Remember Lee Iacocca, the man who rescued Chrysler Corporation from its death throes?  He’s now 82 years old and has a new book, ‘Where Have All the Leaders Gone?‘ 

Lee Iacocca says: 

‘Am I the only guy in this country who’s fed up with what’s happening? Where the hell is our outrage? We should be screaming bloody murder! We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, ‘Stay the course.’

Stay the course? You’ve got to be kidding. This is America, not the damned, ‘Titanic’. I’ll give you a sound bite: ‘Throw all the bums out!’ You might think I’m getting senile, that I’ve gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore.

The most famous business leaders are not the innovators but the guys in handcuffs.. While we’re fiddling in Iraq, the Middle East is burning and nobody seems to know what to do. And the press is waving ‘pom-poms’ instead of asking hard questions. That’s not the promise of the ‘ America ‘ my parents and yours traveled across the ocean for. I’ve had enough. How about you? 

I’ll go a step further. You can’t call yourself a patriot if you’re not outraged. This is a fight I’m ready and willing to have. The Biggest ‘C’ is Crisis! (Iacocca elaborates on nine C’s of leadership, with crisis being the first.)

Leaders are made, not born. Leadership is forged in times of crisis. It’s easy to sit there with your feet up on the desk and talk theory. Or send someone else’s kids off to war when you’ve never seen a battlefield yourself. It’s another thing to lead when your world comes tumbling down.

On September 11, 2001, we needed a strong leader more than any other time in our history. We needed a steady hand to guide us out of the ashes. A hell of a mess, so here’s where we stand.

We’re immersed in a bloody war with no plan for winning and no plan for leaving. We’re running the biggest deficit in the history of the country. We’re losing the manufacturing edge to Asia, while our once-great companies are getting slaughtered by health care costs. 

Gas prices are skyrocketing, and nobody in power has a coherent energy policy. Our schools are in trouble. Our borders are like sieves. The middle class is being squeezed every which way. These are times that cry out for leadership.

But when you look around, you’ve got to ask: ‘Where have all the leaders gone?’ Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense? I may be a sucker for alliteration, but I think you get the  point.

Name me a leader who has a better idea for homeland security than making us take off our shoes in airports and throw away our shampoo? We’ve spent billions of dollars building a huge new bureaucracy, and all we know how to do is react to things that have already happened.

Name me one leader who emerged from the crisis of Hurricane Katrina. Congress has yet to spend a single day evaluating the response to the hurricane or demanding accountability for the decisions that were made in the crucial hours after the storm. 

Everyone’s hunkering down, fingers crossed, hoping it doesn’t happen again. Now, that’s just crazy. Storms happen. Deal with it. Make a plan. Figure out what you’re going to do the next time.

Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. Who would have believed that there could ever be a time when ‘The Big Three’ referred to Japanese car companies? How did this happen, and more important, what are we going to do about it?

Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening. But these are the crises that are eating away at our country and milking the middle class dry. 

I have news for the gang in Congress. We didn’t elect you to sit on your asses and do nothing and remain silent while our democracy is being hijacked and our greatness is being replaced with mediocrity. What is everybody so afraid of? That some bonehead on NBC news or CNN news will call them a name? Give me a break. Why don’t you guys show some spine for a change?

Had enough? Hey, I’m not trying to be the voice of gloom and doom here.  I’m trying to light a fire. I’m speaking out because I have hope - I believe in America. In my lifetime, I’ve had the privilege of living through some of America’s greatest moments. I’ve also experienced some of our worst crises: The ‘Great Depression,’ ‘World War  II,’ the ‘Korean War,’ the ‘Kennedy Assassination,’ the ‘Vietnam War,’ the 1970’s oil crisis, and the struggles of recent years culminating with 9/11.

If I’ve learned one thing, it’s this: ‘You don’t get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it’s building a better car or building a better future for our children, we all have a role to play. That’s the challenge I’m raising in this book. It’s a “Call to Action” for people who, like me, believe in America’. It’s not too late, but it’s getting pretty close. So let’s shake off the crap and go to work. Let’s tell ‘em all we’ve had ‘enough.’

Make your own contribution by sending this to everyone you know and care about. It’s our country, folks, and it’s our future. Our future is at stake!!

I refuse to get off my soap box until we see concrete steps taken to end the ongoing economic and market malaise infecting all aspects of our society and world.

Step 1 - Courage.  Politicians need to gear down the rhetoric immediately, stop pointing the finger at others, take responsibility for their own actions, stop focusing on re-election, forget about who did what to create this mess over the last 2-3 decades and simply SOLVE THE PROBLEM by doing what needs to be done.  This is no longer a Republican or Democratic issue.  It is an American issue and nobody cares about the politics of any of this any more.  Period.  Have some courage and start doing what needs to be done instead of what needs to be done to get re-elected.  Doing the right thing may not be popular, but it’s always easy to do the right thing if you actually represent who elected you to do what you’re there for Mr. Politician.

Step 2 - Innovation.  Every politician needs to embrace the creators of jobs and wealth - entrepreneurs.  Why is it so hard for elected officials to understand that entrepreneurs create the ideas that create the companies that create the jobs that create the wealth.  I’m not talking about giving this idea “lip service”.  I’m talking about making this a national imperative as important to the fabric of the President and the government as JFK’s idea to put “a man on the moon”.  I want commitment, not talk.  I want an executive and legislative focus on this initiative that becomes the foundation of the United States government, the pillar of economic stability and the fabric of all legislative, policy and monetary initiatives going forward.  I want every politician talking about this every day of the week and the media to push this as a national priority in every broadcast everywhere.

Step 3 - Investment, *not* Stimulus.  Congressional officials and the President need to invest $5 BILLION in young companies, start-ups and entrepreneurs.  I have written about this before, but I want $100 MILLION put to work in each of 50 cities across the country.  This money will *not* be in the hands of elected officials.  Rather, it will be put in to each city in the form of a local start-up and young company growth capital fund and will be managed and run by a team of selected serial entrepreneurs, VCs, private equity investors and Angel investors so that a base level of scrutinty can go in to the selection of companies for investment.  This group will be investing on behalf of the American taxpayer and will receive a 0.5% management fee and 10% equity upside for success.  Why?  Because you need talent to make good investments and monitor and assess the investments until liquidity is achieved.  You get what you pay for and “free” doesn’t scale.  We want talent and we want investment discipline.  This structure achieves that.  Further, each $100 MILLION per city selected will be invested to the tune of $250K - $1M per company so that we can get stimulus rolling on new ideas and young company building for at least 150-250 companies per market.  This $5 BILLION investment from TARP will *always* result in more economic activity than giving it to Bank of America or Citigroup to backfill holes in their balance sheets.  And, it will result in investment returns to the American taxpayer both in the literal sense and the figurative sense as well.

Step 4 - Presidential Executive Order.  President Obama … immediately issue a Presidential Order to mandate that every *primary* residential mortgage in the United States be immediately and proactively refinanced to no worse than a 4.5% interest rate on a 30 year fixed interest mortgage.  No fees, no appraisals, no applications, no qualifications, no strings attached.  Advise all banks that they have until the end of February to make this happen through their entire portfolio of loans.  Advise any bank that refuses to comply with your Presidential directive, and that has taken even 1 penny of TARP money in the past, that they will be *nationalized* on March 1st unless they have performed under this Presidential directive.  This is not going to fix everything in the world of foreclosures, but this is going to allow *everyone* in the United States to get the same starting point whether they were responsible or irresponsible in their personal finances.  Since 92% of Americans have been responsible to date, they too will actually get a benefit for having been responsible just as those that have not currently are getting a benefit that they probably shouldn’t be getting at all.  Plus, it will put a real floor underneath the housing market and provide a foundation from which to move forward from for all of us.

Right now we need bold, bipartisan action with big thinking and new thinking.  We need leaders unafraid to lead, even if their actions are unpopular and even if that means that they are not re-elected to office.  We need people that can stand up and say “We screwed up.  It is all of our faults.  It is *my* fault and I intend to fix this.  Follow me.”  Note the last statement PLEASE … “Follow me.”

We are all tired of the noise.  We are also tired of the activity.  We want results and we want them now.  Stop confusing activity with results and lead, follow or get the hell out of the way already.  This is the greatest country in the world.  Let’s start proving that again and lead the world out of this once and for all.  If anyone lacks the commitment and conviction to make this happen, then do what needs to be done for the betterment of this great nation … RESIGN.

Today we see more evidence of the stresses in “the system”.  It’s not so much that the markets are up or down in a big way.  In fact, today they don’t seem to be doing very much of anything, as the Dow is down a little more than 100 and the Nasdaq is off about 40 as of this writing.

The data continues to be bleak, whether it’s unemployment numbers, manufacturing numbers or pretty much anything else that we want to cite.  However, with that said, everyone continues speculating about our having hit “the bottom” back in October/November when we successfully retested the lows and held.  Even better though is the view that the market has already “priced everything in” except for “new surprises” or macro events.  Yeah, OK, sure it has.

Clearly Mr. Market is expecting the Fed to drop the Fed funds rate by at least 75 basis points to 0.25% at the end of its FOMC meetings today and tomorrow. But, while most of the world is focused on the Fed and “quadruple witching” options expiration this Friday, today I want to focus on the oil and gas patch and the latest announcement from Weatherford International that they too are leaving the United States for the greener pastures of Switzerland. 

Someone in Washington DC needs to start paying attention to how many large US corporations in the energy complex are simply throwing in their operational white towels and literally bailing out of the US in droves (at least in terms of their corporate structure, HQ leadership and investment).  At last count this puts Transocean, Foster Wheeler and Tyco in Switzerland and Haliburton in Dubai, in addition to many, many others that are probably less known by “the masses”. 

This is absolutely great, just great (insert frustrated sarcasm here for effect).  Perhaps as a next step our illustrious leaders can see if they can effectively drive Cisco Systems, Google, Microsoft, Apple and the entire core technology complex out of the country as well (again, insert frustrated sarcasm here for effect).  I’m sure that such grand political efforts would breed the basis for further improvement in the US economy and much stronger future prospects for the continued global leadership of our great nation.  Please, please, WAKE UP!!

Oil Companies Voting With Their Feet—Investor’s Business Daily

Source: 15 December 2008 (c) 2008 Investor’s Business Daily

Energy: Another day, another oil company fleeing the country. No, this isn’t Ecuador, the banana republic that just defaulted on its debt after chasing out investors. It’s the United States, and what we’re seeing is self-defense.

Much political hay has been made in Congress about “unpatriotic” corporations that move operations abroad. Weatherford International is the latest, taking its headquarters from Houston to Switzerland. The oil services company said that it wants to be closer to its markets. But what it really meant was that it no longer saw the future in the U.S.

In a political atmosphere of blaming corporations, it’s no wonder. Halliburton fled to Dubai in 2007. Tyco International, Foster Wheeler and Transocean International all went to Switzerland. As a pattern emerges, America’s global standing diminishes, in part because it’s based on the willingness of companies to invest. It’s an especially bad sign when domestic companies flee.

“The U.S.is an important market,” Weatherford CEO Bernard J. Duroc-Danner told the Houston Chronicle Thursday. But, “it’s just a market. It’s not the primary market.”

How does that sound for a loss of global leadership? If that’s not clear enough, try this: “In the hierarchical pecking order, (Houston’s) not going to be Rome anymore.”

What accounts for this vote of no confidence in the U.S.?

Start with the demonization of oil companies. Executives have been hauled before Congressional star chambers, held up to abuse and ridicule, and then blamed for high oil prices as if they wanted to kill their markets. Rising global demand, nationalizations and Congress’ failure to open the country to drilling go ignored.

Huge companies such as Exxon Mobil, whose market cap exceeds the GDP of most countries, create $100 billion in earnings in quarters when oil prices soar. It looks high, but over the years, the industry’s average returns, at 9%, are less than other industries.

Nevertheless, Exxon’s profits are evidence of its success at extracting oil from miles below the earth’s surface, even underwater, and from unbelievably hostile environments, such as the Arctic. Instead of being objects of national pride for their productivity and efficiency, and subjects of heroic Hollywood movies, their success is considered to be dishonest.

Congressional hostility affects oil companies’ operations abroad, too: Exxon, remember, noted that Congress’ animus toward oil profits directly encouraged Hugo Chavez’s uncompensated expropriations of $1 billion of Exxon’s assets in Venezuela, which drove oil prices higher.

With an expanded Democratic Congress and an incoming Democratic president determined to create “patriot corporations,” it’s no surprise to see companies try to get out while they can. Make no mistake — it’s investment fleeing the country. As this goes, foreign capital could flee next.

Congress’ abuse sets the political tone for the worst to come.

First, oil companies, like all corporations, endure the second-highest taxation in the developed world (39.25% of their income), which dampens their competitiveness. The 2007 OECD average is 27.6% and falling. Worse still, U.S. firms are taxed on operations around the world, unlike the global standard, making a move of headquarters a defensive move.

Meanwhile, politicians openly say they want to hike taxes on oil firms. President-elect Obama seems to have backed off, but questions remain as to whether he can stand up to a rapacious and economically ignorant Congress that hasn’t.

Second, Big Labor is feeling its oats, swaggering confidently with newfound political power. United Steelworkers approved a “national oil bargaining policy” for higher wages and beefed up its “strike defense fund,” both of which point 15 plans to squeeze oil companies, if not launch strikes.

“You have to prepare your membership for 2009,” according to USW International Vice President Gary Beevers on a union Web site. “The oil companies are ready for us; we have to be ready for them.” With Congress at their back, oil companies are unlikely to lose.

None of this portends well for the U.S.business environment. That’s why top-performing firms, such as Weatherford, are exiting. Until Congress learns to appreciate and value oil firms, this will continue, leading to less U.S. investment and influence as more competitive climes beckon.

It’s pretty bad (sad) when people have to start writing “pep talk” pieces to home owners to not make them feel like idiots for owning “a part of the American dream” (see article below).  Unfortunately it seems that this “dream” is continuing to be a really bad “nightmare” for an awful lot of people out there.  After all, entertaining Freddie Kruger and Jason during the holidays isn’t exactly at the top of anyone’s proverbial “fun list” of things to do.

I think that this has gotten so far beyond anyone’s control that all the king’s horses (Fed, FDIC, TARP, Congress, etc.) and all the king’s men (Paulson, Bernanke, Summers, Geithner, etc.) aren’t going to be able to put Humpty Dumpty (U.S. housing market and mortgage backed securities) back together again anytime soon.  The endless money printing, unbearable debt and fallacy of being able to engineer a “soft landing” is going to lead to a plummeting U.S. dollar, plummeting domestic purchasing power and extremely high gold prices (and commodity prices in general for that matter as deflation gets replaced with hyper-inflation and the dollar falls off a cliff).

I don’t buy in to the latest multi-day rally and expect to see things turn back in the other direction as soon as we get back to the economic fundamental and data realities at hand.  “Hope” is a four letter word and sure isn’t a sound basis for an investment thesis.  I’m an optimist by nature, but right now I have to acknowledge that I’m an experienced optimist.  Enjoy.

Price plunge reminds us what we really value in a home

MarketWatch Databased News - November 25, 2008 11:31AM EST

CHICAGO (MarketWatch) — For most Americans, their home is their biggest investment. So when we read about record declines in U.S. home values, we naturally think our investment is in the tank.

But just because buying a house represents the biggest financial commitment most of us will ever make does not mean that its value is in its price and that if that price does not go up year after year we are somehow an investment failure.

That kind of thinking may apply to your retirement savings. Indeed that philosophy is the one Wall Street has pushed on all of us in selling the idea that we need to keep a good chunk of our nest egg in stocks because, historically, stocks have provided the kind of return we need if we are to retire “comfortably.” But houses are not stocks — even though the prices on them are acting like equities in a bear market.

The latest Case-Shiller home price index released Tuesday by Standard & Poor’s shows prices falling at an annual rate of more than 17% in September across the country, with all 20 markets tracked by the index showing declines from August and from September of 2007. See Economic Report.

These are troubling statistics, confirming that the housing market is in throes of its worst downturn in decades. Much as the argument about stocks historic returns over the long haul have blown up in everyone’s face as we look at a decade of essentially zero gains, the argument that housing holds its value by appreciating on average a percentage point or two more than inflation each year now seems like so much smoke puffing.

But let’s forget about prices, for the moment (and doesn’t that feel good!) and concentrate on fundamental value. Because that is something that no home-price statistic captures.

At its core, a house is a shelter. Unless the roof caves in, there is always some economic value in that.

But most people when they dream about a house or start looking for a house or actually buy one think about value in a whole different way: they think about the fireplace they can gather around with their families, the kitchen where they can show off their culinary skills, the bathroom that they won’t have to share, the schools they will be able to send their kids to, the neighbors they will be able to entertain in the backyard, the parks they can bike and hike and the community events they will be able to attend.

Yes, you have to make a price decision. And that can come back to haunt you if you’re forced to sell in a market like this. But that doesn’t mean you value any of those other things any less.

– Steve Kerch, assistant managing editor/personal finance

I firmly believe that stability in the U.S. financial markets can only be achieved if it is first achieved in the U.S. housing markets.  From my perspective, the vicious cycle of job losses, missed or delayed mortgage payments, the resultant foreclosures and short sales from these “problem mortgages” and FAS 157 quarterly mark to market write downs of mortgage backed securities and other housing related assets are putting extreme downward pressure on physical asset values. 

This deflationary spiral, when combined with the continuing global credit crunch and lack of financing for prospective buyers and refinancers alike, is similarly causing continued strain for both the businesses and consumers tied to these properties.  My proposed solution to reversing this nightmare is quite straight forward and is something that I term the FLOORS program - Fair Lending Options On Real Stabilization.  

It includes:

1. For the next 6 months, allow every *existing* home owner in the United States to refinance their primary residence home mortgage to a 30 year fixed interest rate at 5%, whether or not they are behind on their payments.
2. For the next 6 months, allow every *prospective* home owner in the United States to purchase a primary residence home mortgage on a 30 year fixed rate interest rate, also at 5%.
3. For any *existing* home owner in the United States that is unable to afford their primary residence even after attempting the refinancing program detailed above in item 1, offer them the following simple choice: (1) allow the bank to re-work their mortgage by extending their terms from 30-50 years, reduce their fixed interest rate from 2%-5% and/or reduce their loan principal so that the homeowner can afford the new loan and split the resulting economic write down equally between the underlying bank and the U.S. Treasury via an expanded TARP bailout program with the federal government underwriting the difference … and in return for this assistance and intervention, the homeowner will only get 20% upside on the future equity appreciation of the home while the bank and U.S. Treasury will equally split the remaining 80% of the upside on the future equity appreciation of the home, or (2) allow the homeowner to go through the normal foreclosure process, ruin their credit for 7-10 years and force the primary residence to be handled as has been the case historically for foreclosures.
4. In situations where the residence is a *secondary* or *investment* property rather than a primary residence, offer *only* the program detailed in item 3 above as an option for the mortgage holder as this form of home ownership is more consistent with speculation rather than a primary residence for day-to-day family living.

I believe that this simple approach is the best one for a number of reasons.  First, the idea that Citigroup, Wells Fargo, Bank of America or others including the FDIC and federal government are going to restructure mortgages for primary residences only for those individuals and families that have been delinquent on their payments or irresponsible in their financial decisions leading in to this situation is completely and utterly unreasonable and unfair to all of those home owners that have been responsible and timely on their payments and financial obligations historically. 

Second, everyone in the United States would be treated equally with regards to the opportunity to either refinance their primary residence or purchase their primary residence.  Nobody would be left out of the opportunity to improve their monthly financial outflows and this freed up capital would then be available for consumers to save, pay down other debt or spend in the economy. 

Third, with foreclosures and short sales of homes significantly reduced from the program detailed above in item 1 and outstanding new and resale home inventory reduced in parallel from the program detailed above in item 2, stability in home prices country wide could finally be achieved and the bleeding would be halted. 

Fourth, both banks and the U.S. Treasury (thus, us the taxpayers) would ultimately benefit in the mid and long term despite their near term write downs against the program detailed above in item 3, because the underlying properties would begin appreciating again as the downward deflationary pressure is ultimately replaced by re-inflation as the economy and markets stabilize and then begin to recover and expand.

The bottom line on this idea is a simple one.  First and foremost, ensure that everybody involved in the problem has skin in the game both now and later on as well.  And, most importantly, ensure that every American home owner has the opportunity to participate whether or not they were responsible or irresponsible in how they arrived at this point.  Choices still exist for home owners in these programs, and based on the individual beds that each has made for themselves, they can decide where and how they want to sleep in them. 

If you too agree that this is a good idea, please leave a comment, forward this to your Congressional representative, sign a petition endorsing the thesis or post this elsewhere, both online and offline, so that we can continue having the discussion. 

The only ones with good ideas and approaches to fixing this problem are not restricted to those in the Beltway, and it’s time that financially responsible individuals get included in the programs being established as much as those that may have made less sound choices or been dealt a bad hand via job losses, medical issues or other extreme family circumstances.  If we focus less on casting judgment and more on fixing the underlying issue, then exactly *everyone* in this country will benefit and we all “win”.