Thank goodness, in fact, that most journalists are still in the business of writing first to inform, then to entertain.
I don't have any axe to grind over GM - no-one can ever force me to buy their product again - but I do have one over the role of journalists and journalism.
If you think financial journalism is about nothing but entertainment you must be reading the wrong newspapers.
Rant over...
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Journalism is about...No correction...Editorial policy - is about selling newspapers. How the journalists and editors choose to do this is another matter.
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>>you must be reading the wrong newspapers.
FT, Times and WSJ every day.
>>If you think financial journalism is about nothing but entertainment
If you think that all financial journalism is the same, that all financial journalism is aimed at informing without consideration of entertaining, then I have a bridge in Brooklyn you may be interested in buying... Failing that, just put the Sun down and try getting out more.
The articles are there to sell the paper. Some papers are bought for serious financial information, and therefore the journalists write serious financial articles. Some papers are bought for pure entertainment and contain appropriate artices. In between there are a raft of other papers, including the Telegraph.
*ALL* journalists and *ALL* papers are there to entertain. Sometimes that entertainment is provided by truth, detail and accuracy and sometimes it is tainted towards the tastes of its audience to a rgeater or lesser amount.
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so, not fantasy income, merely in the wrong period.
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the problem is that it has taken until now for this to be brought to light. most companies in the us that were engaging in this sort of accounting came clean soon after worldcom and enron ran in to difficulties. more details at
www.investorsassociation.org/forums/showthread.php...C
and other threads on that forum.
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Dalglish,
You have a good point. However, within the senior boards of large corps, and their auditors, there is now such paranoia over the whole "Enron" thing that the fact that it took so long probably means they truly didn't do it on purpose.
It probably also means that for some reason it was about to come anyway - what could discover it ? Perhaps a due diligence effort driven by a refinancing or Chapter 11 process. UK and US GAAP is essentially the formalisation of acceptable manipulation. Sometimes the boundaries get pushed, sometimes incorrectly but not always inappropriately.
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Its interesting how many US companies are going for 'Chapter 11' - despite the fact that their economy is supposedly booming. Basically Chaper 11 is being used to allow management to tear up long-standing wage and benefit agreements. There was an excellent Washington Post article on this - its available on-line here:
www.washingtonpost.com/wp-dyn/content/article/2005...l
And before anyone feels too sorry for Delphi, it might be worth noting that the company has set aside fully 10% of its equity to pay management bonuses once in comes out of Chapter 11 (with employee wage-rates more than halved and health benefits almost non-existant).
I also have little sympathy for GM shareholders. The company persisted in making gas-guzzling cars and SUV's - pushing toward higher and higher GVW's. Ford and GM repeatedly lobbied the US government not to introduce car-type type-approval for SUV's and pick-ups (keeping them outside crash-test regulations and CAFE requirements).
Now higher fuel prices mean that the SUV fashion craze is coming to an end and the US companies have been caught totally flat-footed as they find that they have ceded the smaller car market to the Japanese. Chapter 11 is a way of enabling them to tear-up union agreements and deny benefits (which they have known the exact cost of for many years...). Essentially it is a smart trick to get the past and present workforce to pay for management bungling.
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Lets not blame the car companies too much for abusing chapter 11. Its a trick first exploited by the major US airlines.
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The information that has surfaced recently comes from the following shenanigans...
GM sign a multi-year deal with a supplier. Over those years the supplier will make cost savings due to inherent efficiency improvements or due to the longevity of the deal itself.
GM want some of those cost savings or at least benefit from any prognosable savings that the supplier may make.
Some or all of the cost savings over the term of the contract are paid to GM in the first year. In this case the year is 2001 when, maybe, those monies should have been accounted for over a number of years.
I think that this is how those monies suddenly 'appeared'.
Sounds a bit of an iffy deal, but the SEC is investigating this.
Yes, as mentioned in a earlier thread, any supply problems from Delphi will have far greater impact than problems with the unions.
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aprilia
i get the impression that you do not regard most motor manufacturing bosses in high regard, and feel that their workers are hard done by.
the questions faced by all moral consultant businessmen probably include:
how do you succeed in a consulting business? does one make its aim to make profits and enrich yourself & family, or to help enrich the companies and their workers, or does one do it just to live a basic monastic life without any luxuries?
for example, what fees that should you charge them? does one set them higher or lower than competitors (of course one must try not to price your competitors out of their livelihood, but then one would be in a cartel ! ), or to improve your own wealth, or to improve your client's products and profits, or do you give away your services at charitable rates to ensure that the poor downtroddden workers in those industries continue to survive through the company carrying on its corrupt business where the directors stuff their pockets with all the money they can get?
hard decisions. i know, much easier to just work in the state sector living off other peoples taxes.
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Dalglish, there is also the option of simply not doing business with people whose business practices one deplores.
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the great difficulty for GM and Ford is the overly generous terms they signed up to in the late 90s with the Unions for wages and benefits to their entire retiree and worker populations that were clearly unsustainable (eg assumptions in their pension scheme that shares would return 9% av).
Both the big 3 and the airlines have major issues of huge legacy populations that dwarf their current active employee count. These retirees are obviously never going to agree to changes in their terms without a fight.
I always find it rather strange in the US that a company pays the healthcare costs of its retirees.
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aprilia i get the impression that you do not regard most motor manufacturing bosses in high regard, and feel that their workers are hard done by.
On the contrary - I have met many very good managers. I have worked in the US though, and have a problem with the way some of their senior management operate. US senior managers generally earn massive multiples of the average worker's salary and seem very unapproachable and divorced from the daily operation of the company. When they bungle things they generally stick around and sack a few engineers/assembly operatives. There is a lot of that going on.
To quote directly from the Washington Post concerning Delphi:
"This helps explains an aspect of the Delphi filing that has puzzled observers: CEO Miller's petition to the court to award up to $87 million in bonuses to senior managers, who also would share 10 percent of the equity in the reorganized company.
Logic would suggest that a dynamic corporate doctor would want to amputate, not remunerate, the people who helped get the company in trouble in the first place. Bonuses and equity, however, "incentivize" managers, to use Wall Street lingo, to remain at the company and meet the downsizing targets set by Miller."
Having recently been on a tour of Japanese auto makers and component suppliers I must say I have the utmost respect for Japanese management. They seem to mostly run efficient organisations without the need for shedsloads of pay and share options. They also really get involved in the running of the company - you see these guys walking around at the side of the line - they know what's going on at the sharp end. The workforce are also fairly remunerated (some would say generously) and, contrary to popular belief, they do operate unions.
the questions faced by all moral consultant businessmen probably include: how do you succeed in a consulting business? does one make its aim to make profits and enrich yourself & family, or to help enrich the companies and their workers, or does one do it just to live a basic monastic life without any luxuries? for example, what fees that should you charge them? does one set them higher or lower than competitors (of course one must try not to price your competitors out of their livelihood, but then one would be in a cartel ! ), or to improve your own wealth, or to improve your client's products and profits, or do you give away your services at charitable rates to ensure that the poor downtroddden workers in those industries continue to survive through the company carrying on its corrupt business where the directors stuff their pockets with all the money they can get?
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If you are talking about me specifically, then I charge what I think is a fair rate. I don't know what others charge. I have always been careful to only charge for work done and if things don't go to plan then I don't charge anything other than expenses. I could get away with a lot more, but I'm not greedy and I suspect its for that reason that I have never been without forward-booked work for many years - even when things have been slack for others. Nowadays I also try not to be greedy in life in general. I have had a lot more in the bank in the past and have wasted money on both S-Class and 7-series etc etc. Now I'm getting a little older and wiser I try to work as little as possible and spend as much time with the children as possible - I try not to work during school holidays (unless its a bit of report writing on the PC - like I'm doing today). I think if everyone just 'eased off the throttle' a little then life would be a bit more pleasant.
hard decisions. i know, much easier to just work in the state sector living off other peoples taxes.
I don't know what your problem is - I find sniping like this pretty sickening. I don't regard state employees as second class citizens or people to be constantly denigrated. Maybe if you're ever unfortunate enough to be involved in a nasty RTA (as I once was) you'll muster breath to make that comment to the firemen and ambulancemen who cut you out of wreckage.
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Nicely put Aprilia
"I think if everyone just 'eased off the throttle' a little then life would be a bit more pleasant."
Or more succinctly, "Chill"
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Nicely put Aprilia "I think if everyone just 'eased off the throttle' a little then life would be a bit more pleasant." Or more succinctly, "Chill"
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Yes - something you learn with age I guess. Unfortunately I remember that word from first time around (i.e. the 1960's!).
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Or more succinctly, "Chill"
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ditto.
only wish francis drake, nelson, churchill et.al had done the same.
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Motoring!!
DD.
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Churchill's motoring! :-)
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Awww Yes,
but I wasn't targeting you specifically JBJ.
DD.
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I know, DD - I was just feeling frivolous. I'll be better soon...
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Motoring!!
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the motoring link i was alluding to was the fact that the conquered nations germany and japan are ahead of britain (2nd and 3rd largest economies) and arguably have healthy "national" owned motor manufacturing industries. and indeed they have plants here (bmw-mini, toyota, honda, etc. ).
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A friend works for Seimens in Germany. They are going through a massive lay off programme at the moment. Deutsche Telekom are also laying of 32,000, and he mentioned other sto me too. Germany do well in export markets but not so well at home. The perception is that Germans need to Buy German and support their own industry, which they are not doing. Including cars...so he said.
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"support their own industry"
I'm still not buying a Rover. TVR, maybe...
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A friend works for Seimens in Germany. They are going through a massive lay off programme at the moment. Deutsche Telekom are also laying of 32,000, and he mentioned other sto me too. Germany do well in export markets but not so well at home. The perception is that Germans need to Buy German and support their own industry, which they are not doing. Including cars...so he said.
Hmm - most cars on the road seemed to be German brands when I was over there a couple of weeks ago. Increased market penetration mainly from Far Eastern brands if any (Japanese, few Korean). Likewise most domestic appliances and factory equipment (apart from FANUC robots, which are everywhere) is German. Stories of the demise of the German economy are somewhat exaggerated, sure they've got some problems but they still have tremendous intellectual capital and a fundamentally strong engineering base.
Meanwhile the UK's engineering base has been laid waste. Not just Rover, but many other great British engineering companies. I was unlucky enough to buy a few £k's of GEC-Marconi shares about six years ago. Well we all know what Lord Simpson (the guy who sold Rover to BMW IIRC?) and John Mayo did to that company - took it down to penny share status, about 10000 sacked, reduced pensions and touted it to the Chinese before selling to Eriksson. Never mind, they got a generous pay off for their efforts...
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>>I was unlucky enough to buy a few £k's of GEC-Marconi shares about six years ago.
I bought some Marconi shares too when they were 2p each, a gamble that didn't pay off. But I also bought some Stagecoach shares at 15p each - they're £1.14 now! You win some, you lose some!
cheers, Sofa Spud
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A Ford-GM merger? Henry Ford did start the company that became Cadillac, after all!
It was his second attempt at a car company, originally called the Henry Ford Company, I think (his first attempt, the Detroit Motor Company, had failed). This new Henry Ford Company was successful but Henry fell out with his business partners and was forced to resign, causing the company to be renamed Cadillac. The rest is history (which is bunk, of course!). Ford went on to found the Ford Motor Company that exists today, while Cadillac went on to become part of GM.
cheers, SS
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