Problems Resulting From Mergers and Acquisitions

                                           

When corporations announce mergers or acquisitions they love to give reasons why there is the premium invariably paid by the acquirer to shareholders of the company being acquired.

                       

After all, there has to be an incentive to sell the business. And sometimes, that premium of the targeted company’s book or operating value can be too high, well above current market pricing.

                       

One of the main reasons often given for this premium is the alleged value of synergy. That is, the innate benefits to be derived from having the merger.

However, studies show that synergy frequently is not as beneficial as it’s made out to be. Unexpected problems always arise, from merging staffs and personalities. And they may not be easily minimized.

                       

It’s difficult to determine who really gets any benefits. I feel deals are usually done too fast, and far too often for just  CEO ego satisfaction. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Fantasy Unemployment Numbers

                                           

Monthly government unemployment numbers often have little to do with reality. If corporations spewed out such faulty figures they would be hauled off to court and officials jailed.

                       

The media emphasis usually goes along with the official government charade by placing a spin on what you are supposed to make of the raw figures, depending on the political party they favor.

                       

One illustration was the Obama administration’s past creation of the “jobs saved” number. When actual “job lost” numbers are the norm. Jobs saved were merely estimates of the fantasy variety, that could not be truly measured.

                       

But worse, unemployment statistics leave out those who have given up looking for work, or are counting part-timers who cannot find full-time work. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Reduce Corporate Income Taxes

 

                       

The U.S. corporate income tax is too high, in relation to what is being imposed by other countries, many who claim to be socialist or who have otherwise managed economies. They don’t profess to have capitalist feelings.

                       

Yet, they all realize the importance of relatively low corporate tax rates.

Still, America has a social mantra of “soaking the rich” and the corporation is targeted as rich, though the taxes paid are really a cost of doing business and must be priced into what’s sold.

                       

There is no logic in keeping U.S. corporate taxation as high as it is, when you want to keep American business competitive in global markets and at home.

                       

Furthermore, let American corporate already-taxed earnings overseas come back home, tax free, The funds can be used here. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

                   

               

           

       

       

       

Private Health Care’s Lower True Cost

                       

Much is made about how much Americans spend on health care, compared to others.

                       

We spend about 16% of the GDP on health-related services. It’s perfectly acceptable to do so, if we get the best care available. Provided it’s not directed and controlled politically by the government. That is when mismanagement sets in, as it has whenever government runs any business or service,

                       

But while the French, for example, spend about $6,000 per household less on health care, they get far less in services and quality than Americans do, a fact that proponents of ObamaCare never disclose, (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Wise Bureaucrats in Government?

 

                   

Steve Forbes, on Forbes.com, a few years back,  wrote a piece of basic economics for the laymen, which I repeat here, for the public to learn and remember.

                                   

The media does a poor educational job, but Mr. Forbes sums up a bit of Education 101, also for those whose parents have bankrupted themselves to send kids to college.

                       

Mr. Forbes reflects on the erroneous supposition that there are always ”wise” men around who try to manipulate economic problems and fine-tune the necessary financial remedies necessary to mitigate and rectify problems. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Adequate Schooling Produces Jobs

                           

                   

About 60% of jobs in 1950 did not require special skills. According to ETS, Educational Testing Services, there were plenty of jobs for those looking for work requiring no special abilities.

                   

Now about 80% of jobs are considered skilled and need training, not all of which are available to high school graduates.

                   

This is a fault of high schools. You don’t need a college degree for most non technical work positions. You would not, if K-12 standards in English and mathematics were adequate.

                   

We send kids to expensive college where they become useless graduates. All we have to do is train them for useful, profitable work while in high school. They can go on to master good paying jobs once they have the basics.

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

Medicaid and Medicare Failure

   

           

Congress created Medicare and Medicaid in 1965, Politicians kept expanding benefits, while talking about controlling costs. Yet costs kept skyrocketing.

           

This couldn’t happen in private business because of the likelihood of bankruptcy. But government intervention prolongs losses and makes matters much worse and expensive. As long as taxpayers continue to pay the bills.

           

This same government failure, as we see with fraud-infested Medicare and Medicaid, is on the menu with ObamaCare. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

       

                                   

       

Outlandish Athlete Salaries

                                       

The Left complains when a "rich" top executive gets more than a million or so a year of “taxpayer-protected” income. What about a ball player who hires no one, who makes ten million and more a year? And may actually be a loser?

           

Remember: Money is fungible. The payment does not have to be direct. Money can be substituted from one pocket of government or payer to the other, to hide the source of funding. It adds up to the same total outlay.

           

Yet, many ball parks are subsidized in some way by government, and thus the fungible funds are being used to pay grandiose athlete salaries.

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

Offer Tax Breaks for Private Health Insurance Purchases

                       

Nothing the government does is truly cheap, except quality, when you total up the direct and indirect costs. ObamaCare health insurance never will accomplish what it intends to do.

                       

A suggestion: Tax employer-provided health-care benefits but return this money to employees in the form of tax deductions, to buy their medical insurance as they buy home and auto coverage.

                       

That will make insurance transferable and keep workers on their jobs with coverage. You will then have health- insurance security and portability, along with personal independence.

                       

And even more competition among about 1500 insurance carriers. With certain lower health insurance costs. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Socialist Theory and Capitalist Realism

                                       

Socialism always ruins environment. As evidenced in Soviet Russia, China and communistic Eastern Europe. Capitalism has invariably treated the environment as an asset for future use.

                       

Socialist countries use capitalist principles only to bail them out of dire economic disaster after socialism fails.

                       

Even in so-called socialist countries, it’s capitalist principles that countervail socialist errors. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

               

Investment Portfolios Management Evaluations

Large investors such as pension funds, foundations and major mutual fund managements, often evaluate  the management of companies in which they invest.

                       

The main idea has always been that you do not buy or retain ownership of securities in firms whose management you do not like. Other, usually large  investors, actively promote their influence in making managerial changes.

The latter often have another motive. They often are more interested in takeovers and active management.

                       

Furthermore, it takes a lot of nerve and arrogance on the part of outside investors who think they can micromanage because they have a large stake in a company. They may make better use of their time elsewhere. Certainly, they may want to look for over--zealous salaries and bonuses and for fraud, but that should be all. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Budget Dangers

Government wasteful spending is more than a waste of money. Excess spending that produces budgetary debt causes even deeper recessions than we would normally have. In fact,

I have repeatedly reported that stimulus funds have actually been a political slush fund, doled out to “friendly” recipients.  Independent study has shown actual overall job losses while the “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.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

                   

               

               

Oil Pricing Ignorance

                       

Every time the prices of oil and gasoline go up, there’s a call for a congressional hearing, to put oil company CEOS on the grill.

                       

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

                       

The oil companies pay an effective tax rate of about 40%, much higher than most corporations, far too high in an industry where exploration is so necessary, and expensive.

                       

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