"Circuit City Unplugged, DHL Shipping, and GM in Reverse"

It seems we are undergoing the process of creative destruction, a term coined by economist Joseph Schumpeter to describe the event where, much like natural selection, companies that are profitable survive and those that are not...don't.

As of this morning:

1. Circuit City has declared bankruptcy,
2. DHL is abandoning its shipping and ground services in the United States and , hence 9500 jobs,
3. and General Motors has been significantly downgraded as analysts predict GM will not have the minimum required cash flows of $11 billion in the first quarter 2009.

Talks are spreading about a potential bailout for the major automakers, as Ford's position is deteriorating as well. This would not be the first time for these automakers to call on the government, nor will it be the last with current business strategies and projected financial performance. So what do we do? Do we bail them out and if so, for how how long?

I hope that no one disagrees that these three companies qualify as big business. In the same manner, I don't think anyone would descibe the automakers' struggle as news. Would you give an inefficient business a handout? Remember, there are many jobs at stake which turns heads in Washington.

A viable solution could be a tax cut across the board. In effect, this would free up cash for many firms, large and small. Perhaps some big business will use this cash effectively and remain in business. Others will fail. This option puts responsibility on the business to be productive as to the taxpayer-funded counterproductive behavior.

"Economist Thomas Sowell Fears Obama Presidency"

Acclaimed African-American economist Thomas Sowell fears an Obama presidency and equivocates it to an American historic disaster! Read for yourself.

http://www.realclearpolitics.com/articles/2008/11/ego_and_mouth.html

"You're Not the Only One: The Global Economic Downturn"

The U.S. isn't the only economy hurting and Tom Petruno highlights the global economic phenomena in an article today in the LA Times. Many global markets peaked in mid-2007 and have lost over 50% of their value since.

Here’s a sampling (not meant to be all-inclusive):

Markets down more than 70%: Vietnam (-70.5%), Peru (-73.2%), Ireland (-73.4%), Russia (-73.9%), Iceland (-88.7%).

Markets down between 60% and 70%: Hong Kong (-60.1%), Poland (-62.6%), China (-69.8%).

Markets down between 50% and 60%: South Korea (-54.5%), Italy (-55.2%), Egypt (-56.9%), Brazil (-57.2%), Japan (-58.1%), Singapore (-58.2%), Turkey (-58.5%), India (-58.3%).

Markets down between 40% and 50%: Great Britain (-42.3%), Australia (-43.3%), U.S.-S&P 500 (-44.0%), Spain (-46.4%), Germany (-47.0%), Mexico (-48.3%).

Petruno also notes that the dollar has regained some strength in recents months, making the burden for those with international investments even more difficult to bear.

See full article at:
http://latimesblogs.latimes.com/money_co/2008/10/heres-a-club-no.html