$1 income may be too much!

The offer of the bosses of the main car companies in the US to work for $1 a year in return for federal assistance shows great political wisdom that has been sadly lacking amongst top bankers. It also shows a grasp of economic reality still sadly lacking in the financial sector.

The US car majors realise that they are paying too many people too much money to make too many of the wrong kind of cars. They need to cut the cost of each car they make, to stimulate sales by lower prices, and to match the competitive products coming from abroad. They need also to recognise the shift in customer choices and produce a new range of models more suited to modern American requirements in the age of sometimes scarce and dear enegry.

The bosses will deserve their $1 if they can pull off this transformation. Indeed, they would then deserve a bonus as well, geared to results and to getting out of federal support. If they cannot find a way to cut their costs and change their models at the same time – and it will be very difficult- even $1 could prove excessive. These companies now need great leadership capable of redefining them as leaders in the modern marketplace, and capable of delivering high quality goods at realistic prices. Politicians on the Hill were right to demand they sell their corporate jets and cut their executive remuneration before considering their request for support. It is just a pity the US and UK authorities did not take the same line with the top bankers who came seekng state aid in order to sustain their unrealistic levels of remuneration and comfortable corporate lifestyle. Instead the authorities in the Uk both forced them to raise equity capital more urgently than was needed, and then made it available to them without demanding the cost cutting you would expect in the circumstances.

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11 Comments

  1. Acorn
    Posted December 3, 2008 at 3:03 pm | Permalink

    Parliamentary democracy is coming to an end in the UK. (Comments on influence Labour has over state officials) Still, we have had a good run for our money. Most empires rarely last more than a hundred years, I reckon we have had nearly three hundred.

    Anyway, Axel Merk has a very good piece on Monetizing the Debt. It is one of the best I have seen that explains how central banks create money.

    http://www.financialsense.com/fsu/editorials/merk/2008/1202.html

  2. mikestallard
    Posted December 3, 2008 at 4:46 pm | Permalink

    I am looking for another car at the moment.
    What we are looking for is something which seats about 3 people, is excellent for parking in the town, which doesn’t cost an arm and a leg to fill up, yet which will take us along the motorway safely and at sufficient speed.
    I notice that when we thought this through last time, we bought the a Korean car. Now the Japanese have produced a small car that actually swivels round when you park it – by driving it head first into the space.
    And what about electricity? Or, yes, steam cars?
    Do you remember when the smug British motorcycle industry refused to modernise? Or when the Swiss clock market did the same?
    How History repeats itself!
    But, that said, I wish we still had some leadership like these Americans. Leading by example? God forbid. I have just been listening to Speaker Martin blaming the lady whom he made Serjeant at Arms for allowing a Police raid!

  3. Stuart Fairney
    Posted December 3, 2008 at 5:28 pm | Permalink

    A few questions a propos nothing

    ~ did the speaker recently down grade the post of sarjeant at arms?
    ~ if he then alleges failure in the post he downgraded should he bear responsibility?
    ~ should any leader of an organisation actually be proactive and not rely on the weak defence “I wasn’t told”?
    ~ If the permanent secretary at the Home Office didn’t think it worth telling the Home Secretary that an MP was about to be arrested, one wonders what he thinks important and worthy of mention?
    ~ If one of your servants had failed to mention something crucial to you, wouldn’t you sack them?
    ~ If you didn’t sack them, wouldn’t it perhaps suggest you were protecting them, because they were protecting you?
    ~ Wouldn’t it be better to get all parties to make statements under oath on this matter?
    ~ Does the Lenthall doctrine* still apply?

    * To Charles the First “May it please your Majesty, I have neither eyes to see nor tongue to speak in this place but as the House is pleased to direct me, whose servant I am here”

    Reply: All very good questions. I will be able to answer more of them after tomorrow’s statement by the Home Sec and Monday’s debate.At the moment we do not know what happened in detail apart from what the Speaker told us.

    • brian kelly
      Posted December 3, 2008 at 9:26 pm | Permalink

      This police action after parliament was prorogued. Good timing, wasn’t it? Speaker Martin away [though he was informed twice that an MP was to be charged – the first time on Wednesday evening and then Thursday morning at 0700], presumably Smith away and Jacks [the clerk]. All very ‘nicely’ done except that it may all be unraveling. I simply do not believe that Smith did not know anything of what was happening – nor possibly Brown [although they may have said at some point ‘I want to know nothing’. God, what a govt we have – at the utmost charitable level utterly incompetent – at worst ….?

  4. griff
    Posted December 3, 2008 at 7:15 pm | Permalink

    Have a look at the charts at the bottom of this article

    http://www.ft.com/cms/s/0/027b1efc-c0a4-11dd-b0a8-000077b07658.html?nclick_check=1

  5. Adrian Peirson
    Posted December 3, 2008 at 7:16 pm | Permalink

    They should build Diesel vehicles, that run on biofuels produced by Aerican farmers operating a sensible balance between food and fuel.
    Their Govt, like ours wont do that because their Govt is not their govt, their Real govt is the Military Industrial Complex intent on enslaving humanity.
    Perfectly illustrated by Austin Mitchell today in Parliament saying we need to spend spend spend and build build build.

    Spend Spend Spend will get the Proletariat further in to debt, they are not to know they are being misled to ruin, they are Busdrivers, nurses, police officers, roadsweepers, shop assistants, mechanics and Plumbers, they are not stupid, its just that they like all of us focus their attention in specific directions, they assume that Govt is similarly doing their Job.

    They do not know that credit is simply thin air, that Public borrowing through gilts enslaves them and their children to the Shadow govt, the global Banks.
    They are not to realise that simply by issuing our own currency there woiuld be no loan to pay back, no interest to pay, no govt debt and hence little if any need for income tax.

    Whether we borrow it or print it ourselves, Money is ( now )worthless paper.

    If we’d operated like this we would not have enslaved our children to the tune of £1Trillion.

    We would have been £1Trillion pound better off, what ios the interest on borrowing of £1Trillion at 5%.

    It’s £ 50 Billion Per annum.

    everything I see Western Govts doing appears geared towards enslaving us further into this.

    They will not Grow Biofuels are will severly restrict it because it competes with Global Oil companies, they have committed us to Nuclear because the Military Industrial complex owns all the Uranium.
    Make a mistake with a wind generator and the worst that can happen with a Wind Generator is that it falls on someones head.

    Make a mistake with Nuclear and we endnager the Entire Country virtually indefinately.

    The are lowering interest rates to encourage us to borrow more and more, to enslave us more and more into this Matrix.

    If it were up to me, I would have let the Banks go bust, written off all bank and mortage, creidt card debt.
    Let people keep their homes, cars and businesses.
    This would have given people more income, then they would spend spend spend, so why did the Military Indistrial Complex, Sorry our Govt not do this if it wanted people to Spend, the answers is in my view is because it wnats to keep us and our children enslaved.

    If instead of Printing Gilts, we had Printed money ( instead of Borrowing it ) we would not have enslaved out children to the tune of £1Trillion pounds, this is no accident, this is out and out deception and theft.
    We need to wake up to the fact that we and our country are being Looted.

    http://uk.youtube.com/watch?v=PYzidSbFQ30

    just Watched your debate in the House of Commons, Michael Clapham Labour is going on about Carbon Capture Technology, coud you have a word with him and tell him the Technology already exists, it is Called a tree.
    Simply Plant Billions of Trees and over the next ten yrs we will be absorbing Billions of Tons of CO2.
    Again I have to point out that the Military Industrial complex will not allow it, they will not allow it because there is no loot, sorry Tax in that.

    • Bazman
      Posted December 4, 2008 at 12:54 pm | Permalink

      You could cover the planet in bio-fuel crops, windmills and trees and the energy requirement and environment needs of the world would still nowhere near be met. If everyone lived like a third world peasant your ideas might work.

      • Adrian Peirson
        Posted December 4, 2008 at 7:32 pm | Permalink

        It would work, the average British woman is having 1.8 children this is below replacement levels.
        This is of course aided and abetted by the 6 Million abortions carried out under Westminster rules, the extermination camps, sorry pregnancy advice centres we now have in every town.
        The recent embriology bill which made abortions even easier to obtain.
        And a plan in parliament to Sterilise British Schoolgirls.
        http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=514542&in_page_id=1770

        They are creating a new race of people
        http://www.brusselsjournal.com/node/865

        Anyway back to fuel, If we had a reduced population of around 30 Million, we could have a sensible balance between Growing food and fuel.

        The Govt, indeed Westminster is not interested in the environment, pollution congestion, crime levels because all of these things are profitabe to them.
        They have created all these problems precisely so they can profit from them through fines and taxes.

        Their ‘Concern’ is just spin and lies, Psychological Manipulation to get you to hand over your wealth to them.

        Their real agenda is money, control, power it always has been.

        Congestion, Landfill, Food security issues, fuel Security, urban sprawl, rising crime, pollution can all be addressed by REDUCING The population.

        Why has no one proposed it I wonder.

        We are being farmed.

  6. rugfish
    Posted December 4, 2008 at 5:40 am | Permalink

    I must defend truth wherever I find it.

    Firstly, Gordon Brown misquoted John Redwood yesterday at the dispatch box when suggesting that JR advocated that Britain needs to “lower its living standards”. John Redwood has said no such thing so his report to parliament will no doubt be quite rightly followed by a point of order from John Redwood at the next available opportunity.

    This is an extract from the post Brown was referring to and it clearly and unambiguously puts the blame on government for ITS POLICIES bringing living standards down in Britain.
    ____________________________________________________________

    “The truth is that both the UK and the US are following policies which will force a cut in living standards. For years both these economies have been living well beyond their means, thanks to easy access to credit from the strong exporting nations and commodity producers who were generating big surpluses. It has been possible for both the great Anglo Saxon democracies to run large balance of payments deficits, large government deficits and large deficits in the personal sector. People and governments have spent too much and borrowed to do so.

    Now the world’s markets are saying enough is enough. Living standards in both the public and private sector are being brought down by a combination of government policy and market reaction. The private sector has to sell more abroad and consume less at home. The government sector has to get closer to just spending what it can collect in taxes”.
    _____________________________________________________________

    Tory MP Damian Green was subjected to a “police raid” at his home and offices on the back of a “suspicion” by police on matters they found relevant to a “possible” breach of national security yet are unable to produce ANY real grounds to actually make that allegation stick. Furthermore, they act without a warrant ( which I happened to point out prior to Mr Speaker declaring it ), and they fail to inform The Sergeant at Arms and the Palace of Westminster that they have no warrant or that she can refuse to permit the police to enter Mr Green’s office’s.

    But if that isn’t all, the best was yesterday evening following Gordon Brown having made a speech which showed intention to help homeowners.

    This is what I heard Gordon Brown saying which was later backed up and confirmed by Margaret Becket :-

    The government has agreed that homeowners facing repossession through redundancy or a drop in income can defer a portion of their interest payments for up to two years. He also said that 8 lenders had already signed up to it and that he expected to provide full details to the house soon. ( Today wasn’t the time as this was the Queen’s speech ).

    Shortly after his speech, bulletins ran across SKY and the BBC as they each vied to get the news out as quickly as possible and to beat the other to viewing figures.

    The BBC asked Robert “Pest”on “So that means any homeowner can simply defer their mortgage payments for two years” ??? “It appears so, yes” He replied.

    They have misled the public and that is not what Gordon Brown said !

    I switched to SKY.
    They had an estate agent and a property rental agent in the street and the estate agent welcomed the package but the property agent said this would help his “Buy to Let customers who were struggling” with their mortgages.

    Firstly, the package Brown described will not apply to property speculators it will apply to homeowners. That is what Gordon Brown said.

    Secondly, it will not apply to “all homeowners” as the BBC and SKY have said, but it will apply to “some” ( who are facing repossession through redundancy or a drop in income and to a limit of £400,000 ), NOT to Buy to Let owners who do not make those properties their “home”.

    I have to also say that shortly after these “false reports” were given, that both channels sought to dismantle Gordon Brown’s plans by describing them as being “no good in detail”, after having falsely reported the detail Gordon Brown I have to say, had clearly and adequately described as applying to “homeowners” – “facing repossession”, and that “part” of their interest “could” be deferred.

    The truth is a mystery to these people I feel.

  7. Bazman
    Posted December 4, 2008 at 1:39 pm | Permalink

    ‘Corporate lifestyle’ Got a lot to answer for these days hasn’t it? Private jets, fantasy pay, short working hours combined with socialising/ schmoozing in luxury houses and restaurants on expense accounts. Nice! You would not expect these captains of industry (Ha! Ha!) to wear hair shirts, but you would expect there to be some relation to pay and justification of lifestyle to the shareholders/workers and customers. The arrogance of many would put Russian Tsar’s or third world dictators to shame why do they need all this money? and should any company be employing a group of people so out of touch with reality?
    The analogy of the death of the British motorcycle industry is a good one. Arrogant directors still believing that Britain ruled the motorcycle world and with over five hundred registered motor bike manufactures in Britain at one point it did. The pressed steel early Honda’s with their flashing indicators and pressed steel tool kits were seen as a joke, but at least they has lights and a tool kit and could contain the oil in their casings. Basic engineering, allowing casual clothes to be worn by non enthusiasts The British manufactures had little new practical design ideas and if they had, did not have the tooling to build it. The arrival of the Honda CB 750 SOHC as the first ‘superbike’ sealed their fate as they could now never catch up
    http://www.realclassic.co.uk/hon03112800.html
    The epitaph of The British motorcycle industry should be: “They where mens machines.” The Japanese where careful not to dance on the grave though, and still often pay homage to the British bikes in technology and design, but say they are copies though is patently not true. A myth of old wet eyed men.
    Let em’ burn…

  8. Sarah
    Posted December 4, 2008 at 6:30 pm | Permalink

    I just returned from a holiday in the States last week and was amazed to hear that production workers for the US giant car makers were on $78 per hour, whereas the Toyota worker, as a comparison, was on nearly half that cost. The high costs were, in some part, the result of the powerful unions. These poor workers may now wonder whether a job on lower pay may have been better than no job at all.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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