It's About Accountability, Stupid!

Posted By: AZ Moderate
Posted on: Aug. 25, 2006 at 9:56 AM

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I was watching Imus in the Morning this AM, and he said: “USA Today is reporting that Ford Motor Company, which we were talking with David Kiley [Marketing Editor of Businessweek magazine] about, is considering going private.”

I had just read in the Arizona Republican Snoozepaper’s Business Section’s sidebar column that “Buybacks set record: Big companies bought back a record $116 billion worth of shares in the second quarter, up 43 percent from a year earlier, Standard & Poor’s says. The previous buyback record was $104 billion, set in the fourth quarter of 2005. ‘We’ve never had this magnitude of buybacks,’ S&P index analyst Howard Silverblatt says.” [The Arizona Republic, Business Section, August 25, 2006]

It occurred to me as I read the AZ Republican that these corporations, flush with cash from record profits reaped during the lifespan of this Bush economy, are bent on freeing themselves from shareholder oversight and restraint.

Shortly thereafter, Imus revisited that issue and echoed my suspicions. “Analysts say that if Ford became a private company they could do whatever the Hell they wanted. They wouldn’t have to answer to anybody.”

Sound familiar in this New World Order of the corporation, by the corporation, for the corporation?

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www.MoronInCharge.com

Aug. 25, 2006 at 11:26:28 AM

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Well AZ Moderate. Bush has made it quite clear: This is an ownership society. I take that to mean, soon enough, we will all be owned.

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Lars The Viking

Aug. 25, 2006 at 03:29:17 PM

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AZ Moderate, it appears that your title is a knockoff of the original Clinton campaign motto "It's the economy, stupid!"

Accountability is in fact the single greatest need in this government of ours, and in the coorporate world (but I repeat myself).

You hit that nail squarely on the head with this article and its implications.

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Average American

Aug. 26, 2006 at 10:25:31 AM

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I would have to disagree that this is a sinister plan to gain control of the company for the sole purpose of "doing what ever the hell they want". Due to increase regulations and intrusive government oversight in the wake of Arthur Anderson, Ford and other corporations who by the way, did not show record profits, Fords losing it's ass right now, are simply trying to do what they have always done, reduce cost and retain enough stock to protect themselves from a possible hostile take over.

With Ford laying off tens of thousands of workers, mostly because of the unbelievebale union pensions they agreed to during the "good old days" they are attempting to reduce cost and retain control.

This is good business, nothing more.

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Phaedrus

Aug. 26, 2006 at 10:26:25 AM

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The thing for Ford (and alot of US firms) is to break away from large institutional shareholders who's idea of accountability is the next quarter's profits, and not the long term prospects of the company. Japanese firms have 1 year, 5 yr, 10 yr 25 yr, 50 yr, and 100 yr plans for where they want to be, size wise, markets, etc. US companies on the other hand can only be concerned with this quarters numbers...

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Hunter

Aug. 26, 2006 at 02:09:01 PM

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AZM

Perhaps next time you post an article about record profits, you should pick on a company that hasn't LOST 1.4 billion so far this year. Just a suggestion.

And as long as we're on the subject of "freeing from oversight and restraint" did anyone catch Wall Street Journal article on this weeks bond sale? The headline tells us the Treasury is auctioning off 12.19 billion in long bonds (10 year) at 4.78%. But deep, DEEP in the article we learn the Treasury is also looking to auction off 33 billion in 3 and 6 month bonds and another 22 billion in 2 year bonds. Both of the latter will be paid back at the inverted yeild of 5.08%.

The sad part of this is they have to do short term, high interest rates because the dollar is losing its value so fast only an idiot would take the 10 year bond

But pay no attention to that, lets dog pile business.

BTW, I picked up a new nickname last Saturday. I'm now called, Grandpa. Thank-you, thank-you. But I have a problem, I can't seem to find the $28,429.14 dollars my new grand-daughter owes the feds for the national debt, can someone help me out?

Dave

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AZ Moderate

Aug. 28, 2006 at 10:19:51 AM

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Double A, your single dimension “Corporations as victim” NeoCon bias that any corporate failure is caused by the workers’ unions is showing through.

“The reason for the cutback is that Ford is being hit hard by the fall in sales of big pick-up trucks and SUVs, where it makes most of its profits. With the high cost of petrol, consumers are moving down to smaller SUVs or even to cars, both parts of the market where Ford is not so strong.” (“Ford and General Motors, Engaging reverse gear”, Aug 24th 2006, From The Economist print edition)

The Economist is hardly a bastion of anti-capitalist liberal bias.

Furthermore “Late last year Ford family members were talking wistfully of taking the company private. But they could not afford the $15 billion that would have cost, and no private-equity backer would go near a firm with such poor prospects where a family holds 40% of the voting shares, but only 5% of total equity.”

But the real culprit is buried far down in the article.

“It all shows how bad things have become. Insiders acknowledge that Ford's main weakness is poor product development. This has left it struggling in its highly competitive home market, where it faces not just GM and Chrysler, but also Japan's big three (Toyota, Nissan and Honda) and Hyundai, an ambitious South Korean newcomer.”

A MANAGEMENT policy of “poor product development”. Yup, it’s those labor unions alright! If only they had instituted better management policy. Those dastardly labor unions must be held ACCOUNTABLE! The buck stops there. Outlaw them! Outlaw them now!!

I rest my case, Double A.

PS. Double A, do I see your unrefined NeoCon dagger poking a hole in the fine fabric of your newfound reasonableness? See my cautious comment on the New Double A on his article “The Battle for America continues...” Do I need to watch my back?!?

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AZ Moderate

Aug. 28, 2006 at 10:37:28 AM

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Phaedrus wrote:

“The thing for Ford (and alot of US firms) is to break away from large institutional shareholders who's idea of accountability is the next quarter's profits, and not the long term prospects of the company. Japanese firms have 1 year, 5 yr, 10 yr 25 yr, 50 yr, and 100 yr plans for where they want to be, size wise, markets, etc. US companies on the other hand can only be concerned with this quarters numbers...”

Amen. brother, amen! I remember a cartoon a decade or so ago that summed it up nicely. There were two panels.

Panel 1 showed a group of Japanese executives clustered around a telescope looking at the distant future through a telescope and taking notes.

Panel 1 showed a group of American executives clustered around a telescope, which was aimed at the reverse end of another telescope, which had the eyepiece focused on the eyepiece of a microscope that was focused on a quarterly report.

And for you Double A, defender of all-that-is-corporate-is-good" and scourge of all-that-is-labor- is-evil, it has been said that the difference between European management and ownership and American management and ownership is that the European business model counts its employees as an asset where as American management counts its employees as a liability.

I remember reading somewhere back a few years ago that European ownership was searching for management talent globally, with the exception of the United States. The regard with which American slash-and-burn management was quite negative, although in the interview that was muted for obvious reasons.

A term that has come to gall me by its widespread use is the accounting phrase “The bottom line”. It subtly and not so subtly grinds every consideration down to the fine point of the profit-and-loss statement. The rest of the world 'gets it' that it is about more than just that. We in our corporate American Dream don’t, and that is dehumanizing.

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AZ Moderate

Aug. 28, 2006 at 11:03:55 AM

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Good difference of perspective, Hunter. I thought the article was about accountability. I still think it is, but you looked at this diamond through a different facet that I didn’t realize was there. Good show – it is an alternate interpretation that lends depth to the discussion. Thanks for the thoughtful alternative viewpoint.

Allow me to dissect the article to lay open the underlying structure that I intended:

Accountability: “Analysts say that if Ford became a private company they could do whatever the Hell they wanted. They wouldn’t have to answer to anybody.” This quotation was included to support the argument that Ford is a poster-child for the lack of ACCOUNTABILITY in Corporate America.

Record profits: “Buybacks set record: Big companies bought back a record…”. While this comment concerned Corporate America in general, this quotation was included to support the argument that Corporate America may be positioning itself for less oversight and ACCOUNTABILITY by stockholders.

And you wrote: “And as long as we're on the subject of "freeing from oversight and restraint" did anyone catch Wall Street Journal article on this weeks bond sale? The headline tells us the Treasury is auctioning off 12.19 billion in long bonds (10 year) at 4.78%. But deep, DEEP in the article we learn the Treasury is also looking to auction off 33 billion in 3 and 6 month bonds and another 22 billion in 2 year bonds. Both of the latter will be paid back at the inverted yeild of 5.08%.

“The sad part of this is they have to do short term, high interest rates because the dollar is losing its value so fast only an idiot would take the 10 year bond”.

Accountability of our Federal Government: Lucid observation. Would you perhaps put this in the ACCOUNTABILITY pile? Who’s watching these keepers of our wealth, these denizens of the undisclosed locations?

You are sharing with us the government’s version of using our house as an ATM. Refinancing and tapping national equity earned over the decades with the rest of the world is our leadership’s version this long term train-wreck in the making. Keep up the penetrating and very informative comments and articles Hunter.

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AZ Moderate

Aug. 28, 2006 at 01:16:14 PM

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MoronInCharge, you’ve got that right. Corporate America owns us, lock-stock-and-barrel.

But we should keep in mind that Bush is simply a hood ornament bug deflector on the Fascist AmeriCorporNation juggernaut that has been installed by the NeoCoNazis and passes for our government. To keep our eye on the bug deflector will keep us from seeing the onrushing juggernaut that is the real danger to our life and limb.

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Phaedrus

Aug. 28, 2006 at 05:30:28 PM

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Yeah Mody, on the Euro companies searching for executive talent bypassing the USA, does anyone know any "foreigners" who are execs of US firms? I've worked for many Swedes, Norwegians, and Indians (of the Ghandi sort).

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