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Tuesday, October 20, 2009

Bob Brinker's Saturday Guest: Micheline Maynard

Posted October 20, 2009....Bob Brinker's Saturday guest-speaker was Micheline Maynard (Mickie to Bob Brinker). Mickie's new book: "The Selling of the American Economy: How Foreign Companies are Remaking the American Dream."

David Korn did a brief summary of the interview in his latest newsletter. Posted with David's permission. David Korn wrote:

"The main gist of her book is how important foreign companies are becoming to our economy.

Some of the salient points of the interview are as follows:

1. Maynard says as long as America has been in existence, we have had foreign investments. Protectionism is a result of fear. The facts are that foreign companies have provided more stable jobs over the last few years than some American companies. Maynard says in her research she was very surprised to discover that foreign investment is now 15% of GDP and there are more than five million people here that are employed by foreign companies.

2. When we did the auto bailout, the argument was if the American car companies failed, we would lose about 2-3 million jobs in the United States. The reality is that foreign companies provide about double the American jobs in the auto industry.

3. Toyota, they has 1300 dealerships in our country and employ about 250,000 in the United States. That includes about 30,000 in their factories. Many of the politicians have pushed hard for foreign investments because jobs are jobs and we need them.

4. About 25 years ago, protectionism pushed by the unions backfired. The Japanese companies were told their imports would be restricted unless they built plants here and manufactured the cars here. Those companies started to open plants in states that did not have the traditional union base that places like Michigan did. The UAW was not able to organize those workforces.

5. Maynard talked about Tata, the parent company responsible for the Nano ‹ the tiny car aimed primarily at the Indian market that cost $2,500. It is actually one of the biggest companies in the world and they want to be the next Toyota in the United States. Tata actually owns the "Eight O'Clock Coffee" which is about as American a brand as you can get. They also manage some hotels here, and have a bunch of other businesses. This Indian company has a lot of ties to the U.S.

6. Ford Motor Company has a leg up on the other car markers in terms of getting their product line up turned around. The big question, however, for Ford and the other car markers is when the car market will turn around. We are going to have the worst year for cars since 1982 and there is a question of whether we will ever get back to the boom years. Ford has cut its costs such that it can compete. But there is still a lot of denial in Detroit.

7. There are are plans for Chinese companies to build hybrid electric cars in southern states.

8. What's your opinion of General Motors? Maynard says their is talk to get the IPO done in 2010, but you don't want to rush that. GM is like two companies now -- there is the new constituted GM and the old one that could stay in bankruptcy for years.

9. Bob noted that our government claims to favor a strong dollar, but the reality is it is nonsense. Maynard said the Yen and the Korean currency are very strong against the dollar and even Canadian currency is moving in that direction. Toyota wants to open a factory in Mississippi, but they are getting hit by the strength of the Yen. The American auto industry is now half foreign automakers. If you have these huge currency imbalances, it can have a big impact. If we were a homogenized society with only American workers employed by American companies it would be one thing. But with so many workers employed by foreign companies whose ability to prosper depends on currency, a big imbalance in the dollar creates problems. The flip side is that a German company like Volkswagon wants to open a plant here because it would be cheap for them to do so.

10. Maynard was surprised by the decision to put tariffs on Chinese tires since they really aren't a big issue. The big job losses in the tire industry have already taken place about 5-6 years ago. It was a strange decision, especially to a trading partner that has bought a lot of Treasury bonds. Eventually many Chinese companies will want to come to the United States to do build plants and business here and so we have to consider whether we want to make it conducive for them to come here and create jobs."
David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2009
You may request a complimentary copy of David Korn's weekly newsletter at this [LINK].

David Korn and Kirk Lindstrom publish "The Retirement Advisor." You can download a free copy at the same [LINK].

Sir Pig sent this picture of his children being schooled in where "Pork" really comes from on a hill near Washington DC:

Dixiegeezer took this closeup of an obviously friendly squirrel having lunch. Click on the picture for full screen:


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