Official Corporate Takeover Pressure

In many instances, corporate proxies may make it easier for hostile takeovers to be made. It is not always a given that making it easier to foster corporate takeovers, is in the best interests of all stockholders.

The objectives of many of the takeover artists are often solely for quick, short-term profits. That may not be in the long term interest of the corporation or most of its shareholders.

Yet, much of the recent legislative pressure in Washington from the administration has been to accomplish this purpose.

This does little for corporate democracy. It helps reimburse party and lobbyist funding.

Tax Credits for Business Hiring

Experience shows that the idea of giving business tax credits for hiring does not generally work. Businesses would eventually hire anyway in most instances.

What is important and damaging to business, is recurring taxes, not the need for credits. Research has shown this time and again. But left-leaning politicos love to hand out tax credits under pressure, as they cannot abide permanent tax relief.

It’s apparently against their secular religion.

So they continually talk about temporary tax credits, to impress the public and potential voters. Moreover, if the public is unfamiliar with business, politicians get away with the ruse.

At least for a while; because tax credit policy simply does not work.

Political Business Men and Women?

Too many of our law makers in Washington and in state houses, are lawyers. It’s no small wonder; we have too many lawyers graduating college. They need something to do other than seek litigation briefs.

It helps explain why we have too little doctors, scientists and mathematicians. I guess, when you cannot cope with science or math, it’s far easier to become a lawyer. Years ago, you could become a lawyer without going to college. You took the bar exam after clerking in a law office.

I believe too many lawyers in government have become a major problem. We need representatives who actually represent the people. They ought to come from different job experiences. Furthermore, politicking should not be a permanent career.

I also strongly feel that we need small business men and women in Congress and in state houses. It would change the legislative outlook about taxes, business and everyday problems of the middle class as well as poor.

The Federal Reserve’s Conflict

The Federal Reserve has a conflict of interest in its very mandate. The new financial Dodd-Frank regulation law has tilted the effect of the Fed in many ways, giving the executive branch of government much more influence on the Fed.

Despite the logic for the Fed’s independence, Congress always has wanted to impose influence. It has to an extent. Since 1978 the Fed has had to enforce the Full Employment and Balanced Growth Act, known as Humphrey-Hawkins. That conflicts with the Fed’s stated currency/inflation activity.

The Humphrey-Hawkins Full Employment Act enforcement creates an inflating bias; certainly not one of dollar stability. So there is always a conflict of interest.

Remember, the Fed handles monetary policy. The president, through the Treasury Department, is in control of fiscal policy. It’s difficult for the Fed to control outlandish spending by the government.

Sarbanes-Oxley Obsolete

Sarbanes-Oxley was passed in 2002, after the Enron and WorldCom disasters. Like all legislation by Congress, written and executed as a reaction to a media-enhanced investor-debacle, the law of unintended consequences is an ultimate result. Negatives far outweigh any positives.

Sarbanes-Oxley has been a great profit center for accounting firms. It’s also a good talking and campaigning point for populist politicians, but an expensive headache for companies.

Lots of smaller corporations no longer seek public funds because it has become too expensive for them to be publicly owned. Audits are too expensive.

What is more, the legislation helps little in preventing fraud, the intended purpose. That does special havoc with small business which cannot afford the added, expensive bookkeeping.

Moreover, this keeps foreign corporations, even giants, out of the U.S. or has existing ones reconsider their American status.

If any corporate executive wants to commit fraud, Sarbanes-Oxley will not prevent collusion to do so. On the other hand, anyone with corporate experience (that leaves out most in Congress) knows that Sarbanes-Oxley makes running a business more like a steeplechase or handicap than it should be.

Proxy Voting Changes

Attempts had been underway for some time for changes in the way proxy votes are permitted and counted. Under the new Dodd-Frank Act some have been finally legislated.

Street name votes must now have consent of the share beneficiaries. There are now nonbinding shareholder votes on compensation-related issues. Governance changes and board of directors compensation committee changes were also enacted.

Like other added restrictions on business, they serve little purpose, other than a play to a voter block that feels the corporation’s primary care is not its product or service, jobs and profits that enable it to operate, but to seek secondary social goals, almost simultaneously.

Anyone with hands-on business experience knows it is impossible to focus on both at the same time and be profitable. Only community organizers and social scientists with no top-level business experience think that way.

This fine-tooth-comb meddling is actually unfair to most shareholders because many activist minority shareholders are not really interested in genuine company matters. Their primary goals are societal concerns that ought to be rectified by federal, state and local government, not private corporations.

For years, they have clamored for changes in corporate activity which the vast majority of shareholders would not want. Today, corporations are being nudged by government to actually submit much of the proposals into their proxies.

The President and Moods and Sentiments

I have in the past discussed how moods are relatively long-lasting emotions; sentiments are shorter-term. Correspondingly, they can affect how stock market cycles react and can precipitate booms and busts in industry.

Therefore, our Chief Cheerleader, the president, in the midst of a deep recession, should never make it a practice of singling out an industry, whether industrial, communications, banking, insurance or lender of any type, as scapegoats when he wants the economy to recover and produce jobs.

Protecting Trade Secrets

The best and cheapest way to protect your trade secrets is to keep them under lock and key the best you can. Be sure your employees, customers or clients are not able to get at data that should not be made public. Of course, this is never simple.

Also, it’s logical at the very onset, to use trade names and logos that are hard to duplicate. Example: A made-up name such as Kodak.

The best and cheapest way to protect your trademarks, aside from registering them, is to actively use them in commerce. The laws are friendly only to those who fully employ the names, marks or logos they want protected. Even registration is not an outright guarantee.

Stay out of courts if you possibly can, when you have disputes that concern trade secrets or trademarks. Those with the most money to litigate will win.

Unfortunately, patent and trademark litigation contests often are not proud examples of prevailing justice.

The Dollar Gold Link and Bretton Woods

From 1947 until 1967, when we had gold- dollar convertibility, unemployment averaged only 4.7%, with economic growth about 4% annually. Plus the fact inflation remained relatively low.

In 1971, during the Nixon Administration, the Bretton Woods agreement set up a new system, including the International Monetary Fund and the International Bank for Reconstruction and Development, part of the World Bank Group. The U.S. dollar became the world reserve currency for the member states.

However, slower growth has ensued from that point, and gold today appears to be the preferred reserve of many countries.

America seems to have flubbed the job.

The Dodd-Frank Risk Cure?

Risk was never overcome by regulation. The media can more fully explain this, if they tried to find facts out for themselves and report them.

Example: Fannie Mae and Freddie Mac were risky semi-government agencies who were instrumental players in our sub-prime crisis. There was no lack of regulation.

But that financial meltdown has resulted in even more regulation with the likes of Dodd-Frank.

The EPA and the Democratic Process

Congress has not been able to pass a Cap and Trade bill. The public realizes the proposed legislation is a device for powerful government taxation. The measure is more a means for imposing taxes on industry and consumers, than it is for environmental protection.

So what does the Obama Administration do, in its effort to help reduce emissions it claims the bill will reduce? Especially when global warming is not scientifically proven?

It imposes controls through unelected bureaucrats in the Environmental Protection Agency (EPA).

Only they can make CO2, which we exhale, and trees ingest, a poison.

Phony Job Creation

When you hear that jobs are being created always consider:

One: Are jobs make-work for government or are they permanent?

Two: Are the jobs full time or part time? And if so, for how long?

If the work is for government, are they unionized with special pension programs? If the answers are that they are overwhelmingly government-oriented, you know they may be phony and costly. Particularly when so much of the so-called Obama administration stimulus went to states which added government jobs.

Another important statistic: While economists may differ, spending for a government job is known to have an economic multiplier effect of 1.4 or 1.5, On the other hand, private jobs have an economic multiplier of close to 3.5.

So beware of job claims during a recession, especially when you get those politically-inspired varieties.

Extended Unemployment Checks

Unemployment benefits have an impact on unemployment statistics. Extending benefits tends to make the unemployment rolls greater because it’s generally a disincentive for seeking jobs.

Studies show that most unemployed, who are not desperate, put off looking for work until unemployment checks are ready to run out.

But the media operates with just selective reportage. They find a small percentage who truly need more benefits and make it appear that all the unemployed require to be on a dole forever, or else they starve.

With no remedy, other than an unemployment check.

Real Unemployment Numbers, Part 2

Average unemployment numbers are what we get, covering all age groups. That average can consist of different classes, each of which is affected differently. Classifications contain teens up to age 25. Or all adults 25 and older Or high school graduates, or college graduates; skilled and unskilled.

The adjusted unemployment rate now is closer to 17.5%, not the 10% reported by the media and the government. The youngest job-seekers are suffering the most from the current recession.

Real Unemployment Numbers, Part 2

Average unemployment numbers are what we get, covering all age groups. That average can consist of different classes, each of which is affected differently. Classifications contain teens up to age 25. Or all adults 25 and older Or high school graduates, or college graduates; skilled and unskilled.

The adjusted unemployment rate now is closer to 17.5%, not the 10% reported by the media and the government. The youngest job-seekers are suffering the most from the current recession.

Inaccurate Unemployment Figures

Raw government-announced unemployment figures can be misleading. They must be carefully interpreted. They never fully are in the media, often for politically-slanted purposes.

Examples: Unemployment numbers don’t tell you how long the unemployed have been out of work. Or how many are not working full days or have permanent jobs. Nor how many have given up looking for work. Those out of work a long time may not even be looking for employment, and are not being counted as unemployed,

All that results in a better than reported unemployment figure.

Moreover, the time of year reported is a factor. And weather conditions may have much to do with short-term implications of job statistics.

Management Ability

It is true that an executive must operate with the hand being dealt. If the business environment or the economy is poor, an excellent manager may do extremely well by just minimizing losses. But there are no real standards to go by.

Look at the management techniques used and they are all the same. The same acronyms to describe managerial approaches. Those that worked in the past may not be working now. The ones that did not work in the past may be working today.

A lot of luck is involved and lots of persistence. You do need an earnest game plan Also an eye on protective management technique that actively avoids serious problems. That, for example, keep away from damaging lawsuits, especially employee harassment and EEOC complaints. Management has to consciously stick to the employee manuals set up.

The CEO Role

Studies have looked at the effect of top management changes and have found they account for only about 10% of added profitability.

Often it is other circumstances that result in a company’s doing better or worse. The economy, business or general industrial conditions may have much to do with any company’s near-term fortune.

There are business cycles. Moreover, the bigger the company, the harder it is for a CEO to turn operations around on his or her own.

The CEO is certainly important, but never to the extent the public, or the media, may believe.

Speaking on Our Feet

The inability to speak on our feet has brought about a term I have called Telepromt-torical.

President Obama has much to do these days with the state of our business and financial climate. He appears to be vying with the status of those ancient Roman senators who stood around in togas making speeches. Interestingly, they did so without the use of teleprompters.

He, however, has changed things in this country, even the world. You might say, his speeches are very teleprompt-torical.

I would think that schools today ought to include courses on debating, in addition to their regular curricula. The ability to think on your feet without having something to read from in front of you, other than note outlines, would be a benefit to all.

And not just for those who hope to become president.

MBAs for Environmental Studies

By now. there is enough evidence to show that the entire scientific evidence behind global warning is suspect.

Environmental studies programs depend to a great extent on the premise of global warming. Cap and Trade legislation is actually a ruse to create taxation, based on dubious global warming science.

So why start off on a career with a new MBA degree in this specialty? It is either a marketing ruse to get a job that defies science or your own credibility as an MBA has become tainted by scientific doubt.

Just another marketing scam our vaunted institutions of higher learning have developed.

Government Regulation and Bubbles

Politicians are having a heyday on how they intend to stop future financial bubbles. They succeeded with enacting Dodd-Frank.

Bubbles are man-made, enforced by government policy and regulation. They breed on human psychological extremes. And they feed on panic.

The onus and guilt may be thrust on private parties for political purposes, but bubbles exist only if government agencies permit them to do so.

Actually, it’s far better that the powers-that-be in government sit on their hands than “do something” in the way of remedies. The long-term in a bubble event often takes care of problems better than short-term panaceas.

Apart from those called in to do the short-term patchwork remedies, If there has to be basic blame for recent bubbles in the U. S., it can be placed on the heads of the governors of the Federal Reserve. They are the guilty, who have made money too cheap. That is always the fuel for a bubble.

Bubbles can be dampened when the availability of currency is tightened. However, the opposite monetary policy has been the story in U. S. bubble experience.

America a Corporate State?

Liberals will fight you to the death, should you accuse them of any fascistic offense. Yet they are, nevertheless, guilty of corporate state politics, right here in America.

Their argument is that super financial regulation, such as Dodd-Frank, is the answer to stopping bubbles and financial risk. More regulation, they say, will reduce financial meltdowns. That same financial risk that past regulation failed to catch.

And if large companies “too big to fail” look ready to do so, the U. S. ought to be the employer of last resort, to bail them out. While government, in effect, operates them. In the past, the bankruptcy laws remedied the problem without political input.

Well, that is corporate statism, pure and simple. That was the road taken by the Obama administration with autos and banks and insurance in 2009, and it is now a permanent fixture.

There were alternatives.. Actions that would have been better solutions and less destructive to our long-term economy.

College Kids Are Getting Their Money’s Worth?

There is a disconnect somewhere. More kids go to college. More get into debt. More of their parents are going broke financing their education.

According to the National Assessment of Adult Literacy, the percentage of college graduates’ ability in literacy had declined from 40% to 31% in the past decade. About 20% of college seniors did not have the ability to estimate whether their car had enough fuel to get to a gas station.

But more kids and parents can show those fancy diplomas to friends and relatives. So I guess all is not lost after all.

Why Waste Fortunes on Useless Degrees?

Some people look down on vocational schools. A degree from a four-year college is considered first class. A vocational-school degree is not. That should be a prejudice we must overcome. Because maybe that is what many students would be better off at.

Those who have employable skills will earn top dollar at jobs that employers want, even in deep recessions. Others, with their fancy-school diplomas sit around depressed for the lack of opportunity, despite all their effort toward those impressive but impractical and useless degrees. It’s rough spending a fortune to get through college, only get a degree that does not enable you to find a viable job.

It is worse when that career puts you in extreme debt.

Earning Good Money Without College

You don't really need a four-year college degree to be successful. Vocational education does pay off better for many of those who have lost jobs or are seeking entry-level positions in trades.

Even lower-level electricians today make on average $48,000 a year. Plumbers make $47,000. That's much more than the average American earns. And those jobs may be more plentiful.

According to a Wall Street Journal 2010 survey, accountants and engineers thought that the schools played an important role in employer consideration but the numbers were not that overwhelming. For business and marketing majors, the survey appeared to show that the schools were not that important, especially when cost was considered.

That going-to-college myth is slowly shrinking with the Great Recession.

The College Teaching Mill

Consider the dismal teaching quality of colleges. Over 4,000 colleges and universities now enroll over 17 million students. College has become a huge growth industry. Unfortunately the industry has also changed and mutated negatively, with far too little oversight of quality.

Colleges appear to be primarily in the business of acquiring students, differing to a degree, only in their approach to marketing.

Some do so as research centers. They may boast professors with science awards and Nobel Prizes. These are very appealing marketing devices. Such esteemed faculty also attract grants and endowments, as well as students.

But even that’s a façade and not a teaching-type institution to attend.

Realistic College Planning

Are you or your kids really college material and worth the sacrifice of cost and effort?

Be realistic about yourself or any of your children going to college. It’s a major budget-busting factor that has been tossed about for years in a sea of misinformation. The facts about education, especially college, are about as corrupted as those that surround investing.

They also impact the family positive, even negative net worth, and deserve full family thought, discussion and proper planning. ( See the Earl J Weinreb NewsHole® comments.)

Futures Markets on Future Events

Some businesses have had employees create a futures market on a subject of importance to their company. They feel that certain points of view, though a gamble, can be prescient, if the gamblers or speculators have no inherent bias in their choices.

Future projections on business concerns always are difficult to estimate. If any can be predicted with more independent accuracy, they would be immensely practical.

But caution is needed. For such markets to have value, they must have lots of independent input. Sampling should be efficient and unbiased.

I find that is almost impractical in most business projections. However, futures markets may have their place in foretelling political outcomes and general marketing concepts.

Joseph Schumpeter on Capitalism

Those who know the least about capitalism rant the most about its negatives and never appreciate its overwhelming positives.. To those I would suggest a review of the life and work of Joseph Schumpeter, the Austrian-German-American economist. He died in 1950 and has been since overlooked in academic circles and the media.

His view of “creative destruction,” how the demise of established companies led to a growing economy has been the foundation of the American dream for so many.

Personal incomes have doubled every fifty or sixty years in America, when entrepreneurial zeal is permitted to operate.

Yet, left-leaning politicians will never guess there is any economic opportunity without government being the instrument of largess.

Labor Unions and Real Wages

In an ideal productive society, a worker gets what he or she produces. Labor has to be productive. If it is not, there is an eventual disconnect somewhere.

The perfect example is the downfall of the American automobile industry which priced itself out of business primarily because of its labor costs. You can talk style and product non-competitiveness, but the bottom line is this: Management was bulldozed into giving eventually catastrophic labor contracts, in order to avoid immediate catastrophic union walkouts.

The breakdown in schools can be attributed to the same cause. Here it is the avoidance of competition in the form of breaking the public-school-only monopoly that unionized teachers have. A choice of vouchers would make for better productivity of teachers and better schools.

Unfortunately, the labor unions and its wage conflict has grown into the American social and cultural contract, and has been so highly politicized by union campaign funding, it will be almost impossible to rectify in the foreseeable future.

Inept Colleges

Too many schools market themselves by appealing to the baser instincts of students. The idea is to fill the rosters by making it easier to attend. So many graduates are unable to find real, practical jobs. Or why we have so many with easy-to-get law degrees and few who are doctors and scientists.

Affirmative action is practiced, not just for conventional minorities. It is there for any group that is not equally represented on attendance roles.

The truth is, few undergraduate students have celebrity professors. They often are taught, instead, by graduate students.

In fact, Colleges and universities engage in "bait and switch;" confer what are actually deficient degrees, and engage in other practices that would bring legal sanctions if done in any other business.

Parents and taxpayers pay billions of dollars to colleges and universities. Schools make money whether students learn or not, whether students graduate or not, and whether they get good jobs after leaving school, or not.

The College Education Scam

College education has become a scam in many ways. College administrators and politicians should drop promotional hype. Higher college enrollment and government loan programs and subsidies may be good for the college marketers, but they don’t produce the training needed to fill real, paying jobs in industry.

Too many degrees, especially from four-year institutions, offer graduates little skills but a resume, when they go looking for a job in the real world.