More Opinion by The Springboard

THE UPRISING OF THE AMERICAN PARTY "Clearly the voters are engaged right now, at least for sure on the republican side, and what they have concluded is that the republican party has not done their job. Thus, Donald Trump gets their vote."

Wednesday, January 30, 2008

IT'S NOT THE ECONOMY, STUPID

Every time I hear someone utter the words "the economy is bad," I get an intense and nervous urge to slap someone. Reality check, please. If you put things into perspective I think it's quite clear that the economy is still in relatively good shape, albeit true that we have myriad issues facing us in today's economic climate; such as the subprime disaster, lowered consumer confidence, falling markets, and ever-rising oil and heating costs. We have a big mess to sift through right now.

Still, unemployment hovers only slightly above 5%, inflation remains around 3%, and mortgage rates which although did see new highs in the past couple of years have fallen back down. Today you can get a 30-year fixed mortgage for less than 6%, and that number still may go lower as mortgage rates catch up to the recent cuts made by the FOMC to the overnight lending rates between banks.

Consider that in the years of the Great Depression it was the basic amenities which people could not afford, like food and clothing. The jobless rate then was a staggering nearly 33%. Many of America's poorest cities had as high as 50% unemployment. Not a single person in today's generation, nor many of the baby-boomers, can truly relate to the absolute destitution and despair that people experienced during that ten-year span. If you take a really hard look at where the US economy is today, and you look at the historical data, it is clear that we have made an astounding recovery, and that times are not nearly as tough nor as bad as they can be, and have been in the past.

Today people complain when they have to cut back on things like the Big Mac, or Netflix. They have cable, cell phones, a TV in every room, home computers and laptops, 2,000 square foot homes and the Wii. The list, of course, goes on.

We have no room to complain. We can relieve ourselves of many of our literal self-inflicted financial woes.

Of course we want the best for ourselves and for our children. Of course we want the rewards to compensate for the tedious daily grind. There is nothing wrong with that. But we cannot kid ourselves that we are living in bad times, or that there is something wrong with the economy. The simple fact of the matter is that we, as a people, have become complacent. We have become unappreciative and materialistic. Frankly, we've become confused about what is and what is not necessary to get on to the next day of our lives. Furthermore, we simply expect too much, too soon.

Consider as well that it was the result of massive deficits and the beginnings of World War II that finally ended the US's longest depression in history. And back then there was no talk whatsoever about a "rebate" check from Uncle Sam to go out and buy more stuff you don't need to survive. Perhaps back then a check from Uncle Sam to buy a much needed loaf of bread might have been more in order.

Saturday, January 26, 2008

WAITING FOR THE GOVERNMENT TO GET SIRIUS

For almost the past year we have been waiting to get some kind of an answer from the antitrust people in our government regarding the proposed merger between XM Satellite Radio Holdings Inc. [XMSR] and Sirius Satellite Radio Inc. [SIRI]. I must say that I'm becoming a bit impatient. Of course I want the deal to go through as I've placed my bets on Sirius Satellite Radio, and frankly the shares aren't worth a whole lot without a signed deal. Comparatively neither are the shares in XM. We absolutey need a deal like this to return value to the shareholders of either of these two companies.

The facts are simple. Neither XM nor Sirius are profitable as standalone companies. Furthermore, the satellite radio business with only 5% of the market is miniscule in comparison to regular radio, and to be fair so far the whole concept of subscriber-based commercial free radio really hasn't captured the hearts and minds of many. Without a merger it would seem unlikely that either of the two companies could ever stand a chance to be profitable.

It would be a monopoly in the sense that naturally, there would no other company in the marketplace. But here's the problem; if satellite radio as a business currently doesn't seem to be viable, how in the world can that be a monopoly? If the two companies combined were to try to gouge their paying subscribers then they would simply leave satellite radio in the dust and return to the old tried and true regular radio. It's not like electricity, or gasoline, or the old Ma Bell.

Besides, it's actually in the cosumer's interests if you consider that a merger between the two companies would further expand compatibility, programming, value, and interest in its format. That, in turn, would spur on the kind of competition the antitrust people are looking for. Eventually other players will enter the marketplace if they see there is space for their products and services. And a merger between XM and Sirius could also better define what satellite radio wants to be, and how it intends to compete in the marketplace with its much bigger competitor; your local radio station.

Sunday, January 20, 2008

CEO COMPENSATION IS OUT OF CONTROL

We hear it all the time that the rich get richer and the poor just keep getting poorer, and I'll be the first to tell you that I agree to some extent that capitalist corporate America has gotten away from itself and has helped to bring some validity to this argument. America's CEOs are paid enormous amounts of money and still the American worker struggles to make ends meet. The companies' boards will always tell you that it is essential to maintain quality people with attractive compensation. When we are talking tens of millions of dollars in salaries and bonuses, this goes beyond compensation. This is corporate America sucking enormous sums of money from the shareholders, and robbing the pockets literally of the other employees of the company. Let's not forget that the CEOs are also employees. Performance doesn't appear to be a deciding factor anymore in how much someone will be paid.

There needs to be serious delving into the practices of compensating CEOs and other high-level corporate executives by the US Government, and there needs to be more of an outcry from America's shareholders. Frankly, America's workers should be rather vocal about this as well. Right now we don't have this public outcry and therefore nothing will change. I'll not go into the other contributing factors here such as the disaster of NAFTA, which has sold many hundreds of thousands of American jobs down the river, or the fact that we have been far too lenient regarding our trade practices with countries like China. That's for another topic.

Take into consideration a recent article that stated that the financial industry which has lost hundreds of billions of dollars in the crash of the subprime and housing markets last year paid out a record $80 billion in salaries and bonuses. CEOs who took on too much risk, turned a blind-eye to predatory lending practices, and failed to see problems developing were paid better than they ever have been in the past. How can this be justified as appropriate compensation? Meanwhile the top financial firms have been slashing jobs, arguing that cuts are necessary due to market conditions. Once again the upper echelon aren't willing to make sacrifices of their own, or take responsibility for bad decision making. Are these the same quality people we want to attract to the highest posts in corporate America?

Capitalism is not a bad thing when it works properly, and I'm a strong proponent of it. But when we leave a huge divide between how we compensate at the lowest and highest paid levels within the corporate structure, when we reward bad behavior with higher pay and bigger bonuses, do we not also lose the strength of the argument that capitalism is the best idea for the free world?

It is certainly something to think about.