Sitting down to bagels and juice after seven games of volleyball, my teammate, Manuel, a native of Spain, asked why people in our country have difficulty discussing politics. Dan, still smarting from his team’s loss to us in the final game but ever the diplomat, said it was due to the great polarization that has overtaken today’s political environment. Our fellow teammate, Mike, indicated a lot of the problem arose over the role of government. For example, Mike pointed out that the government now owns General Motors. Realizing GM is still traded on the open market I asked what he meant. He said the government should have let them fail. A mute point since they did lend the former giant some hefty cash, but one with which I tend to agree, especially in lieu of what their long time competitor, Ford, was able to do. Then, I asked Mike what problem he had with the government’s current role with the automaker. From his vantage point the dealerships that were slated to close were able to pressure their representatives in congress and persuade them to let 660 of the 1,000 remain in business. Here’s where the other Mike, the one who played on Dan’s side this week, had a question. He asked our Mike if it wasn’t true that each of those dealerships was a privately held franchise. Receiving a concession to his observation their Mike, who happens to work in the auto finance world, made the assertion that even though the company was having trouble the individual franchise may still be profitable and deserve the chance to stay open. At this point I turned to Manuel and indicated he had done an admirable job of spurring a civil discussion around which differing views were held. Foolishly, however, I turned back to our Mike, who I respect as a level headed thoughtful and intelligent individual, and posed the question most investors want to know when assessing the merits of a financial decision: Has the playing field changed since the near collapse of GM and its current status. Just so we’re clear, any of you who have followed this blog for the past couple weeks, or read, listened or seen the news during this same time, realize a major player in the automotive world, Toyota, has been experiencing some problems. Our Mike attributed these problems to government meddling. For clarification, and since it has been brought up elsewhere, he did not think that the rise of Toyota and the fall of GM was in any way due to our government allowing the complaints about Toyota engineering over the past three years to go unheralded. He does however think the attacks congress has made on Toyota the past couple weeks prop up the company they own, which is GM. It would be nice if the representatives in congress could sit down with bagels and juice and discuss civilly the merits of the legislation in front of them, and actually get something done. When I got home the front page of this morning’s paper told how while state employees are losing money with furlough days they more than compensate with overtime. An example was given of a prison nurse who lost $10,000 last year to reduce her salary to $92,000, but received enough overtime to make her total earnings $270,000, almost $50,000 more than the head of the prison system. The article went on to tell of 50 state employees who received over a $100,000 in overtime last year. My wife, who due to cuts in the California budget, was given furlough days says she has not earned any overtime. In fact, as far as we know, teachers, and many like my wife put in hundreds of hours of overtime correcting papers, recording grades, and preparing lessons, have not received any additional compensation. Maybe, we’ll discuss this imbalance after volleyball next week. There is that election in Iraq today, and, oh yeah, the Academy Awards. As usual, your comments and responses are greatly appreciated.
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