Company A and Company B

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sat Nov 15, 2008 1:11 pm

Let’s say you own two companies. Together they have incomes of $100 million a year, but one of them, Company A generates $70 million and the other Company B $30 million. Things are going along fine for many years and then the product made by Company B the $30 million company confronts a great deal of competition and things are not going so well. The people who operate Company B for you want you to invest more to help them over a hard time. That’s sounds like a good idea because you sure don’t want to lose your investment. Now, where do you get the money to help Company B.? Ideally Company A would be able to generate additional revenue above $70 million through growth and you could use the excess to help Company B. Unfortunately, that would take time and perhaps even additional capital. You could borrow the money to help Company B. but obviously Company B will have to pay it back and if both of these companies don’t’ start growing how is Company B going to get the additional revenue to do that, take it from Company A?

There is one other choice, you can simply take money from Company A and give it to Company B, but if you do that you have further limited the ability of Company A to grow and generate the additional revenue you would like to have to help Company B.

So, the moral of the story is, “stimulus packages created by the federal government can’t possibly work because there is no place to get the money except take it from one part of the economy to give to another or to borrow money which means that somewhere down the line you have to figure out how to generate additional revenue to pay the new debt. You can’t keep just shifting things around. You have to encourage the economy to grow so the pie gets bigger rather than just try and slice it up differently.

Company B needs to figure out alternative ways to fix itself or it needs to cease to exist or merge or operate as a smaller entity, or become more efficient. What you don’t want to do is take money from A so your chances of further growth which benefits all are strangled.

Now, take this simplistic little story and send it to your Congressman because he or she is about to strip more from Company A. :yh_rotfl

Oh, in case you are a supporter of another bailout for the auto companies, I say go for it. Take what is left in your retirement plans and invest in GM. Friday it closed at $3.01. In December 2007 it was $39.19 and in December 2003 it was $53.40. $3.00 is a real bargain and if you believe in the Company you will make a killing and be able to buy any good car you want that is not made by the Big 3. But before you make this investment, I better tell you that the market analysts give GM a 4.14 rating (a strong sell rating is between 4.1 and 5.0). :driving:

Finally, if you are an American, complete the poll I have started and let’s see if there is another reason to not invest in GM, Chrysler or Ford.

Kindle · Post by **Kindle** » Sat Nov 15, 2008 1:36 pm

Well, I would say, unless you are smarter than all the economic advisors working on the stimulus package, they may 1) know something you don't or

2)they may be a part of the old communist plan to 'conquer us from within' by "spreading the wealth".

el guapo · Post by **el guapo** » Sat Nov 15, 2008 1:41 pm

id C i had no idea what on gods green earth you were on about

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sat Nov 15, 2008 3:21 pm

Kindle;1059055 wrote: Well, I would say, unless you are smarter than all the economic advisors working on the stimulus package, they may 1) know something you don't or

2)they may be a part of the old communist plan to 'conquer us from within' by "spreading the wealth".

There are a lot of people smarter than the people working on a Big 3 bail out designed to appease the UAW.

Here is one of the best articles I have read that gives a few interesting facts beyond what I could do.

Just Say No to Detroit

Would you invest in companies that have been in decline for decades and who have been unable to fix themselves while competitors have thrived in the same business? Hopefully not, and why should the American taxpayer.

Read the article before you reply.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sat Nov 15, 2008 3:26 pm

el guapo;1059057 wrote: id C i had no idea what on gods green earth you were on about

After viewing your video, I am not surprised.

el guapo · Post by **el guapo** » Sat Nov 15, 2008 3:33 pm

QUINNSCOMMENTARY;1059154 wrote: After viewing your video, I am not surprised.

sorry ya not amused:yh_rotfl:yh_rotfl

Post by **Oscar Namechange** » Sat Nov 15, 2008 4:09 pm

QUINNSCOMMENTARY;1059029 wrote: Let’s say you own two companies. Together they have incomes of $100 million a year, but one of them, Company A generates $70 million and the other Company B $30 million. Things are going along fine for many years and then the product made by Company B the $30 million company confronts a great deal of competition and things are not going so well. The people who operate Company B for you want you to invest more to help them over a hard time. That’s sounds like a good idea because you sure don’t want to lose your investment. Now, where do you get the money to help Company B.? Ideally Company A would be able to generate additional revenue above $70 million through growth and you could use the excess to help Company B. Unfortunately, that would take time and perhaps even additional capital. You could borrow the money to help Company B. but obviously Company B will have to pay it back and if both of these companies don’t’ start growing how is Company B going to get the additional revenue to do that, take it from Company A?

There is one other choice, you can simply take money from Company A and give it to Company B, but if you do that you have further limited the ability of Company A to grow and generate the additional revenue you would like to have to help Company B.

So, the moral of the story is, “stimulus packages created by the federal government can’t possibly work because there is no place to get the money except take it from one part of the economy to give to another or to borrow money which means that somewhere down the line you have to figure out how to generate additional revenue to pay the new debt. You can’t keep just shifting things around. You have to encourage the economy to grow so the pie gets bigger rather than just try and slice it up differently.

Company B needs to figure out alternative ways to fix itself or it needs to cease to exist or merge or operate as a smaller entity, or become more efficient. What you don’t want to do is take money from A so your chances of further growth which benefits all are strangled.

Now, take this simplistic little story and send it to your Congressman because he or she is about to strip more from Company A. :yh_rotfl

Oh, in case you are a supporter of another bailout for the auto companies, I say go for it. Take what is left in your retirement plans and invest in GM. Friday it closed at $3.01. In December 2007 it was $39.19 and in December 2003 it was $53.40. $3.00 is a real bargain and if you believe in the Company you will make a killing and be able to buy any good car you want that is not made by the Big 3. But before you make this investment, I better tell you that the market analysts give GM a 4.14 rating (a strong sell rating is between 4.1 and 5.0). :driving:

Finally, if you are an American, complete the poll I have started and let’s see if there is another reason to not invest in GM, Chrysler or Ford.

My Prime Minister has achieved much since everything went into meltdown. He's using the words 'Fiscal stimulation' a lot these days. He has his critics but his policy is to basically get the British to SPEND more money thus giving the economy a much needed economic boost.

From what i can see, he has done this by borrowing money from Saudi Arabia that i have to remind everyone, is and always has been, Britains ally.

I am not the worls'a economist but from what i can see, by borrowing from Saudi, it means he is not robbing company A to bail out company B.

The borrowing has allowed him to slash interest rates saving the average mortgage borrower money of up to £400 a month. The banks have slashed their rates which has been passed on to the lender at his insistence. He has insisted the fuel pumps pass on the fall in crude and more cuts are expected soon. His critics insisted he would raise tax in a budget to cover the borrowing but he has surprised them by announcing that he is cutting tax giving the average home an extra £500. The theory is that this should give us more money in our wages and increase our spending. His oppossition have nothing to offer other than reduce the borrowing and rob from company A to bail out company B. If they did this, there would be no other choice than to cut back on health, Education etc. As yet, i have heard no proposals to cut back on any other department, infact we have seen him announce a million £ package to create more jobs for anyone affected by the meltdown in the city.

I think he has taken the right route and all the time his critics have nothing to offer, it seems the best way to go.

What are your views, Quinn on the way, he has handles it??

He has just also increased the cold weather payment to pensioners to cover any rise in heating bills from £200 to £250.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sat Nov 15, 2008 4:20 pm

oscar;1059172 wrote: My Prime Minister has achieved much since everything went into meltdown. He's using the words 'Fiscal stimulation' a lot these days. He has his critics but his policy is to basically get the British to SPEND more money thus giving the economy a much needed economic boost.

From what i can see, he has done this by borrowing money from Saudi Arabia that i have to remind everyone, is and always has been, Britains ally.

I am not the worls'a economist but from what i can see, by borrowing from Saudi, it means he is not robbing company A to bail out company B.

The borrowing has allowed him to slash interest rates saving the average mortgage borrower money of up to £400 a month. The banks have slashed their rates which has been passed on to the lender at his insistence. He has insisted the fuel pumps pass on the fall in crude and more cuts are expected soon. His critics insisted he would raise tax in a budget to cover the borrowing but he has surprised them by announcing that he is cutting tax giving the average home an extra £500. The theory is that this should give us more money in our wages and increase our spending. His oppossition have nothing to offer other than reduce the borrowing and rob from company A to bail out company B. If they did this, there would be no other choice than to cut back on health, Education etc. As yet, i have heard no proposals to cut back on any other department, infact we have seen him announce a million £ package to create more jobs for anyone affected by the meltdown in the city.

I think he has taken the right route and all the time his critics have nothing to offer, it seems the best way to go.

What are your views, Quinn on the way, he has handles it??

He has just also increased the cold weather payment to pensioners to cover any rise in heating bills from £200 to £250.

So who is going to pay for the interest on the borrowing and increased cold weather payments? The concept of spending is fine, but a temporary stimulas will not change the fundamental problems, once the extra 500 is spent then what?

Post by **Oscar Namechange** » Sat Nov 15, 2008 5:22 pm

QUINNSCOMMENTARY;1059178 wrote: So who is going to pay for the interest on the borrowing and increased cold weather payments? The concept of spending is fine, but a temporary stimulas will not change the fundamental problems, once the extra 500 is spent then what?

Yes, i agree that his measures could be seen as short term. Going by previous governments here, this Prime Minister seems to be straight talking and honest in what he has told us. He has said that the borrowing from Saudi is obviousley going to come at a cost. After sacking the bank chiefs and directors, the government have control of banks and can keep them in better check for keeping the slash in interest rates permanent. The income tax cuts will also be permanent although he has just announced that these cuts will only apply to 'poorer' people on lower incomes. The borrowing allows him to invest into more jobs and continue investment in health and education again producing more jobs. The tax revenue from the newly employed should cover the interest from the Saudi loan.

As i said, he does have his critics but during his time as Chancellor under Tony Blair, he did actually borrow the least amount of money compared to the rest of Europe.

wildhorses · Post by **wildhorses** » Sat Nov 15, 2008 7:36 pm

QUINNSCOMMENTARY;1059178 wrote: So who is going to pay for the interest on the borrowing and increased cold weather payments? The concept of spending is fine, but a temporary stimulas will not change the fundamental problems, once the extra 500 is spent then what?

Not to mention ...what is the 500 spent on? If it is used to catch up on bills, then it does not feed the economy. It only gives the recipient a better night's sleep.

Tan · Post by **Tan** » Sat Nov 15, 2008 8:56 pm

I feel like I'm in class...

Quinn are you a professor?:)

watermark · Post by **watermark** » Sat Nov 15, 2008 9:11 pm

What about the Chinese bailout stimulus package of 5 billion? Are they doing the same thing as US? My gawd do countires as big as China actually copy dopey plans like the U.S? Why? if they are so bad, why would anyone do that?

U.S. car makers need to change the way they build their cars and that's common knowledge. Thing is our carmakers are passive aggressive little ****s (CEOs) who are a wittle bit scared of losing their millions (boohoo). They don't want to face any downsizing of lifestyle and pretend they are ok. Meanwhile the company wants everyone to think they care about their workers (they don't really) so they ask to be helped, because, godforbid if not then all these people will lose their jobs. Do I care if the Ford salesman loses his job? NO! Get something else going for yourself.

American auto makers don't realize the difference between transportation car and aesthetic car. One gets a family around and saves the environment, changes a people's way of thinking, the other makes an individual feel a certain way. Both are possible however if the company wants to make money then, well, the choice is obvious.

Sorry this is a little off topic for I'm not on topic, however it's better to be it here than elsewhere.

Accountable · Post by **Accountable** » Sun Nov 16, 2008 5:58 am

oscar;1059224 wrote: Yes, i agree that his measures could be seen as short term. Going by previous governments here, this Prime Minister seems to be straight talking and honest in what he has told us. He has said that the borrowing from Saudi is obviousley going to come at a cost. After sacking the bank chiefs and directors, the government have control of banks and can keep them in better check for keeping the slash in interest rates permanent. The income tax cuts will also be permanent although he has just announced that these cuts will only apply to 'poorer' people on lower incomes. The borrowing allows him to invest into more jobs and continue investment in health and education again producing more jobs. The tax revenue from the newly employed should cover the interest from the Saudi loan.

As i said, he does have his critics but during his time as Chancellor under Tony Blair, he did actually borrow the least amount of money compared to the rest of Europe.Seems like his answer is to nationalize anything that doesn't do what he wants it to do. That's a cost far too high for American culture to pay, imo. Downsizing, giving up the title of World Police Force, and stressing individual responsibility would be far healthier for us.

Good on you, though.

Kindle · Post by **Kindle** » Sun Nov 16, 2008 8:56 am

QUINNSCOMMENTARY;1059150 wrote: There are a lot of people smarter than the people working on a Big 3 bail out designed to appease the UAW.

Here is one of the best articles I have read that gives a few interesting facts beyond what I could do.

Just Say No to Detroit

Would you invest in companies that have been in decline for decades and who have been unable to fix themselves while competitors have thrived in the same business? Hopefully not, and why should the American taxpayer.

Read the article before you reply.

No, I would not invest in a company that has been in a decline for decades, but according to the latest TIME magazine in an article titled "Is GM Worth Saving?", it states;

they had $30 billion cash pile and plans to restructure the company as the economy rebounded and 2007 U. S. auto sales topped 16 million units.

Then came October. Sales plummeted an astounding 45% over the same period last year, a result of a slowing economy and a dearth of financing for would-be car buyers.

All car company sales were down this year, with a especially bad October. The failure to sell cars fell not to their inadequacies, but to the affect the bank failures had on people's purchasing power.

Everything is interlinked and it has a domino effect on other industries. We may just now be seeing the start of what may yet be coming.

Post by **Oscar Namechange** » Sun Nov 16, 2008 9:45 am

Accountable;1059516 wrote: Seems like his answer is to nationalize anything that doesn't do what he wants it to do. That's a cost far too high for American culture to pay, imo. Downsizing, giving up the title of World Police Force, and stressing individual responsibility would be far healthier for us.

Good on you, though.

I am not qualified enough to understand how Gordon Brown's actions would benifit or not benifit America as you have a completely different view of economy.

The £500 average saving on income tax would not be a one off and once spent back to the same problem as wildhorses thought. It is a permanent cut and a more long term benifit for those on lower incomes. He has also just blocked credit card companie's from re-possessing folks homes if they owe under £25,000. There are two sides to this. One, People with young familie's don't end up homeless and then become a huge burden of our council housing department but two, he is not really punishing these idiots for going out on the buy now, pay later idea. I'm not sure which is for the better on this one but i do know that the homelessness it would cause would have a direct affect on the government. They would have to pour money into housing again to re-home them. That would entail taking from company A to bail out company B.

We have an all too easy system here when you find yourself in debt. You simply go to your local magistrate and ask to be declared bankrupt. If you have no assets to take, the government picks the tab up along with the tax payer. Within 5 yrs, these people can apply for credit again with a clean slate. Another loop hole in the law is that if your business goes under and you are declared bankrupt, you can re-open your business the following day as long as it's in another company title with a new company director. He really needs to do some-thing about this.

He has achieved a great deal over just a few weeks and there is no doubt that things are moving. Fuel has been slashed and the suoermarket giants have gone into a price war bringing down the cost of food quite dramatically.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sun Nov 16, 2008 9:56 am

Kindle;1059642 wrote: No, I would not invest in a company that has been in a decline for decades, but according to the latest TIME magazine in an article titled "Is GM Worth Saving?", it states;

they had $30 billion cash pile and plans to restructure the company as the economy rebounded and 2007 U. S. auto sales topped 16 million units.

Then came October. Sales plummeted an astounding 45% over the same period last year, a result of a slowing economy and a dearth of financing for would-be car buyers.

All car company sales were down this year, with a especially bad October. The failure to sell cars fell not to their inadequacies, but to the affect the bank failures had on people's purchasing power.

Everything is interlinked and it has a domino effect on other industries. We may just now be seeing the start of what may yet be coming.

That $30 billion is now being spend at the rate of $7 billion a month.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sun Nov 16, 2008 9:59 am

wildhorses;1059309 wrote: Not to mention ...what is the 500 spent on? If it is used to catch up on bills, then it does not feed the economy. It only gives the recipient a better night's sleep.

What happened? How did we get on the same page so often? I know you have been reading the writings of William F Buckley (unlike his son apparently).

Post by **Oscar Namechange** » Sun Nov 16, 2008 10:11 am

I can't do the poll at the top. As i am a woman, i have no idea of what kind of car we have other than it's a white one.

Accountable · Post by **Accountable** » Sun Nov 16, 2008 11:40 am

oscar;1059695 wrote: I am not qualified enough to understand how Gordon Brown's actions would benifit or not benifit America as you have a completely different view of economy.To state it mildy.

oscar wrote: The £500 average saving on income tax would not be a one off and once spent back to the same problem as wildhorses thought. It is a permanent cut and a more long term benifit for those on lower incomes. £500 from what? and at what percentage of avg income?oscar wrote: He has also just blocked credit card companie's from re-possessing folks homes if they owe under £25,000.That sounds on the surface like a strictly PR move with no real impact. How often does something like that happen?

oscar wrote: He has achieved a great deal over just a few weeks and there is no doubt that things are moving. Fuel has been slashed and the suoermarket giants have gone into a price war bringing down the cost of food quite dramatically.He took control of fuel prices as well? They're dropping naturally here.

Kindle · Post by **Kindle** » Sun Nov 16, 2008 1:16 pm

QUINNSCOMMENTARY;1059709 wrote: That $30 billion is now being spend at the rate of $7 billion a month.

As the decline in their assets is due to the banking situation, do you still feel it is the car manufacturers fault that they did not have a larger cushion in preparation for the unexpected?

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sun Nov 16, 2008 2:31 pm

Tan;1059351 wrote: I feel like I'm in class...

Quinn are you a professor?:)

Thankfully no and equally thankful not a lawyer either.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sun Nov 16, 2008 2:40 pm

Kindle;1059881 wrote: As the decline in their assets is due to the banking situation, do you still feel it is the car manufacturers fault that they did not have a larger cushion in preparation for the unexpected?

That is pure nonsense and don't let anyone tell you that. Their problems go back years before the financial crisis and include things like building cars nobody wants to buy, failing to adjust to the competition, agreeing to benefits that are unaffordable, work rules that pay people who have no job to just show up and sit around doing nothing and more. Even their newest car the Volt is well known by their own admission to lose money.

And even if the problem was caused as you say, where does it stop, do we nationalize every company in the United States, with whose money? Heck we all will be going to Canada for "free" health care. :-5

Post by **Oscar Namechange** » Sun Nov 16, 2008 6:54 pm

QUINNSCOMMENTARY;1059942 wrote:

Heck we all will be going to Canada for "free" health care. :-5

You can come to Britain for free health care Quinn, we give it to anyone who walks in the country. Infact, if your trying to quit smoking, we'll even give you free nicotine patches!!

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sun Nov 16, 2008 7:40 pm

Kindle;1059881 wrote: As the decline in their assets is due to the banking situation, do you still feel it is the car manufacturers fault that they did not have a larger cushion in preparation for the unexpected?

I don't know how to make my point any clearer, the problem facing auto companies goes back many years and an infusion of cash now will only forestall the inevitable.

Accountable · Post by **Accountable** » Sun Nov 16, 2008 8:07 pm

QUINNSCOMMENTARY;1060168 wrote: I don't know how to make my point any clearer, the problem facing auto companies goes back many years and an infusion of cash now will only forestall the inevitable.
You took an afternoon nap, didn't you? :wah:

K.Snyder · Post by **K.Snyder** » Sun Nov 16, 2008 9:25 pm

QUINNSCOMMENTARY;1059150 wrote: Would you invest in companies that have been in decline for decades and who have been unable to fix themselves while competitors have thrived in the same business? Hopefully not, and why should the American taxpayer.

Read the article before you reply.

From my understanding the investments are not going toward the current quota but are actually going towards the work those companies should have been doing decades ago. All you have is a shift in the shares all the while those same companies are keeping the profits.

I call it GD criminal!

Kindle · Post by **Kindle** » Mon Nov 17, 2008 6:00 am

QUINNSCOMMENTARY;1060168 wrote: I don't know how to make my point any clearer, the problem facing auto companies goes back many years and an infusion of cash now will only forestall the inevitable.

Does not the auto industry provide advancements used in other ways, somewhat like the space industry?

sunny104 · Post by **sunny104** » Mon Nov 17, 2008 8:14 am

I'm a happy Hyundai owner.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Mon Nov 17, 2008 12:00 pm

Kindle;1060349 wrote: Does not the auto industry provide advancements used in other ways, somewhat like the space industry?

They may well, frankly I don't know. But the point of all this is not that the auto industry is going away, somebody has to make the 17 million vehicles now made by the Big 3. The point is that the three organizations in question need a major reorganization, perhaps even merged into one company with major changes in union work rules and benefits. They need to do that before anymore money is invested in a failing structure. Plus Congress needs to stop forcing them into non profitable ventures, the market will dictate when people are willing to buy or are forced as a result of economic circumstances to demand more efficient cars. Congress's brilliant ideas are the root cause of many of our problems, including to some extent the housing crisis and sub prime loan crisis.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Mon Nov 17, 2008 12:05 pm

I hope you all are watching our rather unscientific poll on the cars we drive. At this point only 50% are American made. These numbers are consistent with my tabulations walking down the aisles of parking lots (yeah, I really do) although in some cases I find 1/3 American not 1/2.

What we have bought has nothing whatsoever to do with the current economic problems, it has everything to do with our perception of value and quality in a vehicle.

So, ask yourself, why isn't it 80% American made cars and would you invest in a business that can't keep the vast majority of sales within it's own country?

Still time to invest, GM is still around $3.00 a share.