Too Big To... Wait, What?

Or, I know I know but still

So I hear that GM is now gonna be mostly owned by the UAW and the Federal Government. Which, I figure, means that the Federal Government will continue to prop it up for years to come. This got me thinking.

First, it got me thinking, how does this happen? How does a company that employs so many people, that comprises such a large fraction of the nation's economy, suck so badly that it's about to fail?

Bench duck is suspicious.

I know, I know. If I were to ask my go-to econ guy George, I'm sure he'd have all kinds of explanations about how big companies can fail just as easily as small ones. But still... Really? Really? Is this really how it's supposed to be? Big company, big payroll, big business... failing?

Which brings me to the second thing it got me thinking: Is this really the kind of company I want to own? Is it really the kind of company I want the government to own on my behalf, with my money? I mean, I'm pretty sure it's not even the kind of company I'd want to work for.

The third thing I was thinking was... about this whole "too big to fail" thing. How does that work, exactly? I know, I know. If they fail, they take down too much of the economy with them. But still. It kinda seems like a lame excuse, if you ask me.

"Too big to fail." It's weak. Weaksauce. You know what I want to hear? "Too awsome to fail." "Too busy eating the competition's lunch to fail." "Too successful to fail." I mean, if I'm gonna own some companies, I want to own the ones that aren't, you know, failing. I dunno. That's just me, I guess.

Finally, it got me thinking about how whenever there's a big union strike, like at Boeing or wherever, I always wonder if, since Labor seems to think it knows better than Management how to run a company, why they even bother having Management at all? Why work for Boeing, if Boeing doesn't know how to run an airplane company? Why not take those union dues, buy your own factory, and manufacture your own airplanes? You know?

Anyway, now that the UAW pension fund owns 55% of General Motors, I guess I'm kinda getting to satisfy my curiosity: does Labor really know better than Management, or not? I just wish they'd try out this little experiment without using my money for it.

My economic prediction: continued growth in the Thumbs Futures market, over the next several quarters.

Home Is Where The Stimulus Is

Part One: Wherein a Dilemma is Perceived
We do most of our shopping outside of our hometown. Part of it is that we only recently moved here, so we're more familiar with the retail opportunities in the neighboring town we recently moved out of.

Another part of it is that the neighboring town on the other side of us is the one with all the major retail zoning. Which probably explains a lot about why they're doing so well, city budget-wise.

So when our own city council sent out a newsletter encouraging residents (like ourselves) to "buy local", it caused some distress at Chez Container. You see, explained the newsletter, our hometown budget depends a lot on sales tax revenue. And times being what they are, that revenue is more important to the city's fiscal health than ever.

In principle, Mrs. Container and I are all in favor of buying local--especially if it helps our community and our city stay in the black. As new homeowners, we were really excited about the opportunity to put our money where our mouths were, and vote in favor of a property tax increase to fund the local firefighting infrastructure. We figure, we want to live here, it's our responsibility to take care of ourselves. You'd be surprised how unpopular that sentiment seems to be--the region has a history of underfunding its fire departments.

Anyway, that's the principle. But in practice, our hometown doesn't really offer a lot of retail value to us. Not only that, but as children of the automobile, we often find ourselves in neighboring towns anyway. But we do have expenses. We do have a certain minimum consumption level to maintain. So how can we throw some of our business our own way, so to speak?

Her: Well, we buy our groceries here in town...

Me: That's true. And we buy our pizza here in town.

Her: We buy our gas here in town.

Me: Right, right. This is great. What else?

Her: ...

Me: ...


Part Two: Wherein One Hand Washes The Other
Meanwhile, we've been thinking very hard about buying a real camera. It's very hard to take good pictures of crows and containers when you don't have a good camera.

The first thing we did was consult with an amateur photograhper we know through a mutual friend. He'd recently consulted with us about shopping for a new computer, so we figured it was time to return the favor. "We're total camera noobs," we said. "We want a robot that takes awsome pictures for us," we said. "Help us, Obi-Wan," we said. "You are our only hope!"

So our friend looked carefully into the matter, gave it a lot of thought, and after several weeks of research, poured out a Santa Claus-sized goodie sack of advice for us. Included among the many gems were some thoughts about finding a good camera store to do business with. He really likes a store in New York, that's always done right by him. ("It's a Jewish establishment, so you can't place orders on Saturday." "What about Sunday? Are they open on Sunday?" "Yep, Sunday's fine.")

So that got us thinking. Turns out, there's a branch office of a reputable photography chain right here in our hometown. So, after a little bit of discussion, Mrs. Container and I agreed that for all our photography needs, we would "adopt" this store as our Official Buy Local Retailer.

Later, when the City Council finally gets around to fixing those potholes on Main Street, we'll drive by, point, look at each other, and say "see? We did that!"

Irrational Exuberance

I know, I know. I was supposed to make an entry yestreday. Ah, well.

Anyway, S and I were thinking about buying a couple big-ticket items. I mean, we keep hearing about how bad the economy is, but so far the downturn doesn't seem to have affected us. Her employer is doing quite well, and I had no trouble at all finding a new job in November. We have money in the bank. We're getting a nice tax return from the feds. We live within our means. So why not buy something nice?

Then I got to thinking.

The other day, our local NPR station did a report on the "rainy day" funds of the various cities in our county. Some cities were down to almost nothing. Some had a healthy reserve. One city had an entire year's operating expenses salted away.

The part of the report that interested me the most was the city council that started preparing for this economic downturn two years ago. At that time, their analysts became concerned about the trends of some early economic indicators. They brought their concerns to the city council, and the council requested a study of the implications. The study recommended that certain steps be taken--mainly, strengthening the city's rainy day fund--to prepare for the possibility of an economic crisis.

And--here's the good part--the city council actually followed the recommendations of their analysts. So now that the crisis is upon them, they have the resources on hand to survive it.

So all that got me thinking. I figure, there's about three things that city council (and their analysts) did right: They saw the early warning signs, they took a good look at what those signs meant, and they responded promptly and responsibly to what they saw.

Now, like I said, the economic downturn hasn't really hurt us.

Yet.

See, I'm thinking there's going to be at least a couple more waves of contraction, before things really start to get better. I see cell phone sales are down, and cell phone manufacturers are reporting losses. This means companies like Qualcomm, that sell goods and services to cell phone manufacturers, are probably going to start reporting losses soon as well. Things like that strike me as warning signs. We could be affected by the next wave, or the wave after that.

Like that city council, I'm thinking maybe now is a good time to take certain steps. Before the crisis hits us. So we'll probably end up postponing any major purchases for a while; build up our rainy day fund instead.

Meanwhile, we'll continue to spend money on the important stuff: family, health, etc. But that new TV? It can wait. The HD cut-over has been postponed until June anyway.

I'll put up a picture to go with this post a little later today.