THE ENTERPRISE--Of Complexity & the Dumbing Down of America
COMPLEXITY IS STILL KILLING GM
GM still has too many brands and too many models of cars, which lead to huge complexity costs. A long time ago, here in THE ENTERPRISE, I cited this problem and proposed that GM could support, at most 5 brands--maybe even less. Chevrolet, Cadillac, and GMC make the cut for sure. Saturn has a neat legacy in one regard but is trapped by lacking a clear identity these days. Combine Saturn and Pontiac and you get enough volume and vehicles to fill a sporty mid-price brand position. Drop Saab. Sell it back to the Europeans. Hummer can't be a brand. Maybe a model or two in GMC's line up at best. Buick is a dilemma. It's building arguably GM's best cars overall, so it makes the cut. FIVE: Chevy, Caddy, GMC, Buick and a Saturn/Pontiac hybrid brand (less all the duplicated models). C'mon Bob Lutz--you've got the cars looking up--talk to the top guys about killing off some of these wasteful brands (and dealerships and dealer inventory) Complexity kills a company if left untreated.
IN A RECESSION--SPEED IS EVEN MORE IMPORTANT
It seems that about 2/3 of economists believe we are now in the middle of what will have been judged to be the first of two quarters that will have negative growth, and thus be a "technical recession." I'm, not so sure of that, but we are certainly in a nasty soft spell, whatever the definition of that might be. When this happens, top notch CEOs have learned that in a turnaround, they need to size up the situation fast and then take action fast. Careful considered thought comes first. Doing the homework--but quickly--comes next. Then comes decisive action. Cut out the "losers"--and that means people, products, plants and customers--because they all breed and feed into complexity. And you know how I hate complexity, because none of our vaunted accounting systems measures it--at all..
EARLIEST EASTER IN 95 YEARS
Should provide a little boost in spending. April 15 tax time and rebates should also help a little. Checks from the government stimulus package should start hitting in May and June. Expect a little uptick in the economy--but just a little. Finance problems are still overhanging everything, and growth is slow. The weak US$ makes exports strong, so multi-nationals will help prop things up, averting a really big downer. Inflation will grow, and the Fed will have to switch from lowering rates to raising them sometime, probably in the 4Q. Finally, the "recession" if it is one, is very uneven. Some states are doing great. Others are suffering mightily--mostly those along the Mississippi and Ohio Rivers--perhaps because those were our country's industrial leaders in mid-last century...and they are showing their "industrial age."
CHINA IS KILLING ITS OWN PEOPLE
Air and water pollution is rampant and deadly. Olympic competitors are frightened about the impact of air pollution on athletes. The Chinese are also the largest smokers in the world. China makes up about 30% of the world's smokers. India is second at 10%. The US is down to 5%. Of course the huge populations of China and India distort the figures somewhat. Bottom line--they haven't learned from past decades of watching Americans and Europeans kill themselves with cigarettes. I guess with 1.3 billion of the Chinese I shouldn't worry about this--but they should, and they are worrying about part of it: the poisoning of China's air and water. Something has to give--and sooner rather than later--and it will add to the sizable (14-15%)cost increases on goods coming out of China--over last year's prices.
AMERICANS ARE GETTING DUMBER AND SHORTER--IN HEIGHT AND ATTENTION SPAN
Americans are now getting shorter, after a long period when they were getting taller. Height has a strong correlation with success, and vice versa. Too many sedentary couch potatoes, including kids, eating too much junk food. And the politicians and news media are feeding nonsense to the poorly informed masses to support their distorted view of things. Sound bites which were short in 2000 (9.8 sec.) are even shorter now (7.8 sec.). Nobody reads much, and if they do, major print media (like the NYTimes) is heavily biased by its owners'/editors' political agenda. What do they think? Whatever makes sense in under 8 seconds. Now where's my remote--so I can get on with shrinking and getting dumber?
CLASS WARFARE--A POPULAR THEME AND WRONG
John Edwards is gone as a candidate but his misinformation campaign about the poor the middle-class and the rich is being carried on by the two Democrats as they pander to the masses. Fact: living standards are up all across the board. Since 2000 US GDP has grown 18% while population has grown 6%, and while a lot of it is going to the top 10%, their average income is $200,000, but if all of the growth in GDP went to them, it would have to be $350,000. Where did it go? To the so-called "upper middle class" ($50-100k), exactly those folks getting hammered by the AMT, and the same ones who will get clobbered if the Bush tax cuts are repeals. (Remember last week's table? If not, go to my blog and look at it.) Plus, household makeup has changed drastically: Now 17% of the US households have only one person... no kids, no one else. (SINKs= Single Income No Kids)
TIME WEIGHS IN ON HILLARY'S "EXPERIENCE"
Go see this story. It puts her "ready now" experience claims under the harsh light of factual scrutiny. http://www.time.com/time/politics/article/0,8599,1721966,00.html?xid=rss-topstories
No need for me to go further into it. She still has a huge uphill climb ahead if she even hopes to catch Obama.
OBAMA--CAN HE DELIVER?
I didn't pose this question, THE ECONOMIST did, as a cover story. That publication seems to keep just enough distance to be objective. Here are a few pithy quotes worth reading:
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"...Whatever happens, Mr. Obama is already that rare thing—a political phenomenon. ... He has persuaded huge numbers of people around the world to consider politics in an optimistic way.... Optimism is a powerful emotion, but as that song warned, "tomorrow will soon be here." That is why the real questioning of Mr. Obama should begin now.... A man who has never run any public body of note is a risk, even if his campaign has been a model of discipline...."
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Obama's campaign has been an example of rising above racial power--until we hear what he's been hearing most of his adult life. Now the "new news" of Obama's radical pastor (mentor?) is sounding a clarion call of concern. Such strong opinions must have an impact, somehow, for good or bad. Obama can run from it, but can he "hide?"
The general election is still far, far off, and Hillary has not given up. For now, FL and MI primaries will weigh in heavily on the outcome of who the Democrats choose as a candidate. We've learned to never count the Clintons out.
Meanwhile, in this campaign, as in his life , John McCain soldiers on--"telling it like he believes it is" --and talking "straight talk" (as much as any human can in this cut-throat world of modern-day politics). Keep on John. They are accusing him of being Bush 3. I'd say he'd be a new and much improved version of Bush--the one that I supported 8 years ago--before he got ambushed in South Carolina.
Best, John
PS: To Elliott Spitzer: "What goes around, comes around." You deserve everything you get...and more.
NOTE: Since you'll seldom hear it mentioned in the "Mainstream Media"--he is a "crooked" Democrat. GASP! If a Republican had done this, somehow Bush would have been to blame, and if a Republican had a minister like Obama's, we'd never hear the end of it. Interesting how the news plays up some things and not others.
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