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Old America is Sinking

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The Ford Motor Company filed its 2007 proxy statement on 4/5/2007with the Securities and Exchange Commission. It stated the following:

" William Clay Ford, Jr., executive chairman and former chief executive officer, served as CEO from Jan. 1, 2006 until Sept. 1, 2006, and received no cash salary, bonus or other awards for 2006 pursuant to his May 2005 compensation arrangement to forego any new compensation until the company’s Automotive sector achieves sustainable profitability. His 2006 compensation totaled $10,497,292. The expense related to his previous options and other stock-based awards totaled $9,950,585, and an increase of $152,859 in the present value of accrued pension benefits, are included in Mr. Ford's 2006 compensation. Mr. Ford received other compensation totaling $393,848, which included $185,232 in value for required use of the corporate aircraft and $85,708 for security.

Alan Mulally, president and chief executive officer, served as president and CEO from Sept. 1, 2006 for the remainder of the year, and earned $666,667 in salary. His 2006 compensation totaled $28,183,476. Mr. Mulally received a bonus of $18,500,000 which consisted of a $7,500,000 hiring bonus and $11,000,000 as an offset for forfeited performance and stock option awards at his former employer. The expense for his options and other stock-based awards totaled $8,682,376, and includes cost recognized in 2006 for a $5 million stock option grant that he received in March 2007 as part of his 2007 option grant. Mr. Mulally received other compensation totaling $334,433, which included $172,974 for required use of the corporate aircraft, and $55,469 for relocation costs and temporary housing."

Ford Motoer Company announced on Monday January 4, 2006 its "way forward" plan to slash up to 30,000 manufacturing jobs, cut 4,000 salaried employees and shutter 14 factories -- "These cuts are a painful last resort, and I'm deeply mindful of their impact," Chairman and CEO Bill Ford said. "They're going to affect many lives, many families, and many communities."

The President of the Ford Motor Company Alan Mulally, also made an astounding statement regarding the tragic layoffs of 30 thousand workers and the closing of 14 plants.
The statement must have been born out of more than a hundred thousand dollars worth of education and years of on the job training. It was a statement that needed a drum roll introduction. He said, "What we (Ford) needs to do now is create a product that the public will buy." As my ten year old grandson would say...DUH. The simple fact is that the US auto industry has been on cruise control for decades and do not know how to get off it.

In defining the meaning of his phrase," democracy first," which was in answer to those reactionaries who shouted, "America first," Henry Wallace said, " democracy and freedom also means, that the businessman can be free from the fear of those monopolies and international cartels which use unfair practices in buying from him and selling to him or competing with him."

Beginning this new century, in my home State of Connecticut, there are only a few American owned grocery stores left. The food industry is controlled mostly by out of country, tax evading, investor, holding- companies. Royal Ahold NV a Dutch based company owns hundreds of Stop and Shop Supermarkets in New England, however at this writing they are being called the Enron of the food industry because of their exposed accounting manipulations and the entire house of cards is very shaky. A spokesman for the prosecution office in Amsterdam said the investigation focused on the possible "falsification of documents" and the "publication of possible false figures in company reports". In The U.S. District Court in Maryland, Royal Ahold NV, the Dutch grocery giant, agreed to settle a securities fraud class action lawsuit and pay $1.1 billion to shareholders for overstating profit. 800 Stop and Shop workers were laid off. The workers hurt by that scandal are mostly the poor that Clinton "Freed from the welfare rolls", and have no savings or even health benefits to fall back on.

On April 11, 1947, President Truman took the sledgehammer to the braces strengthening anti trust laws put into place by the Roosevelt administration to prevent another depression. Truman first announced the "anti Trust group would concentrate its efforts on major violations of anti trust laws while the Federal Trade Commission would increase it’s effectiveness on an industry wide basis instead of on an individual complaint." He then fired Roosevelt appointee Wendall Berge, Assistant Attorney General; in charge of the anti trust division. The New York Times reported, "Berge has been one of the most aggressive trust busters to hold that position, but it was whispered that he was too much of the old "New Deal " to be comfortable or effective in the new era." Ahold would never have been able to capture such a large segment of the food industry under a man like Wendall Berge.

It is easy to compare the failure of our automobile manufacturing business to our short -sighted foreign policy. For too many years Detroit has paid more attention to the rate of return for their investors than they have to the creation of a better product. When more stock went on the market, they increased the rate of return to the investor by cutting costs on the product development and manufacture. They became immersed in the paper business instead of the car business. Selling the stock (paper) became paramount instead of developing a good product. Dividends are what sell stock. Cost cutting (layoffs) and cheaper production costs pay dividends.

The Japanese did just the reverse. They knew that in the end, the better product would sell more and the investors would be much better off. American consumers were not fooled. They bought the better product. A few Americans got very rich maneuvering the paper on Wall Street and tens of thousands of American workers were laid off.

From 1948 to the present, American foreign policy has been only with the investors in mind. Whether you are viewing Mexico, or any South American country and certainly Eastern Europe the emphasis is on the resource drain of those countries. The poverty rate grows in every country where American dollars are invested to steal resources, and in America, another million personal bankruptcies will be filed before the decade ends. We are producing less and less product and stealing more and more. We are sending more jobs out of the country every day.

In India for example we have created a high tech elite with jobs from both the US and Britain. One would think that it is a great arrangement for the Indian people, but while we continue to lay off workers here, we also continue to increase poverty there. Taxes go up for the poor, prices go up, and the cast system flourishes. A small fraction of the population being paid what Americans would call low wages control political decisions that are supposed to benefit them.

There was not one word from any politician in the fall of 2006 on how this entire philosophic steel plate can be melted down. It would require a revolutionary structural change. There does not seem to be any leader on the horizon with the inclination, the courage or the mandate to radically re-direct the economy domestically, or to seek the wellspring of a creative foreign policy.

On March 17,1965 Willard F. Mueller who was the director of the bureau of Economics on the Federal Trade Commission said, "With Corporate profits the highest in history and still rising and stock prices reaching near record levels the prospect is for continuing pressure for mergers." Dr. Mueller was testifying before the Senate anti trust sub-committee. He told them that since the end of the pre Korean war recession of 1948 to 1949 there has been a post Korean war increase of 17% of total manufacturing assets held by the 200 hundred largest manufacturing companies and the proportion amounted to 54.6% in 1962. If this trend continues," he said, " the two hundred largest companies will own two thirds of all industrial assets by 1975."
The trend did continue for twenty more years.

April 8,1997, the Wall Street Journal announced, "Fortune 500 firms list 23% rise in profits." It then goes on to say that they have, "Restructured, re-engineered, re-financed, down sized, laid off, split up and merged their way to prosperity." The key phrase is "their prosperity." Trickle down mind set cannot separate the "Their" from the country’s prosperity.

They did not do it by manufacturing better products. Consumers are doing a similar thing. They are merging one credit card to another credit card and sinking deeper, and deeper in debt. In February of 1996, the consumer debt was an astounding $1.21 Trillion. It has continued to grow like a teen ager on steroids. We are a paper economy, or perhaps I should say a plastic economy with total debt that has now reached $48 Trillion.

The programmed moguls in the boardrooms obviously feel that when America bounces on the bottom they will not drown with the rest of us. Money makes them feel immune even to that. They are still immersed in the paper game so on August 4, 2007 Ford announced it is recalling 3.6 million passenger cars, trucks, sport utility vehicles and vans to address concerns about a cruise control switch that has led to previous recalls based on reports of fires. They had previously recalled nearly 6 million vehicles beginning in January 2005 because of engine fires linked to the cruise control systems in trucks, SUVs and vans.

 

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