All GLG News Analyses Filed Under: Economics

NEDO - Acquittal delivery organization - Stray sheep of Japanese indutrial guy wants direct lead

October 30, 2008

Analysis by: GLG Expert Contributor

Analysis of:What is NEDO ? | www.nedo.go.jp

I consider what is NEDO. Any Japanese small but excellent R&D team keen to want donation and expand their R&D to the world.  I describe why NEDO is in Japanese stiffened society and stray sheep of Japanese small but excellent industrial guy's keen wish.

A Middle Class Driven to the Brink

October 30, 2008

Analysis by: GLG Expert Contributor

Analysis of:General Motors, Driven to the Brink | www.nytimes.com

What is happening to the U. A. W. "middle class" is a representative portrait of what is happening to the American "middle class". This group will never be reconstituted. The decline of the U. A. W. "middle class" is the direct result of miscalculation on the part of the American automobile industry, the unions and their inability to recognize the economic and cultural changes that have been on the horizon for several years. Like Ford and Chrysler the "General" concentrated too many resources on a type of product that was a symbol of conspicuous consumption, and directly opposite to what their competitors were concentrating on. A strategic error that could result in the failure of the "Big 3".

Chrysler LLC is Hoping Bankruptcy Can Be Used to Rewrite Union Contracts

October 28, 2008

Analysis by: GLG Expert Contributor

Analysis of:"GM, Chrysler Deal Could Spur UAW Concessions, " Detroit Free Press, October 20, 2008 | www.freep.com

The domestic auto industry already negotiated dramatic wage, healthcare, and pension benefits from the UAW during the last round of contract talks.  Some of those concessions though have not been realized yet.  For example, the wage concessions were to drop the standard hourly wage from ~$26/hr down to ~$16/hr.  However, the new wages were not applicable to existing workers.  So the savings is not realized until an existing worker retires or takes a buyout and a new worker is hired.  The auto companies have implemented extensive programs to encourage workers to leave, but they have not been as successful as would be necessary to really provide significant economic benefits to the companies yet. 

Jack LiftonManaging DirectorJack Lifton, LLC

The UAW Created A Unique Path To The Middle Class For Millions Who Must Now Drop Out Of It. When Will Politicians Admit That The Truth Is That They Can Do Nothing About It?

October 27, 2008

Analysis of:General Motors, Driven to the Brink | www.nytimes.com

The American owned and operated OEM automotive industry was only profitable when it had both a monopoly and credit was cheap. This situation can never again occur, because the OEM American owned and operated car industry's domestic market share is already below 50% and is  still rapidly decreasing and the era of cheap consumer credit is now gone perhaps not to return for a very long time, if ever.

Richard BlockProfessorMICHIGAN STATE UNIVERSITY

UAW Concessions Unlikely to Address Auto Industry Problems

October 23, 2008

Analysis of:"GM, Chrysler Deal Could Spur UAW Concessions, " Detroit Free Press, October 20, 2008 | www.freep.com

1.   Broad-based UAW concessions would not be seen by the UAW as addressing the auto industry's problems. 2.   The reductions in hourly employment in the auto industry over the past three years have limited the impact that the UAW has on the auto industry cost structure. 3. The UAW will likely resist reducing the companies' VEBA obligations to be effective on January 1, 2010.

A Not So Admirable Response

October 7, 2008

Analysis by: GLG Expert Contributor

Analysis of:An Admirable Response to the Crisis | maxkapital.wordpress.com

While I agree with the premise that the monetary response by the federal government has been correct by attempting to stimulate investment using the Federal Reserve. However, the author argues that "risk perception is being addressed through tacking solvency issues through the tentitive plan to acquire illiquid debt." The author also believes that the issue of risk perception is being addressed through the government action in the case of Freddie Mac, Fannie Mae and AIG. I would argue that the problem of risk perception remains, particularly on Main Street, USA and that may be the biggest obstacle to resolving these crises.

Free Markets Work When Properly Regulated

October 3, 2008

Analysis by: GLG Expert Contributor

Analysis of:Everybody Calm Down. A Government Hand In the Economy Is as Old as the Republic. | www.washingtonpost.com

Markets cannot exist without trust.  Unfortunately, the financial markets that are in trouble were structured in ways that created irresistible temptations for abuse and promoted the creation of systemic risks that now threaten the US and Global economies.        

Jose TrevinoPrincipalAmeriCompass

Implication of the financial crisis for Mexico

October 1, 2008

Analysis of:Everybody Calm Down. A Government Hand In the Economy Is as Old as the Republic. | www.washingtonpost.com

To Shiller's advices, one may add the following which are particularly relevant for Mexico and other emerging economies: convince better, avoid a "state of denial", learn the lesson from others and act now.

The Response Was Necessary, Though it Invited Catastrophes Waiting for the Next Round

September 29, 2008

Analysis by: GLG Expert Contributor

Analysis of:An Admirable Response to the Crisis | maxkapital.wordpress.com

In the Byzantine, half socialistically subsidized ( or nationalized ) and all of it overregulated and corrupted  world of US financial sector, there was a need to show a state interest and, probably, stop the panic to spread all over the economy. That said, the socialist-style bailouts, i.e. pouring the taxpayers “equity” into insolvent and corrupt institutions, just invites the same people, who seem to be above the law, to try the same “trick”  soon in another sector. Sector-wise,  a question begs:  There used to be rules enforced by the Central Bank to stop over-exposure by the financial system to one sector. What happened to these? How did it come about that so much lending was concentrated in one sector? And at the bottom is the 1970s Basel agreement requiring banks to increase capital if they boosted mortgage loans (and other risky assets.) The banks responded, however, by developing instruments that avoided higher reserves by moving risky loans off their balance sheets.

The $700 Billion Question

September 29, 2008

Analysis by: GLG Expert Contributor

Analysis of:A Magic Multiplier | maxkapital.wordpress.com

Given a GDP of $13.7 trillion at end of 2007, we have to wonder whether $700 billion is enough; it is 4.6X the "Economic Stimulus Act of 2008" injection.

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