General Electric - Another Coffin Nail?

Big snowstorm in Washington D.C. today. I take a look at the Washington Post to read about the storm and see the following: "Paulson's book details GE chief's private concerns in 2008 over company's debt". Like many we invested in General Electric and have since watch the stock decline. The big question, in the face of this corporate decline (both in reputation and performance), why hasn't Immelt resigned or been fired?

Jeff Gerth, in his article writes:

"As the financial crisis worsened toward the end of 2008, chief executive Jeffrey Immelt and other leaders at General Electric repeatedly assured the public there was no need to worry about the company's ability to access credit markets and refinance its massive debts as they came due.

But in private conversations that alarmed then-Treasury Secretary Henry M. Paulson Jr., Immelt laid out a different picture of GE's credit situation, according to Paulson's new book about the crisis."

One would think that "big" investors, such a Buffet and the mutual funds would also be concerned about the decline of General Electric since they are shareholders too. By now I would have expected them to have stepped in to "protect shareholder value". So far no visible action. I wonder why?

Intuit Nonsense

Tax season is upon us. Once again I have debased myself by buying Intuit's Turbo Tax. As I open-up Trubo Tax I am once again relieved that the welcome/registration screen is still loaded with comforting Orwellian newspeak.

1. "Tell us about your Turbo Tax Product so we can keep you up to date."
A nonsensical statement, the product updates itself automatically.

2. "If you want to tell us how you you would like Intuit to contact you or do not wish to received marketing materials, please specify your contact preferences."
Another inane statement. Why should I have to click on "contact preferences", go to another webpage, and re-enter the very same information that I entered to register the product? This is a computer program that is supposedly designed to make life easier for the user by eliminating things such as entering the same information twice! Intuit could simply have provided a contact preference check box on the registration screen itself.

Furthermore, this "request" is an annual tradition. Again this is a computer program, the program calls home, so Intuit could simply ask the question about keeping your prior preferences.

3. "The contact information you update here will only affect future marketing promotions."
The sentence above comes from Intuit's "contact preference" webpage. Good to see this clarification, but its in the wrong place. This clarification could have been provided on the registration page itself.

My concern is that when you read bullet point #2, the implication is that you may not receive product updates if you had requested Intuit not to contact you. To my knowledge, the updates have never been disabled, but the point is that FUD is being used to encourage you to receive marketing information.

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An important consideration is that Intuit is only one of many software sellers that use Orwellian Newspeak to obfuscate what is going on. I will say that Microsoft and Intuit are successfully competing as to who uses the English language in the most disingenuous manner.

As I progress in completing my taxes, I hope to get around to disclosing other irritating "features" on CasualObservations. One of the principle ones being periodic marketing calls for "upgrading". I don't mind an occasional advertisement, but there is a line where the marketing hype becomes intrusive and irritating.

PS (Update): That didn't take long. One of the first opening screens was a recommendation to upgrade to Turbo Tax Premier. Also in reviewing the differences between the Deluxe and Premier version I don't get a clear picture of why the Premier would be better beyond a vague reference to improved "guidance". I won't be exploring the concern of whether the difference between the Deluxe and Premier versions is real or artificial.

If you have any favorite stories to share concerning Intuit, I hope to hear from you!

Rising College Costs: A Federal Role?

The editor of the New York Times ask a legitimate question: Rising College Costs: A Federal Role? Like medical care, college costs have been rising. What bothers me is the apparent inability of some pundits to recongnize that subsidizing an activity, even one as laudable as a college degree for everyone, is - in the end - self defeating. Worse, the US is teetering on bankruptcy so where is this college aide supposed to come from?

As an example of a pundit not recognizing limits, Jane V. Wellman fancifully writes: "The states are broke, and they can’t continue to pay for the lion’s share of funding for higher education. So increasing federal need-based aid should be a top fiscal priority, and the Obama budget proposal is a good thing." So how is the Federal government going to provide financial assistance if it is broke too. Furthermore, even if the Federal government was able to provide financial assistance, where is this money going to come from? Taxes of course!

A fellow contributor to this debate, Patrick M. Callan partially noted the futility of subsidizing education: "These grants do not cause higher tuition, but runaway tuition undermines their effectiveness in supporting access for low income students." To me, Mr. Callan remarks is cutting hairs, similar to the argument concerning whether a cup is half full or half empty. Fundamentally, the simple large scale availability of "easy" money allows colleges to "test" higher tuition rates.

Another contributor, Arthur M. Hauptman, noted that: "If anything, more Pell Grants will lead to lower completion rates because more people are likely to give college a try but not all will finish."

A responder Buh-Bye, Ben Bernanke to the debate weighed in with an important observation, that the student loans are guaranteed by the government, therefore there is little risk to either the school or the financial institution in making inappropriate loans. As previously mentioned the availability of cheap money permits tuition to be raised.

MFF offers this observation: "The most fascinating thing is this: why is that neighboring Canada, where college is not free, is still capable of offering affordable university educations--and ditto for England, where college is also not free."

Elizabeth offers an interesting take, that I agree with: "No mention of outrageous sports budgets of colleges? Why not? Why not support intramural sports and scrap all of the rest? People will adjust. Is there really any reason to pay head coach multiple million dollar annual salaries/ packages etc.? Why are state supported colleges doing this? Is our country so off kilter that it is thought justifiable to use college educational funds in order to develop talent for our pro teams?" Seems to me that pro-teams should pay the schools for their draft picks and that the money should go towards student education.

Obviously my quotes have been picked to make the case that subsidizing college attendance results in ever higher tuition costs because fiscal constraints are removed. We also need to recognize that the money for subsidizing tuition assistance must come from somewhere. That somewhere is taxes. There are real limits, we need to recognize them and adjust our programs accordingly. To conclude, thisteensy, wrote: "Student loans are the worst thing that ever happened to higher education."

A Long Battle for the Hudson River

In scanning the New York Times, I ran across the interactive time-line: "A Long Battle for the Hudson River". This time-line and related editorial deal with: "the decades-long duel between the Environmental Protection Agency and General Electric to purge the Hudson River of toxic chemicals." Now, its not unusual for a company to attempt to squirm out of cleaning-up the environment. What is interesting is the back-story.

The election of Obama, as President, promised a "Green" revolution. General Electric has joined this revolution and its moto is "Imagination at Work". The CEO of General Electric happens to be Jeff Immelt. Mr. Immelt also appears politically close to Obama who has appointed him to his Economic Recovery Advisory Board. So instead of dragging it's feet, one would assume that General Electric would be leading the charge to clean-up the Hudson River. It would make for good public relations and would be a superb demonstration of commitment to cleaning up the environment. Deeds over empty words.

Back in July of 2006 Vanity Fair wrote: "Vanity Fair Profiles GE's Jeffrey Immelt", which stated:

"While Wal-Mart's CEO Lee Scott is likely the corporate chieftain that perplexes Treehuggers the most, General Electric's Jeffrey Immelt runs a close second. The 125-year-old company bears responsiblity for massive environmental damages over the years, including the infamous contamination of the Hudson River with PCBs in the mid-20th century. Many observers would claim that Immelt has staked out a position not far from that of his combative predecessor Jack Welch on the Hudson River issue:he is unapologetic even as he seeks to settle decades of litigation. At the same time, Immelt is also the driving force behind Ecomagination, a company campaign to revolutionize the way GE makes products and produces energy. The campaign's motto, "Green is Green," signifies a commitment to increasing shareholder value through clean technology, sustainable design and complete accountability."

While the Times is to be commended for keeping this environmental concern alive, what is regrettable is that the Times, in typical fashion, has not challenged a supposedly green CEO on why General Electric has not demonstrated leadership in meeting the green obligation of cleaning up the Hudson River. The Times does report that dredging began in May 2009, so maybe things are looking up. Finally substance over stonewalling rhetoric?

PS: We own shares in General Electric, unfortunately not enough to make a dent in how the company is managed.

Reaganomics... the gift that keeps on giving.

The witty title comes from a post in the New York Times by Steven in California. The post by Steven is a comment on the New York Times article: Huge Deficits May Alter U.S. Politics and Global Power. It seems to me that our political leaders continue to disingenuously promise deficit reduction while proposing ever greater deficit spending.

The New York Times in an editorial even writes: "Mr. Obama is right that the recovery is too fragile to make deep cuts in government spending." The problem of course is that virtually every presidential administration in recent history has used that "fragility" excuse to avoid making the "hard" decisions they were elected to make. Someday the bill will come due.

As a relevant example of good sounding empty rhetoric, the Times quotes Lawrence H. Summers, Mr. Obama’s chief economic adviser, as saying before he took his current job: "How long can the world’s biggest borrower remain the world’s biggest power?”