not counting their AUDI brand).  Mercedes had a 13% increase.  BMW increased by 11%.

British companies Jaguar and Land Rover went in opposite directions, with Jaguar down 0.3% and Land Rover up 22%.

The problem is that you can’t go by percentages.  Here’s an example: Even though Toyota’s U.S. sales for July were down 22.7%, they still sold 130,802 vehicles in one month.  Compare that to Chrysler’s huge gain of 20%.  In July they sold 112,026 vehicles, still less than Toyota.

For another example of how percentages can deceive, let’s look at Mitsubishi and GM.  Mitsubishi reported an amazing 41% increase in July, but the actual number of vehicles sold that month was only 7,972.  GM reported a 8% increase in U.S. sales.  Sounds small, but the actual number of vehicles they sold in July is 214,915.  That makes GM the sales leader, however GM officials pointed out  they’re still stuck with a surplus of vehicles to sell.

So, is the auto industry on the rebound, or not?  Overall light vehicle (cars & pickup trucks) sales indicate that the auto industry stagnated in the month of July.  Car sales down 3%, pickup truck sales up 4.8%, almost cancelling each other out.

Data from Autodata Corp

 

Business/Economics, U.S.

What Economic Recovery? Inflation eats into profits for Ford & Chrysler

Both Ford and Chrysler are reporting increased sales revenues, but both are reporting decreases in profits.  The culprit, inflation.

Inflation is driving up the cost of materials used to build their cars, and even with retail price increases the result is lower profits.

Now Ford is preparing to deal with Union contract negotiations in the United States.  Obviously workers are going to want more money, because inflation is driving up their cost of living.

Business/Economics, International, U.S.

What Economic Recovery? Mazda will stop U.S. production, moving to Japan & Mexico

Mazda announced that it will stop production of its Mazda6, at a Ford plant in Michigan.  Mazda will move production of the Mazda6 back to Japan.

The Michigan plant is a joint venture between Ford and Mazda, known as AutoAlliance International.  The joint venture has been losing money ever since the ‘credit crisis’.

Mazda also plans to build cars in Mexico, mainly for the booming Latin American car market.  Some Mexican built Mazdas will be sold in the United States.  Rumors are that Mazda wants out of its joint venture with Ford.

 

 

 

Business/Economics, Fukushima

Want that new Ford in Black, or Red? You’ll have to wait, even paint supplies are running short

It was looking like Ford would escape supply problems from Japan, nope.  Ford announced that specific colors for their new vehicles will be in short supply, due to the disasters in Japan.

Yes, even paint comes from Japan.

An ingredient used to make Ford’s Tuxedo Black, and three shades of red, come from Japan.  That ingredient is called Xirallic.

Ford is trying to find a substitute ingredient.