Monday, April 27, 2009

Random chart...

Chart showing a relationship between college enrollment and family income... Among high-school students with average math scores the enrollment is much higher as family income increases.... Source: College Attainment and Family Income

Random picture...

Britain's Antiterror Documents Photographed By Paparazzi & Posted On The Web

Bob Quick, Britain's most senior counter-terrorism officer was photographed entering the Prime Minister's residence at 10 Downing Street.When the photogs blew up the picture, lo and behold, they could read the secret MI-5 memo (see above). Quick subsequently resigned, and 12 Pakistani student "terrorists" were arrested 'early' due to this leak. Oh, and what is become typical British police incompetence, every one was released for lack of evidence...

Politically Timed "Terror" Arrests - the Real Bob Quick Scandal
Gordon Brown and Jacqui Smith Terror Lies Revealed

Wednesday, April 22, 2009

Hoo boy..

Recently this blogger noticed a lot of traffic from New Zealand. A little digging found that the traffic was coming from forums, which had linked to this blog's 'WMD aren't what they used to be...' entry. Looking at the comments this blogger was struck by the one that said, "I'm not sure what's worse - the WMD charge or that the page is in COMIC SANS!" Wasn't quite sure re what this was about... this blogger kind of likes Comic Sans and uses it quite a bit (e.g. this blog, in e-mail, etc.), so chalked it up to a case of "de gustibus non est disputandum" (referring either to this blogger or the person making the comment, your choice!)...

Well, a couple of days later this blogger ran into this WSJ article: Typeface Inspired by Comic Books Has Become a Font of Ill Will which recounted the creation of this font. Apparently there are many, many people who loathe it and there is even a Ban Comic Sans movement, though this blogger is not sure whether it is really serious or more of a spoof! Visit the site and judge for yourself: Ban Comic Sans.

Tuesday, April 21, 2009

BB & 2D barcodes

'Barcodes of the future' is an article re the use of 2D bar codes with now ubiquitous mobile phones' cameras to provide web-based information for consumers... From the article: "Picture this: you are out and about on a Saturday afternoon and see an advertisement at a bus stop for an outdoor concert. In a corner of the advertisement are a couple of barcodes. Wanting to find out more about the concert, you pull out your 3G-capable mobile phone and take a picture of one of the codes. It transfers you to the official website of the concert, where you find out that it is to be held tomorrow night and some of your favourite bands will be performing..."

A two dimensional (2D) barcode can contain a lot more information that the "original" one dimensional barcode. It wasn't long before someone in Japan married this with the cellphone camera, so that "taking a picture" of the 2D barcode would launch the phone (mobile) browser and take the consumer to the encoded url. The number of potential applications and uses for this concept are limited only by the imagination (read the article for a number of examples...)

As with the "simple" 1D barcode there are a number of different symbologies in 2D barcodes, including QR (originally developed for inventory applications); EZcodes (developed at a Swiss university); Data Matrix (developed by Acuity ciMatrix); Microsoft's tag (see below); etc. Some applications are agnostic and can read all symbologies.

This blogger decide to try this out on his Blackberry Bold, and looked at four different software applications:


First up was NeoReader, available for a number of handsets including the BB. A quick OTA download from here (i.e. and the software was installed on the Bold. Generating a 2D barcode for this blog's url took seconds, and 'snapping a picture' of the barcode took me directly to the blog url that was encoded... (Note: this application also worked without any problem with barcodes generated on Nokia's Mobile Code site)
NeoReader home
Create 2D bar code

Microsoft Tag:

Microsoft has jumped on the bandwagon and has its own version of this software called 'Tag' which can be downloaded directly onto your phone here (i.e. A couple of caveats - first you have to register to use the site to download the software generate the 2D barcodes, etc.; second , they seem to have developed their own version of the 2D bar codes (see below). Note: it looks like a future iteration of the Tagreader software might be able to read their own format and other formats as well (as there is a 'placeholder' for other formats), but at present you are stuck with their barcodes (that come in color or black & white.)

As it is, you can see that 'snapping' a picture of the barcode takes one to the web site encoded...


Another piece of software that is designed to do this as well is i-nigma, downloadable via mobile browser here. Unfortunately I was not able to install and try it out due to an error downloading and installing the application...


Finally, one more application is ScanLife by a company called ScanBuy. It can be downloaded OTA here (i.e. It is necessary to register on the Scanlife web site to use the application (although non-commercial registration is free)... Also works like a charm - 'snap' the barcode and get taken to the encoded url....

Bottom line: As tested, all of the applications that this blogger managed to install worked without any problems. Eliminating the Tagreader application due to its different 2D barcode, this blogger can recommend ScanLife or NeoReader... and would probably go with the latter for very casual use since no registration is required. Now if only there were some 2D barcodes out there 'in the wild' to scan!

Sunday, April 19, 2009

Random quote...

"... Yes, the shareholders will get wiped out in this scenariuo - but these companies have lost 95% of their value already. And for the consumer there won't be any difference. You won't see any interruptions of service, and your accounts will be protected."
- Simon Jenkins, Economics Profesor at MIT, former chief economist of the International Monetary Fund, Money interview ('Nationalize the Banks, and Quick!')

Oh, please.Just because someone has lost 95% of the value of a security, that's no reason to be so cavalier about the 5% that remains. Also, the 95% value loss is the number from the stocks' high, many stockholders with holdings will have purchased at a range of lower prices (and thus have a smaller loss). Lastly, as argued before (see links below) the stockholder currently has the possibility of recovering some of the loss (or making a profit, depending on purchase point) if the stock recovers along with the economy... One would expect an economist of Mr. Jenkins' caliber and experience to know this!

Theory vs. practice - March 30th, 2009
Randon thoughts.. - February 15th, 2009
Rhetorical questions... - February 11th, 2009

Thursday, April 16, 2009

Held to account?

"Senator Patrick Leahy (D-VT), Chairman of the Senate Judiciary Committee, has proposed the establishment of a bipartisan commission to investigate torture and other abuses committed by the Bush Administration." Physicians for Human Rights encourages you to go and sign a petition...

However, it bears repeating, but this blogger (while in favor of the proposition that those responsible be held to account) insists that this only be done if everyone responsible is looked at. The petition in question points the finger at "the Bush administration" and "some mental health professionals and physicians" but somehow seems to have an exemption for the legislative branch. Were politicians not in the loop? Did the "leaders" of certain Senate committees (e.g. intelligence, etc.) not receive briefings? Should they not be held accountable for their roles, even if it was only to pusillanimously keep quiet and look away? This blogger answers "yes."

All the more so because they have, thus far, mostly managed to escape any responsibility for the current economic crisis. Although equally culpable in causing the crisis, they have not been called to account by dint of keeping the 'beam' of public outrage focused on bankers, etc.

Wednesday, April 15, 2009

Powell... Tekel...

Picture credit: Wikipedia. 'Belshazzar's Feast' (1635), by Rembrandt

Previous blog entries have discussed Colin Powell and how he has never acknowledged any real culpability in the matter of Iraq, torture, etc. (for example see the April 20th, 2008 entry 'Did they say that?', the July 13th 2008 entry 'The Powell rehabilitation project?', and the December 14th 2008 entry 'And yet...', among others). Now, following his appearance on the Rachel Maddow show perhaps the veil has been slightly lifted...

Rachel Maddow Grills Colin Powell on Torture Authorization In Bush Admin
Profiles in Cowardice
Rachel Maddow's Colin Powell Interview (comments better than article)
Rachel Maddow Pushes Colin Powell on Torture Discussions

Misc updates...

The September 17th, 2008 'Of interest' entry noted Israel's new Nevatim air base in the Negev, and the September 28th, 2008 'Message sent...' entry noted that the United States was installing a AN/TPY-2 Transportable Radar Surveillance/Forward Based X-band Transportable Radar, in the "first permanent U.S. military presence on Israeli soil." This week the U.S. and Israel conducted missile defense exercises that incorporated this radar....

The April 10th, 2009 entry 'More Nuclear disarmament' looked at President Obama's nuclear-centered speech in Prague, weighed it, and while encouraged by some signs found it wanting... Some updates: Vice President Biden tasked with getting the Senate to ratify the CTBT; "Nuclear weapons experts yesterday pushed for achieving some significant arms control milestones ahead of next year's Nuclear Nonproliferation Treaty review conference in New York"; "experts" expect many obstacles to any administration push in this area (surprise!); and Australia vowed to work with the United States to rid the world of nuclear weapons.

Speaking of nuclear, the April 1st entry 'Bomb, bomb, bomb... Not?' entry decried the poor reporting on Iran's nuclear progress and the "Iran has enough uranium for a bomb' headlines. Well it turns out that Lehman Bros (the financial company that is) has 500,000 pounds of uranium, which (using the same logic") means that this defunct firm has enough uranium to make a bomb!"

Friday, April 10, 2009

More nuclear disarmament

This past Sunday President Obama made a speech in Prague, Czech Republic, in which he spoke extensively on the subject of nuclear weapons and nuclear disarmament (see full text of speech). Below is the part of the speech related to nuclear matters:
One of those issues that I will focus on today is fundamental to our nations, and to the peace and security of the world – the future of nuclear weapons in the 21st century.

The existence of thousands of nuclear weapons is the most dangerous legacy of the Cold War. No nuclear war was fought between the United States and the Soviet Union, but generations lived with the knowledge that their world could be erased in a single flash of light. Cities like Prague that had existed for centuries would have ceased to exist.

Today, the Cold War has disappeared but thousands of those weapons have not. In a strange turn of history, the threat of global nuclear war has gone down, but the risk of a nuclear attack has gone up. More nations have acquired these weapons. Testing has continued. Black markets trade in nuclear secrets and materials. The technology to build a bomb has spread. Terrorists are determined to buy, build or steal one. Our efforts to contain these dangers are centered in a global non-proliferation regime, but as more people and nations break the rules, we could reach the point when the center cannot hold.

This matters to all people, everywhere. One nuclear weapon exploded in one city – be it New York or Moscow, Islamabad or Mumbai, Tokyo or Tel Aviv, Paris or Prague – could kill hundreds of thousands of people. And no matter where it happens, there is no end to what the consequences may be – for our global safety, security, society, economy, and ultimately our survival.

Some argue that the spread of these weapons cannot be checked – that we are destined to live in a world where more nations and more people possess the ultimate tools of destruction. This fatalism is a deadly adversary. For if we believe that the spread of nuclear weapons is inevitable, then we are admitting to ourselves that the use of nuclear weapons is inevitable.

Just as we stood for freedom in the 20th century, we must stand together for the right of people everywhere to live free from fear in the 21st. And as a nuclear power – as the only nuclear power to have used a nuclear weapon – the United States has a moral responsibility to act. We cannot succeed in this endeavor alone, but we can lead it.

So today, I state clearly and with conviction America’s commitment to seek the peace and security of a world without nuclear weapons. This goal will not be reached quickly – perhaps not in my lifetime. It will take patience and persistence. But now we, too, must ignore the voices who tell us that the world cannot change.

First, the United States will take concrete steps toward a world without nuclear weapons.

To put an end to Cold War thinking, we will reduce the role of nuclear weapons in our national security strategy and urge others to do the same. Make no mistake: as long as these weapons exist, we will maintain a safe, secure and effective arsenal to deter any adversary, and guarantee that defense to our allies – including the Czech Republic. But we will begin the work of reducing our arsenal.

To reduce our warheads and stockpiles, we will negotiate a new strategic arms reduction treaty with Russia this year. President Medvedev and I began this process in London, and will seek a new agreement by the end of this year that is legally binding, and sufficiently bold. This will set the stage for further cuts, and we will seek to include all nuclear weapons states in this endeavor.

To achieve a global ban on nuclear testing, my Administration will immediately and aggressively pursue U.S. ratification of the Comprehensive Test Ban Treaty. After more than five decades of talks, it is time for the testing of nuclear weapons to finally be banned.

And to cut off the building blocks needed for a bomb, the United States will seek a new treaty that verifiably ends the production of fissile materials intended for use in state nuclear weapons. If we are serious about stopping the spread of these weapons, then we should put an end to the dedicated production of weapons grade materials that create them.

Second, together, we will strengthen the nuclear Non-Proliferation Treaty as a basis for cooperation.

The basic bargain is sound: countries with nuclear weapons will move toward disarmament, countries without nuclear weapons will not acquire them; and all countries can access peaceful nuclear energy. To strengthen the Treaty, we should embrace several principles. We need more resources and authority to strengthen international inspections. We need real and immediate consequences for countries caught breaking the rules or trying to leave the Treaty without cause.

And we should build a new framework for civil nuclear cooperation, including an international fuel bank, so that countries can access peaceful power without increasing the risks of proliferation. That must be the right of every nation that renounces nuclear weapons, especially developing countries embarking on peaceful programs. No approach will succeed if it is based on the denial of rights to nations that play by the rules. We must harness the power of nuclear energy on behalf of our efforts to combat climate change, and to advance opportunity for all people.

We go forward with no illusions. Some will break the rules, but that is why we need a structure in place that ensures that when any nation does, they will face consequences. This morning, we were reminded again why we need a new and more rigorous approach to address this threat. North Korea broke the rules once more by testing a rocket that could be used for a long range missile.

This provocation underscores the need for action – not just this afternoon at the UN Security Council, but in our determination to prevent the spread of these weapons. Rules must be binding. Violations must be punished. Words must mean something. The world must stand together to prevent the spread of these weapons. Now is the time for a strong international response. North Korea must know that the path to security and respect will never come through threats and illegal weapons. And all nations must come together to build a stronger, global regime.

Iran has yet to build a nuclear weapon. And my administration will seek engagement with Iran based upon mutual interests and mutual respect, and we will present a clear choice. We want Iran to take its rightful place in the community of nations, politically and economically. We will support Iran’s right to peaceful nuclear energy with rigorous inspections. That is a path that the Islamic Republic can take. Or the government can choose increased isolation, international pressure, and a potential nuclear arms race in the region that will increase insecurity for all.

Let me be clear: Iran’s nuclear and ballistic missile activity poses a real threat, not just to the United States, but to Iran’s neighbors and our allies. The Czech Republic and Poland have been courageous in agreeing to host a defense against these missiles. As long as the threat from Iran persists, we intend to go forward with a missile defense system that is cost-effective and proven. If the Iranian threat is eliminated, we will have a stronger basis for security, and the driving force for missile defense construction in Europe at this time will be removed.

Finally, we must ensure that terrorists never acquire a nuclear weapon.

This is the most immediate and extreme threat to global security. One terrorist with a nuclear weapon could unleash massive destruction. Al Qaeda has said that it seeks a bomb. And we know that there is unsecured nuclear material across the globe. To protect our people, we must act with a sense of purpose without delay.

Today, I am announcing a new international effort to secure all vulnerable nuclear material around the world within four years. We will set new standards, expand our cooperation with Russia, and pursue new partnerships to lock down these sensitive materials.

We must also build on our efforts to break up black markets, detect and intercept materials in transit, and use financial tools to disrupt this dangerous trade. Because this threat will be lasting, we should come together to turn efforts such as the Proliferation Security Initiative and the Global Initiative to Combat Nuclear Terrorism into durable international institutions. And we should start by having a Global Summit on Nuclear Security that the United States will host within the next year.

I know that there are some who will question whether we can act on such a broad agenda. There are those who doubt whether true international cooperation is possible, given the inevitable differences among nations. And there are those who hear talk of a world without nuclear weapons and doubt whether it is worth setting a goal that seems impossible to achieve.

President Obama touched on a number of issues, the following are some thoughts and reactions to the speech:

The good:
  • President Obama declared that the United States will take a leadership role in the efforts to bring about global nuclear disarmament, including negotiating reductions in nuclear forces with Russia, to be then followed by other nations.
  • Beyond reductions in existing nuclear stockpiles, President Obama spoke re additional measures: U.S. ratification of the (already signed) Comprehensive Test Ban Treaty (CTBT); efforts to end the production of fissile materials for use in nuclear weapons; and a broadening of the Proliferation Security Initiative and the Global Initiative to Combat Nuclear Terrorism
  • Very importantly, the President acknowledged that the Nuclear Non-Proliferation Treaty is not one-sided (i.e. solely for the prevention of the spread of nuclear weapons), but that it is a grand bargain between the nuclear "haves" and the nuclear "have nots" in which the "haves" committed to moving towards nuclear disarmament in exchange for the "have nots" renouncing the acquisition of these weapons. Also, that the NPT allows for nations' peaceful use of nuclear technology...
The bad:
  • This blogger was not impressed with the suggestion (?) that a terrorist nuclear blast in a major city would have consequences including "ultimately to our survival." Besides being flat out wrong and a gross exaggeration, this sort of language only has negative outcomes. First, this exaggeration can induce fear in the populace, is not conducive to rational thinking, and is the sort of thing that could translate into the acceptance of hasty and/or ill-conceived measures and actions... Secondly, it caters to the fevered imaginations of the people in caves (and elsewhere) who already have a propensity to believe this, and are seeking nukes for this very purpose...
  • President Obama spent some time talking about North Korea and Iran. Granted, these countries are currently in the news... However, by picking and choosing which (and specifically these) countries to call to task here, this blogger believes that he undercut the universal applicability of the responsibility and effort that he was attempting to articulate. Given that some resistance to U.S. efforts in this and other fields is due to many feeling that the U.S. is 'selective' in the application of its principles, calling out these countries while ignoring others - e.g. India (true, not an NPT signatory, but a country with which the U.S. has signed an agreement, and which the U.S. sees as a partner in assisting with non-proliferation efforts), Pakistan, and (dare we say it) Israel - is not exactly the way to break with the past and allay the fears of some nations that these efforts are specifically targeted against them.
... and the ugly:
  • This blogger was very disappointed that immediately after declaring the U.S.'s commitment to seeking a world free of nuclear weapons, the President suggested an open-ended (and perhaps indefinite) time line... By not suggesting a finite period and by using the words "perhaps not in my lifetime" he undercut the urgency of the effort even before getting to any further details of what he was proposing...
  • Worse, by following the conventional wisdom that denuclearization efforts ought to begin with, and be initially limited to, cuts in the U.S. and Russian nuclear stockpiles, he demonstrated a lack of vision. This blogger has long argued (e.g. see the December 31st 2008 entry 'Nuclear moves...', the December 22nd, 2008 entry 'Zero Global Zero', the April 22nd, 2008 entry 'WMD aren't what they used to be,' and the February 4th, 2008 entry 'Pablum re a nuclear free world') that elimination of the French and British nuclear forces should be the first step, one that would have an outsize effect that would jumpstart and radically energize the effort to first reduce, then ultimately eliminate current nuclear weapons.
All in all an excellent speech, and the most important piece was the acknowledgment that the NPT is a grand bargain. However, it remains to be seen how serious this effort really is, and how well it will be translated into concrete actions. The augurs in this regard may not be that good. As a speech, an 'A', otherwise mark this down as 'TBD.'

FAS: Status of World Nuclear Forces
In Prague, Obama sets sights on nuclear-free world
Obama in Prague: Analysis of His Speech
Obama's Nuclear Speech: Required Reading
The 52 minutes of Obama magic that changed the nuclear rules

Wednesday, April 8, 2009

Random picture...

Assembled Arab 'leaders" at the recent Doha (Qatar) summit, picture taken at the closing summary, with the "leaders' lined up in front of a row of flags... By happenstance things lined up so that it looked like a number of them wearing dunce caps. How appropriate!

" Hosni Mubarak has now skipped two summits in a row, without even bothering to provide an official explanation (even if his efforts to convince others to stay away failed miserably). Jordan's King Abdullah reportedly went home early because he was upset that he wasn't met by the Emir at the airport (of such stuff is high politics made in the Arab world). Much of the summit was overshadowed by the pyrotechnics between Moammar Qaddafi and Saudi Arabia's King Abdullah, and the Qatari Emir's efforts to smooth over the public spat. Iraqi Prime Minister Nuri al-Maliki seems to have gone home empty-handed after the Saudi King refused to meet with him, nobody agreed to cancel debt, and the vacuous official statement declined to include boilerplate praise for improved Iraqi security or democracy. Hamas issued a statement complaining that the Summit did nothing for the Palestinians and ignored the threat posed by Netanyahu. (And that's not even getting into the support for Omar Bashir, which I'll write more about later.) Above all, the Doha summit simply punted on all of the major issues facing the region. No effort was made to deal with Palestinian divisions, as Hamas was kept away. No effort was made to deal with disagreements over Iran, as Ahmedenejad was kept away out of deference to Saudi and other Gulf sensibilities and Iranian issues were kept out of the final statement. No real effort was made to overcome the persistent gap between the moderate and resistance camps, despite all of those efforts for the last two months..."

The end of Arab summits?

Tuesday, April 7, 2009

Great quotes...

“The U.S. Navy is larger than the next 13 navies combined, and 11 of them are allies.”
- U.S. Secretary of Defense Bob Gates.

In fact of matter, U.S. annual expenditure on defense (at 48% of world spending) is almost as much as every other country in the world combined... Which makes the periodic complaints that China is increasing its defense spending seem rather whiny...

Random charts...

Above, graph showing the percent of income of the top 1%, as well as a measure of polarization in the House of Representatives. Correlation (but not necessarily causation). From Polarized America via Paul Krugman's The financial factor.

How the discretionary budget breaks down (discretionary i.e. excluding entitlements such as Social Security, etc.)

A matter of geography...

In the news recently, an attack in Sudan on a convoy of 23 trucks ostensibly transporting weapons from Iran to the Gaza Strip. The attack was originally attributed to the U.S., then to Israeli drones, and finally to the Israeli air force... The arms were being smuggled through Sudan... and then through tunnels into the Gaza strip.

Conspicuously absent from all accounts that this blogger has read is the word 'Egypt.' A quick glance at a map shows that this truck convoy would have to cross from Sudan into Egypt, and then drive approximately 700 miles to get to the Gaza border and the smuggling tunnels. Is this really possible without the Egyptians catching on? Could a 23-truck convoy do this trip, cross the Sinai, and then get past the Egyptian forces closing the border? Hmm...

A battle between two long arms
How Israel Foiled an Arms Convoy Bound for Hamas

Monday, April 6, 2009


Picture: Tirailleurs Senegalais poster from

Papers unearthed by the BBC reveal that British and American commanders ensured that the liberation of Paris on 25 August 1944 was seen as a "whites only" victory... the BBC's Document programme has seen evidence that black colonial soldiers - who made up around two-thirds of Free French forces - were deliberately removed from the unit that led the Allied advance into the French capital...

Read the sad story here: Paris liberation made 'whites only'

Mental Health Break

Sunday, April 5, 2009

Junk (?) stories

The 'Good stories?' entry of January 20th, 2009 looked at and criticized a number of 'news' stories (re terrorist anthrax, cyber-attack, & insect-based biological attacks) for poor logic, sloppy science, sensationalism, and other issues... Over the last couple of weeks there has been a spate of EMP-related news stories (for some general background on EMP see the Wikipedia article), some of which exhibit some of the same tendencies...

First, allegedly it is fairly easy to build an EMP device that could bring down an airliner, since, it is claimed, that descriptions of what to do and components are readily available online, and it is also "... technologically unchallenging to build..." such a device. Come on, EMP is real and in the future this technology may increasingly come within the reach of bad actors, but if it currently was as easy as it is alleged to be this would have been tried by now...

Aircraft could be brought down by DIY 'E-bombs'
'Terrorists could bring down jumbo jet using microwave cannon built over internet'

However, perhaps we don't need to worry about terrorists using an EMP device to bring down an airliner, since the entire planet could be thrown into the pre-industrial age by a solar coronal ejection that could wipe out all power generation!

Space storm alert: 90 seconds from catastrophe

Next, Newt Gingrich is out beating the drum re the risks of a rogue government throwing the U.S. back into the pre-industrial age via a single extra-atmospheric nuclear blast.... or perhaps make that three devices... Newt does seem a tad confused re what to do to counter this imminent threat. After arguing that the leaders of these rogue states are not rational (say compared to the leaders of the erstwhile Soviet Union) he seems to think that a) a promise to shoot down missiles aimed at the United States (is this something we aren't prepared to do now? do we really have to "announce" this?), and, b) a "... modern and credible traditional nuclear deterrent..." will do the trick! OK, so are they deterable or not?

A call for some level of EMP defense funding is OK, but he seems to assume that this means spending money on a missile defense program, rather than on other responses e.g. 'hardening' of the system, etc. This latter would have the added benefit of protecting against the 'easily made' internet-inspired EMP devices!!

Iran launch could mean EMP weapon
Newt Gingrich: A Single Nuke Could Destroy America
Gingrich calls for preemptive attack on NK missile using lasers (video)

P.S. Ever the multi-tasker, Newt Gingrich is combining what he feels are good policy prescriptions along with plugs for a friend's novel about an EMP attack!

Great quotes...

"Read The Black Book of Communism and you will discover that in the China of Mao, they did not eat children, but had them boiled to fertilise the fields."
- Italian PM Silvio Berlusconi (back in 2006 while campaigning). For other Berlusconi "planetary gaffes" see here.

Saturday, April 4, 2009

Automotive restructuring...

The automakers submitted their restructuring plans to Congress (see links below) in February. Key elements of GM's plan included:
  • a dramatic shift in the company‘s U.S. portfolio, with 22 of 24 new vehicle launches in 2009-2012 being more fuel-efficient cars and crossovers;
  • full compliance with the 2007 Energy Independence and Security Act, and extensive investment in a wide array of advanced propulsion technologies;
  • reduction in brands, nameplates and retail outlets, to focus available resources and growth strategies on the company‘s profitable operations;
  • full labor cost competitiveness with foreign manufacturers in the U.S. by no later than 2012;
  • further manufacturing and structural cost reductions through increased productivity and employment reductions; and,
  • balance sheet restructuring and supplementing liquidity via temporary Federal assistance.
GM calculated that implementation of their plan would result in a company that would be profitable in a U.S. industry with annual sales between 12.5-13 million units (note: U.S. annual sales in the years prior to the recent economic downturn were around 16 million units). In the interim the government assistance would ensure viability until the restructuring was completed.

After examining the plans submitted the administration rejected them as inadequate... Referring to the plans submitted by GM and Chrysler, President Obama said "... after careful analysis, we have determined that neither goes far enough to warrant the substantial new investments that these companies are requesting..." He announced that GM was being given adequate capital to cover them for another 60 days while "... my team will be working closely with GM to produce a better business plan..."

OK, now this blogger has been unable to find any specifics as to what the administration sees as the shortcomings of the GM plan, or what changes they want made over the next sixty days to make the plan acceptable. Statements by the President and his administration have only contained platitudes.

For example from 'Obama Administration New Path to Viability for GM & Chrysler' (see link below), the Key Findings said: "While GM’s current plan is not viable, the Administration is confident that with a more fundamental restructuring, GM will emerge from this process as a stronger more competitive business. This process will include leadership changes at GM and an increased effort by the U.S. Treasury and outside advisors to assist with the company’s restructuring effort. Rick Wagoner is stepping aside as Chairman and CEO. In this context, the Administration will provide GM with working capital for 60 days to develop a more aggressive restructuring plan and a credible strategy to implement such a plan. The Administration will stand behind GM’s restructuring effort."

And re the changes to be made, it said: "... industry and restructuring experts will help focus this process on:
  • Sustainable profitability: A viable GM should be able to generate meaningful positive free cash flowing, a normalized business environment, generate net free cash flow over the course of a business cycle and invest capital in research and development and capital expenditures sufficient to maintain or enhance its competitive position while also earning an adequate return on its capital.
  • A healthy balance sheet: The restructuring must substantially reduce GM’s outstanding debt and existing liabilities to a level where they are consistent with both its normalized cash flow and the cyclical nature of its business. Given the deterioration in the auto market since late last year, this will require substantially greater balance sheet concessions than those called for in the existing loan agreements.
  • More aggressive operational restructuring: The restructuring plan must rapidly achieve full competitiveness with foreign transplants and more aggressively implement significant manufacturing, headcount, brand, nameplate and retail network restructurings.
  • Technology leadership: The new GM will have a significant focus on developing high fuel-efficiency cars that have broad consumer appeal because they are cost-effective, have good performance and are reliable, durable and safe."
Blah, blah... The main reality probably is that having been pummeled by the public over bailouts, AIG bonuses, etc., the administration felt obliged to be seen as taking a strong line with some recipients of government financial aid, and the automotive firms just happened to wander into the cross-hairs (i.e. bad timing, so 'no soup for them')... . Perusing written reports of what administration officials have hinted at it looks like they also want two additional main changes - GM's bond-holders agreeing to reductions in the GM debt that they hold, and a greater emphasis on 'green.' This last point is more an emphasis of the Democrats and the administration than of the market. While many fault GM for focusing on trucks and other gas-guzzlers, the fact of the matter is that this was a direct response to U.S. consumer demand. The public demand for hybrids, etc. is low, and it's not as if this latest big drop (as opposed to the long-term erosion of market share, which has only partially due to their vehicle offerings) in consumer demand has anything to do with this (as it is across the board and has adversely effect all the car companies, even those that have put a greater emphasis on this segment!)

Oh well, looking forward the plan will be tweaked, the administration will say enough changes were made to make the plan acceptable, and a level of government aid will be forthcoming.

Ford Motor Company Business Plan
GM: Restructuring Plan for Long-Term Viability
President Obama's remarks on U.S. car industry
Obama Administration New Path to Viability for GM & Chrysler