Great CEOs make Great Companies that make the World a Better Place

Posted by PITHOCRATES - September 23rd, 2012

Week in Review

Steve Jobs is no longer with us.  God rest his soul.  But the company he built, Apple, that gave us great things carries on.  But has it lost a little of that magic spark?  The genius that was Steve Jobs?  Yes.  Based on the release of Apple Maps in iOS 6.  Which some have called a debacle.  And something that would not have happened under Jobs.  Which shows us how unique a CEO is.  And how this one person can make the difference between success and failure.  Between a great company.  And a good company.  Despite the attacks on CEOs and their compensation (see Tim Cook Continues to Slowly Kill Post-Steve Jobs Apple by Rocco Pendola posted 9/21/2012 on Forbes).

That said, so much of what matters in tech’s big picture has to do with what will happen tomorrow, not all that’s good about what’s happening today…

Former Intel (INTC) chief Andy Grove wrote a timeless book about leadership, Only the Paranoid Survive. He felt in good times, great leaders needed an attitude of “this too shall pass,” using the time to anticipate threats and prepare themselves to respond fast and effectively.

Grove discusses “Strategic Inflection Points,” where something happens — a shift in technology, new regulations, a competitive salvo — that changes a company’s business overnight. In a blurb on Grove’s book, Steve Jobs said, “You must learn about Strategic Inflection Points, because sooner or later you are going to live through one.”

Because it lacks credible competition, Apple faces few external threats that we know of. Of course, that’s the tricky part about external threats; you do not necessarily see them coming. Great CEOs have to act, in part, like Hollywood producers, dreaming up seemingly unthinkable alternative scenarios to the status quo.

It is a singular vision that defines a company.  From a small startup to a Fortune 500 corporation.  And at the helm is a CEO.  Providing that singular vision.  Someone who can see what others cannot.  Who can see what isn’t there.  Someone who makes change.  Who leads the way.  They don’t follow.  These are people that help us understand that the new thing they created is something that we can’t live without.  This was who Steve Jobs was.  And why the world has so few Steve Jobs.

It is the singular vision of a CEO that makes the world a better place.

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China and Japan get Belligerent over Possible Gas Reserves while the US gives up on Energy Independence

Posted by PITHOCRATES - September 23rd, 2012

Week in Review

Environmentalists are waging a war on coal.  Shutting down as many coal-fired power plants as possible.  They are also trying to shut down natural gas production that uses hydraulic fracturing.  They’ve shut down oil exploration on public lands.  And they’ve pretty much shuttered the nuclear power industry.  So that’s what the Americans are doing about their energy needs.  Basically shooting themselves in the foot.  So what are other nations doing about their energy needs (see Anti-Japan Protests in China posted 9/17/2012 on the Atlantic)?

A long-standing conflict over the sovereignty of a group of eight tiny, uninhabited islands in the East China Sea has resulted in dozens of anti-Japanese protests across China, some violent… Beyond national pride, potentially large gas reserves and fishing rights have raised the stakes, and China is now moving to assert its claim to the islands, contain the demonstrations at home, and respond forcefully to what it sees as a major Japanese provocation.

They nearly go to war.

China and Japan are two energy hungry nations.  Who don’t have enough domestic energy resources.  So they act aggressively to provide their energy needs.  While the US shutters theirs.  Even tries to export their coal to China.  Giving up on energy independence.  And this from the number one economy in the world.  Well, number one so far.

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The US has 5 times the Population of Britain while Spending 15 times on Health Care than the NHS

Posted by PITHOCRATES - September 23rd, 2012

Week in Review

The British are successfully cutting their health care spending.  The NHS is stronger financially.  Even running at a budget surplus.  But it wasn’t easy getting there (see NHS trusts in debt double in year by Nick Triggle posted 9/19/2012 on BBC News Health).

The Audit Commission report said 31 trusts posted a deficit – more than one in 10 of the hospital, mental health and community trusts in the NHS.

The figure is up from 13 the year before.

However, overall the health service posted a £2bn surplus – about 2% of its budget.

The development comes amid an unprecedented savings drive.

The health service has been told to save £20bn by 2015 – the equivalent of 4% a year.

If you crunch the above numbers and convert into US dollars the NHS annual budget comes to about $162 billion.

According to Kaiser total American health care spending came to about $2.6 trillion in 2010.  Most of which the private health insurance industry paid.  Which is about 15 times what the British spend on health care.  Even though we only have about 5 times the population of the UK.  That means that either the British are much better at delivering cost-efficient health care.  Or a lot of people go without health care in the UK.

One would have to assume that once the Americans turn over all health care spending to the government their spending will have to be brought into line with British expenditures.  Because few can do national health care as well as Britain.  So based on population US spending should be 5 times the British spending.  Or $810 billion.  Which would call for a cut of $1.79 trillion in annual health care expenditures.  Or about 69% of current spending.

Standard and Poor’s said the US needed to cut spending by $4 trillion over 10 years to prevent a downgrade of their sovereign debt rating.  Or $400 billion a year for 10 years.  And they couldn’t do it.  The government could not make these spending cuts.  And S&P downgraded their sovereign debt rating.  If they couldn’t cut $400 billion they will not be able to cut $1,790 billion.  Which means when the private health insurers stop paying these health care costs they will go straight to the deficit.  Perhaps doubling or tripling our current trillion dollar deficit.  Resulting in a handful of new credit downgrades.  And completing the transformation from world’s number one economy to banana republic.

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Environmentalists shut down Cheap Electricity from Coal-Fired Power Plants and sends US Coal to China

Posted by PITHOCRATES - September 23rd, 2012

Week in Review

Environmentalists don’t like energy.  Because it pollutes.  So they actively fight against energy.  To reduce pollution.  And to save the planet.  No matter the costs.  They don’t care how much they increase the cost of electricity for the American consumer.  Or how unreliable they make our electric supply (see Analysis: Coal fight looms, Keystone-like, over U.S. Northwest by Patrick Rucker, Reuters, posted 9/23/2012 on Yahoo! News).

Call it the Keystone of coal: a regulatory and public relations battle between environmentalists and U.S. coal miners akin to the one that has defined the Canada-to-Texas oil pipeline.

Instead of blocking an import, however, this fight is over whether to allow a growing surplus of coal to be exported to Asia, a decision that would throw miners a lifeline by effectively offshoring carbon emissions and potentially give China access to cheaper coal.

The environmentalists stopped the Keystone pipeline.  Because they didn’t want that Canadian tar sands oil coming into the US.  Bringing down the price of gasoline.  Which would only encourage people to drive more.  They have encouraged shutting down our coal-fired power plants.  Perhaps our least costly and most reliable source of electric power.  Because we have an abundance of coal in America.  For unlike oil we are not dependent on any foreign sources for our coal.  Coal gives us true energy independence.  If it weren’t for the environmentalists, that is.

Tough new Environmental Protection Agency limits on power plant emissions are often blamed, along with low natural gas prices, for the drop in domestic coal use, but burning the black rock in Asia will have the same impact on the atmosphere…

With nearly 9 percent of U.S. coal furnaces set to go dark in the next four years and more utilities moving to natural gas, the 100 billion tons of coal still locked in the region need to reach new markets or face being frozen in the ground.

The environmentalists would rather that coal stay in the ground.  If they can’t have that they’d rather the Chinese get it for their energy needs than the Americans.  Even though according to the environmentalists it doesn’t matter who burns that coal.  For those emissions will make it into the atmosphere whoever burns that coal.  And if that’s true the US should burn that coal.  Not China.  We should not give up what energy independence we have.  Besides, we’re never going to please the environmentalists.

They don’t like coal.  They don’t like fracking that gives us cheap natural gas because it may pollute nearby water tables.  They don’t like nuclear power because of the chance of a nuclear accident (which has happened a couple of times in the 50-60 years we’ve used nuclear power to generate electricity).  They don’t like hydroelectric dams because they disrupt the ecosystem.  So what do they like?  They sort of like wind power.  If it doesn’t kill too many birds.  They do like solar power.  And some other renewable sources that provide a negligible amount of electric power today.  The things they like, though, will never be able to produce enough electric power to meet our energy needs.  Especially if everyone starts driving electric cars.

So while our energy costs rise and we endure more power blackouts as we shut down more reliable coal-fired power plants and replace them with windmills and solar panels China will be enjoying the power our coal will produce for them.  Is this fair?  It is if you’re an environmentalist apparently.

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GM doing well in China after the Taxpayer-Funded Obama Administration Bailout

Posted by PITHOCRATES - September 23rd, 2012

Week in Review

President Obama saved General Motors (GM).  He bailed them out.  Instead of letting them go through normal bankruptcy proceedings where the creditors are protected and contracts are rewritten so the company can become competitive again.  The Obama bailout didn’t follow normal bankruptcy proceedings.  Nor contract law.  Secured creditors became unsecured by presidential decree.  They transferred ownership to the UAW.  And billions of taxpayers’ money propped up the UAW pension fund.  None of which improved GM’s competitiveness.  And the Obama administration poured more money into the Chevy Volt that no one wanted and few are buying.

But the president did all of these things to save US jobs.  Even though normal bankruptcy proceedings would have made GM more competitive and actually created more jobs.  In fact, under normal bankruptcy proceedings those new jobs would probably have been in the US (see GM opens China test track in effort to remain market leader by Ben Klayman posted 9/21/2012 on Reuters).

General Motors Co(GM.N) opened a new, large vehicle test track west of Shanghai on Saturday as part of its push to retain its leading market share in the world’s largest auto market.

The No. 1 U.S. automaker and its joint venture partners, including SAIC Motor (600104.SS), invested about $252.5 million to build what GM China President Kevin Wale called the country’s largest proving ground…

GM invests $1.5 billion annually in China.

The government still owns GM stock.  So that investment in China was technically made by a company the US government partially owns.  And some of those dollars invested in China were US taxpayer dollars.  So the Obama bailout of GM has allowed GM to invest in China.  And to create jobs in China.

GM is making the investment despite a slowing in the Chinese auto market because it is focused on the long-term growth prospects, Wale said…

GM, whose joint venture in China began building vehicles in 1999, sells under the Buick, Chevrolet, Cadillac, Opel, Wuling, Baojun and Jiefing brands. Wale said GM had to continue to roll out new products as the market grows, including adding products in the SUV and luxury car segments.

The government has raised fuel economy standards and pushed the Chevy Volt.  So we would stop buying the cars we want to buy.  And start buying the cars they want us to buy.  Like the Chevy Volt.  While the Chinese are expanding the SUV and luxury car segments.  Making it easy for the Chinese to buy the cars they want to buy.  Thanks to that taxpayer-financed government bailout.

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