How Often Must Companies Change CEOs?

There was a time when CEOs of major corporations grew into their jobs from the lower corporate ranks, arriving at the top spot in their late 50s or so. Retirement age was at 65, as a rule.

These days the paths involved usually differ. Many top executives fail to stick around that long. Change is the new corporate mantra. CEOs are being treated more like sports coaches who are dropped after one losing season.

It’s an unfortunate management error. Large companies cannot be turned around to suit monthly business conditions, the same way big boats can’t make U-turns in minutes. The idea that this is expected does not speak well for business experts and the media. which egg on such change in proverbial mid-stream. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Dodd-Frank’s Results—Here's Yet Another Fiasco

The Dodd-Frank Act was passed in the middle of 2010. One of its main features was the Volcker Rule, which pertained to the separation of bank’s so-called proprietary investing and commercial banking. The idea was to make the banks safer because perceived speculation could hurt bank safety.

To date, the rule has not been fully implemented because all the brains that comprise government bureaucracy have not yet come up with a suitable definition of which constitutes proprietary investment or trading by banks.

And no one will ever accomplish this task. Yet there’s a general assumption that government knows best and will safely guide bank operations with more and more regulation layers. The bureaucrats talk; nothing concrete is accomplished;  big banks get bigger, and too big to be allowed to fail, according to the bureaucrats. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Gasoline Pricing for Amateurs

Most gasoline consumers have little idea of how gas prices work. Unfortunately, they take the path of least critical resistance and always blame the oil companies and/or speculators. They learned what they feel is accurate from the political demagoguery of politicians who always take their best route for getting votes from an unknowing public.

The subject is complex because of tough, ever-restrictive, and often unreasoned government environmental regulations on oil production, refining and distribution.

Then there are heavy government taxes. On top of that are other restrictions, limitations and regulations. The speculators simply exaggerate short-term pricing; their effects can be to lower as well as raise pricing.

There is a bottom-line solution here: produce more oil and gasoline. That over-rides the other complexities. Moreover, the U.S. is awash with hundreds of years of supplies, which would cost us Zero in balance of payment debits.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Dangerous Budget Deficits Are Worse Than You Probably Think

Government spending is often more than a waste of money.

Excess spending that produces budgetary debt causes deeper recessions than we would have. In fact, I have repeatedly reported that so-called stimulus funds have actually been a political slush fund, doled out to “friendly” recipients. And that independent study has shown actual, overall job losses while the past “stimulus” was applied, to mainly help certain states balance their bloated budgets.

Remember the Soviet Union with its periodic Five Year Plan stimulus efforts and their notable lack of success?

But budget overspending will do to us in the future what it is doing to Greece and several other European countries today. (See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Politicians and Oil Price Increases

Let’s repeat the left-wing political drill. Every time the price of oil and gasoline goes up, call for a congressional hearing and put oil company CEOS on the grill.

Of course, the results, after all the political hoopla, will be the same. The politicos find nothing despite all efforts. The media get their headlines and stories. But the facts will be overlooked.

Moreover: The oil companies pay an effective tax rate of 39.8%, much higher than most corporations, far too high in an industry where exploration is so necessary and so expensive.

Facts: Oil prices are determined by expectation of future long-term oil production. Supply and demand for oil play an important part, and the left does all it can to reduce supply. So the left-induced Merry-go-Round goes on and on. (See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Beware of Newly Spun Wall Street Gibberish

There’s an old saying: Nothing is new under the sun. Especially on Wall Street, where the merchandisers are constantly coming up with new terms with which to market old investing concepts.

I have heard a new term to offer investors a means of attempting to beat the odds of investment success. Unfortunately, it has little to do with needed discipline. The term applied to this “new” discovery is “tactical,” as in “tactical investing.”

However, it’s the same old tactic used to time the market, a strategy where the odds for best-price success are rather small at about 5% for those seeking optimal in-and-out transactions. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Why Not Special High Schools?

Readers know my position on the poor K-12 schools, as well as my feelings about the lax, ineffective education most colleges offer in their run-of-the-mill, time-consuming college courses.

My attention today is on the over 22,500 high schools who today turn out so many unfinished products, as well as drop-outs who never complete the easiest of work entailed.

I have always mentioned why high school grads with special achievements ought to get diplomas that note grade honors, to distinguish them from ho-hum students.

Then we should have more, better, specialized high schools as well. But we now have only about 165 of them. On this subject I recommend a book by Chester E. Finn and Jessica A. Hockett about schools where exams are needed to enter. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

What Energy Shortage?

I recently noted oil production figures and realized that the U.S. imports about 20% of the world’s supply.That’s lots of dollars lost that hurts our international economy position as well as foreign relations.

Yet, we have enough oil and other at-hand energy in the country for our own needs, were we to politically decide to develop them.

Take natural gas as just one example, as a source of energy that has little environmental downside. We have enough in America to last at least 250 years, until we discover really viable alternative sources. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Future Business/Industrial Economic Shortcomings

When you listen to politicians these days, you easily see how deceived too many are by the illusion that the huge federal and state debts will somehow disappear down the road. If the problem is just swept under the proverbial rug and forgotten, until the next election. I have commented on this thoroughly in the past.

Another problem too many politicians are overlooking  has to do is the need for ever-increasing telecommunication needs. It ought to be expanding at a rate beyond even our current imagination. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Train Lawyers To Be Other Than Political Liberals?

In The Princeton Review’s 2013 edition, the publication lists what it considers the 168 best law schools. They also determined from a study of about 18,000 students, where the most politically liberal-minded were.(Reputed by the survey to be at Northeastern University.)

In real life, you can run a poll of existing lawyers by looking at their political donations, about 95% to the party we know that generally opposes tort reform or any legislation that would tend to diminish law fees. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

A Real Stimulus is Possible

A stimulus ought to be a genuine job generator. Experience shows it should work quickly and be practical, not to be effective after the eventual, normal recovery would have occurred. After all, there are frequent normal cycles in an economy.

Moreover, a real stimulus will not change the country’s political and social infrastructure. To many politicians, a stimulus is the hope of political opportunity.

The stimulus should not be an excuse to provide political payoffs. A stimulus is not supposed to promote voter turnout or change the form of government. And it certainly should not cause inflation to endanger our children and grandchildren in the future. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Even Communist China Now Avoids U.S. Keynesian Stimulus Economics

It’s interesting to see that a noted economics professor, Zhang Weiying,  at a major Chinese university, is now advising the Communistic China government on what it has done wrong in the recent past, using Keynesian stimulus efforts which have failed to keep their economy functioning at an even keel. The Chinese growth has stalled despite all the funds being thrown at the problem.

As a result, they are putting a stop to this loose money policy, something our pundits of monetary policy at the Fed, and fiscal policy at the Treasury, are still committed to. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

High Corporate Taxes Make No Sense, Even For Liberal Politicians

All politicians want the creation of jobs. Some of them want corporations to pay their “fair share” of taxes while producing work openings.
But U.S. corporations pay more corporate taxes than all other world corporations. So how are they to  compete in the world markets?
Furthermore, our Keynesian politicians spend and spend and print more paper money to stimulate the economy. Yet, U.S. corporations have about $1.7 trillion in overseas earnings that they do not bring back because those earnings, already taxed overseas, would be taxed again by Uncle Sam. 

1.  A reduced U.S. tax rate would provide much of those funds as a  genuine stimulus. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

How Do You Break Up The Big Banks?

Federal regulators keep trying to cut the size of big banks which they claim have become too big to fail. The clumsy Dodd-Frank Act of 2010 has staggered along with its thousands of pages of bureaucrat-eese, that includes an attempt to keep banks secure. All it has done so far has made banks even larger.

Breaking them up isn’t easy, nor will it solve the problem of safety. Smaller banks will have to work with each other to accommodate the economy, and this keeps stacking a potential house of cards. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

The Importance of an Independent Corporate Board

Investors all agree that an independent board of directors is important and they would hope all companies in which they invest, as opposed to merely trade, would have a truly independent board.

The question is: What is a truly independent board of directors? I would say, the one primarily in charge of spending, costs and audits. Also, the CEO and the board chairman should not be the same executive.

The question of who is a good manager or not is often too subjective to be a critical factor in determining how effective the board can be. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Faulty Media-Promoted Unemployment Figures

When reported, month-to-month, new net job increases are running about half the rising number of Americans, and you, yourself, see  more and more unemployed around you, but the media insists on reporting a major drop in the official unemployment rate, you just know something is wrong.

You do, but most of the vaunted media doesn’t.

When a skilled worker can’t find a permanent job but instead gets  part-time, temporary work with a broom for a couple of weeks, he is considered employed by the media when it suits them fine to parrot the resultant employment numbers.

Nor does the media tell you how the employment numbers are actually estimated by the U.S. Bureau of Labor Statistics. Not by accurate head-count but a sort of poll, subject to the pitfalls of such a system. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

The Importance of Financial Confidence

You will never really get this from the media headlines, who repeat anti-business threats from politicians who should know better.

You will never create jobs when business owners and managers are unsure of the future or fear what government will throw in their paths in the future.

So the best way to keep an economy in a recession or the doldrums, is to rant at businessmen, or threaten them with more taxes, or raise their costs in so many bureaucratic ways. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

What's a Real Stimulus?

A stimulus planned during a recession must act quickly, if it is to be practical. It’s also supposed to stimulate the economy with minimal cost.

Any government really fully aware of how to stimulate a morbid economy would institute a quick tax cut on all types of income; that always works, Tax cuts on interest and capital gains.

Corporate tax cuts are tremendous boosts to an overall depressed economy especially when most foreign country rates are much lower than those in America. (See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Cheaper College Tuition

There’s no reason college cannot be cheaper; that is, if colleges were under pressure to really try to reduce costs.

Take a recent study done by Christopher Matgouranis, Jonathan Robe, and Richard Vedder, a Professor of Economics at Ohio University, and the director of the Center College Affordability and Productivity group.

Reporting data at the main campus, at Austin of the University of Texas, the study says tuition fees could be cut in about half by asking 80% of the faculty with the lowest teaching loads to teach half as much as the 20% with the biggest loads. The top 20% now cover 57% of the teaching.

Many professors simply do not teach but spend time on research, much of questionable utility. Also, student-teacher ratio standards make little sense, while college bureaucracies are in need of major cost-saving overhauls and streamlining which can reduce tuition costs even more. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Do We Really Need More Teachers?

Let’s face it, when I was younger, ALL my classes had well over 40 students per teacher. And the students did well, far better than the graduate and drop-out crops being turned out today with a bit more than 20 students per teacher, on average.
Moreover,  we had no internet and other devices to assist teachers, other than weathered books, old-fashioned blackboards and handy rulers for law and order..
The need to “invest” in more and more teachers is the mantra from school unions who want to grow at taxpayer expense, more than any positive aid to teaching they purport to be. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

The Uproar Over Complex Oil Pricing

For decades, the media has done a poor job in explaining how oil pricing works. As a result, the American public goes berserk whenever it costs them more to buy fuel at the pumps. When prices drop, there’s little comment, or attempts to find out why.
This ignorance is perfect for politicians who are responsible for much of American gasoline and fuel oil pricing.
The subject is too complex to fully explain here but there is one essential factor in such pricing that overrides all. The more American oil we produce, the cheaper the product will be. And The U.S. can become a major producer of the product for at least the next couple of hundred years, until we can produce alternate fuels that won’t bankrupt us. 

It’s the politicians who only imagine they see environmental problems under every rock, who are the culprits.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Securities Advisers Responsible For Loss Reimbursement?

I have no sympathy for advisers who often charge clients for services the clients may well do themselves. But why sue such advisers who have no crystal ball and who cannot see if an investment will turn down?

And yet many pension funds do sue advisers who could not see a downturn in the mortgage markets a few years back.

This lacks common sense on the part of the investors, other than a ruse to collect money from any source available. So why not sue, hoping a judge and jury will not be conversant with how legitimate securities markets work in real life?

(See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

How Much Savings Is Needed For Retirement?

It’s common to see the financial media fill up space with comments on how much you have to save annually for retirement, or how much savings you should amass in order to have comfortable retirement.

All that discussion is meaningless, except to fill that chatter.

There is no magic amount to save, as some advisers would have you believe. There are too many contingencies in life that make a pat-formula too simplistic and useless.

The practical solution to proper retirement is to save and invest all you can. And secondly, to depend on alternate sources of retirement income, other than Social Security and personal investments. 

That means the possibility of having a source of part-time income, a subject I constantly discuss. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

Revisiting Poor Justice-- Hanging Judges and Juries

Since 1978, The U.S. Supreme Court has permitted prosecutors  to threaten defendants with even more charges and tougher penalties, at a federal trial.  

At the same time, Congress has legislated more federal crimes, many of which defendants are not aware of until they are arrested for the transgression. On average, over 56.5 new crimes have been legislated each year over the past ten years, stipulating mandatory minimum penalties which can run to twenty years.

With such official license to threaten and bully, many innocent defendants have been pleading guilty for smaller sentences, just to avoid the major sentences, once a hanging jury and judge get the case.

American politicians keep repeating “justice” but because many of the innocent victims are business men, the outrageous practice goes on. While prosecutors attain their own fame and fortune in politics. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at twitter)

The Job Interview

I started and helped operate a profitable major employee-contracting business for 17 years. The work varied from ordinary clerical to nurses and physicians. 

Lots of suggestions get thrown about on the important subject of securing a job. Let me tell you one that makes more sense than others I see being professed in the media as the best.

Try this job interview technique with a prospective employer, after the interview: Now that we have had our discussion, do you have any reservations about me that you would like to have me explain or answer?

That helps get into any problems that may stymie your efforts. (See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Why Not Some Moratorium on All Federal Regulations?

An important suggestion that the vast majority of Americans are not thinking of: There should be a year’s moratorium or until the next presidential election, on all new federal regulations until an independent audit can be arranged to evaluate what we now have.

I can guarantee the U.S. economy and political system will not spin out of control. But we will get an idea of duplications and such inanities as spilled milk on farms being treated as “oil spills.”

And also, an audit of the massive Federal Register to reduce its ridiculous size.(See the Earl J Weinreb NewsHole® comments and @BusinessNewshole.)

State Budgets Affected By Politics

The public marvels at Wall Street’s salaries and bonuses, while government salaries get slight attention.

While we know about Uncle Sam’s spending these days, state and local outlays are beginning to get commentary because severe budget problems are a major source of problems for all states and cities as well.

I am referring to exorbitant pensions held by millions of active and retired state and local public employees. These include city managers, teachers, cops. garbage collectors, guards. They represent at least three quarters of public employees who have what is called defined-benefit retirement plans.

They have the ability, unfortunately, to organize voters and thus control politicians who keep adding to taxpayer burdens until there are not enough taxpayer funds to go around for the feeding frenzy to persist. (See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

The Media’s Huge Impact on the Economy

 
The media has a huge impact on the economy because of its influence in politics. Unfortunately, research and just pure independent observation easily show bias and slant, so that impact can be dangerous to the economy and, thus, the country.

The media’s impact, moreover, exceeds its inherent ability, being composed of individuals who often are not truly fit to be in their influential positions.

The average citizen is thus imbued with one, overriding economic theory, a form of Keynesian, which has been refuted over many decades of experience.  (See the Earl J. Weinreb NewsHole® comments.)

The Inflationary Economy

A 2003 report by the Federal Reserve calculated the effects of government debt and its impact on long-term interest rates. It was done before the current deep recession and weak “recovery” and the efforts of the Administration.

The report concluded: "A percentage point increase in the projected deficit-to-GDP ratio raises the 10-year bond rate expected to prevail five years into the future by 20 to 40 basis points. Similarly, a percentage point increase in the projected debt-to-GDP ratio raises future interest rates by about 4 to 5 basis points."

In other words, the effect of inflation in the form of higher interest costs.

Inflation induced by heavy deficits does not arise rapidly during a recession, but it jump-starts once recovery gets going. Then it quickly gets out of hand.

All the theory economists use as remedies get stymied by politicians who know the medicine will cause economic belt-tightening. Those remedies will be over-ruled by political considerations.

The present Greek, Portugal and Spain debacles are perfect examples of what happens when belt-tightening is avoided too long. (See the Earl J Weinreb NewsHole® comments.)

The Questionable Wisdom of Crowds

 

The assumption that the masses can be correct may arise from a theory that there is a certain wisdom in crowds. There has been some limited research on this to explain how a form of futures market can explain, for example, how the public could predict future election winners.

Practical results from the use of such theory has been non-existent. No real futures market has ever resulted from past attempts to implement such theories.

The problem: If crowds were prescient, there would be no booms and busts and no economic manias as have existed over past centuries. All securities markets would then be predicable.

On the contrary, evidence over the years suggests the opposite; crowds are invariably wrong. (See the Earl J Weinreb NewsHole® comments.)

No Justice for Alleged “Criminals”?

I have maintained for some time that business folk have a terrible time getting justice when both juries and judges have little understanding of business, just the anti-business sentiment they get from political cant.

A further indication of this problem: A study by professors Lucian Dervan and Vanessa Edkins at the Florida Institute of Technology, and reported in the Wall Street Journal, indicates another issue bearing on such injustice.

Oftentimes, the innocent plead guilty before trial because they feel the odds are stacked against them. And in pleading guilty they avoid a stiffer sentence from an erring judge and jury. (See the Earl J. Weinreb NewsHole® comments.)