When trying to ignite growth, car companies and the government have recently used a few strategies: the bailout strategy; or the research, development and adaptation strategy. Let me explain: 

The bailout strategy:

The government first spent $19.4 billion to keep General Motors from collapsing; then they forked out another $30.1 billion to pay for GM's bankruptcy costs--grand total $49.5 billion (more details at  usatoday.com). Chrysler also found it in their hearts to accept a generous $4 billion gift from the government, with $8 billion more to come after bankruptcy (get the details from finance.yahoo.com).

In other words, the government is spending twice as much to finance GM and Chrysler's bankruptcy costs then they paid to keep the companies from collapsing in the first place. According to that old graybeard Merriam-Webster, bankruptcy means  "utter failure or impoverishment." That's what this is: a failure.

Whether GM and Chrysler ever return to profitability, this plan is a failure because all along there has been a better way.

The research, development and adaptation strategy:

Three years ago, Ford--without government handouts or prodding--rethought their operation methods. Ford chose to solve their financial problems the old fashioned way--on their own, by cutting costs and trimming excess. Take the time to read this cbsnews.com article explaining the adaptation. They are now the only Big Three automaker to not take bailout money--though they were offered it.

Now comes another twist on government financing of car companies: loaning money to fund research and development for startup car companies with fresh ideas. Tesla Motors and Fisker Automotive just recieved a total of $1 billion in low-rate loans from the government to help fund their research, development and production of hybrid and fully electric cars. (Tesla received $465 million and Fisker got $528 million.) Get all the details at time.com.

Instead of tossing money at a failing company (or companies), this encourages entrepreneurship, rewards forward thinking, and supports job creation. That's a stimulous without any downside.  

http://www.flickr.com/photos/nexeus_fatale/ / CC BY 2.0

 

Myself (editorial/photography), Dan Sweet (design/photography) and Dawson Hunter (video) went up to Seattle this weekend and met Malawian William Kamkwamba. He's a person you're not going to want to forget. I'm not going to get into his whole story right now (keep your eyes peeled on a future issue of brass), but eight years ago (at the age of 14) William built a windmill out of junkyard garbage and scraps to provide his house with electricity. He has since built two more windmills on his family property to pump water and provide additional power.

To read more about William, check out his blog. Also, watch him on The Daily Show this Wednesday (the 7th). Finally, if you get the chance, go watch his presentation with Bryan Mealer the co-author of his new book, The Boy Who Harnessed The Wind as they continue their book tour. Check out Bryan's blog to find out where and when they will be appearing (bottom right corner under "Appearances").

William is a fantastic, polite, charming and genuinely nice individual. Instead of sitting back and wishing things were better, he took the resources (or lack thereof) at hand and created what he needed to change his world for the better. He's now working to change the world and improve the living situation of those around him.

It's an example and message we can all aspire to, whether we're in Smalltown, Africa or Smalltown, USA.   

 

 

By Brandon Goldner on October 2nd, 2009 • Automotive, Life

670,557 new vehicle sales later, the Car Allowance Rebate System (CARS), popularly known as Cash for Clunkers, has come to a close. While America is collectively parking their new cars at the farthest ends of the lot to avoid door dings, the program’s end left the auto industry with smiling faces followed by frowns.

The good news:

  • 10.6% increase in auto sales for August 2009
  • 98% of Clunker payment requests from dealers have been divvied out
  • Ford and GM announced 3rd and 4th quarter production increases due to the program
  • 42,000 jobs were added or saved because of the program
  • Fuel economy of cars bought was 60% better than cars traded in

Unfortunately:

In short, the program did the trick of temporarily boosting auto sales. This was about all that anyone should have expected--anyone thinking that perhaps the orgy of new car sales would usher in a new renaissance of American car infatuation will be disappointed. It was there in the numbers--people bought more foreign cars. One thing we can take from this is that consumers won’t support an American car industry until it becomes stable. Sometimes, no amount of money will persuade someone to buy a Camaro over a Corolla.
 

By Jens Odegaard on September 30th, 2009 • Budgeting, Economy

The host city for the 2016 Olympics will be announced Friday. Chicago, one of the finalists, estimates that it will spend $4.8 billion total to host the games if they win the bid. That sounds reasonable compared to the $1.2 billion the Dallas Cowboys spent to build their new stadium--that's not a typo. 

However, there have been a string of Olympic budget overruns that make the Cowboys' stadium look like a monument to frugality. Beijing budgeted $1.6 billion for the 2008 Olympics and spent $40 billion--they were only off by $38.4 billion. London budgeted $8 billion for the 2012 Olympics and that estimate is already north of $19 billion. For more details, read this time.com article.    

Chicago should be careful what it wishes for. I'm all for Olympics in the U.S., but burdening a city's future with heavy debt isn't worth it. There is hope, though. Atlanta's $1.7 billion, privately funded 1996 Olympics "generated $5 billion in economic activity, including $1.8 billion in hotel, residential and commercial construction," according to time.com.

The basic lesson is that budgets should be followed and risks minimized when possible. Wise planning can lead to large profits, while excess and lack of foresight can lead to debt for generations. It's a lesson that we should apply to our own finances, and one that all governments and businesses should take to heart when charting economic futures.

(For more Olympic fun, check out this blog and this one.)

http://www.flickr.com/photos/chascarper/ / CC BY 2.0

By Jens Odegaard on September 28th, 2009 • Economy, Life

When it comes to naming things with letters and numbers (see also: Nissan 370Z, Xbox 360 etc.) the G-20 might just take the cake: it sounds ominous and wields a lot of influence.

Despite sounding like an American rap group, the G-20 is actually a coalition of 19 countries and the European Union. It was established in 1999 "to bring together systemically important industrialized and developing economies to discuss key issues in the global economy," according to g20.org--the official website of the G-20.

Even though the world has 266 countries (or as the The World Factbook likes to call them, "world entities"), apparently only 20 are cool enough to get into this G-Unit. According to g20.org, that's because the 20 member countries "represent around 90 per cent of global gross national product, 80 per cent of world trade (including EU intra-trade) as well as two-thirds of the world's population."

The other 246 world entities are left out in the cold. This economic snobbery, in part, inspires groups to protest G-20 summits, even though the G-20 has representatives from every continent (except Antarctica). So every region is represented--albeit by the economically powerful countries.

The latest G-20 summit was held in Pittsburgh last week. (For more explanation on why world leaders met in an American steel town, read this.) The purpose of the meeting, chaired by President Obama, was to discuss "further actions to assure a sound and sustainable recovery from the global financial and economic crisis," according to g20.org. To find out more specifics on what was discussed, read the Leader's Statement.

You now have permission to consider yourself educated on what the G-20 is and what it does. My job is complete.

http://www.flickr.com/photos/daveynin/ / CC BY 2.0

 

Whenever possible, I do it myself. I try to improvise or build what I need to accomplish a goal. For example, when I needed a headboard for my twin bed, two pallets (fastened securely together), some batting, fabric and a staple gun did the job. Rather than buying a fancy worktable for my too-tiny dining room, I bought a piece of countertop off Craigslist and two cheap bookshelves. Voila--a kitchen counter with bonus storage space.

But none of this compares to these guys. NASA could easily spend millions, maybe even billions, to put a camera into space, but these guys take the cake. Via Wired:

The two students (from MIT, of course) put together a low-budget rig to fly a camera high enough to photograph the curvature of the Earth. Instead of rockets, boosters and expensive control systems, they filled a weather balloon with helium and hung a Styrofoam… cooler underneath to carry a cheap Canon A470 compact camera. Instant hand warmers kept things from freezing up and made sure the batteries stayed warm enough to work.

Of course, all this would be pointless if the guys couldn’t find the rig when it landed, so they dropped a prepaid GPS-equipped cell phone inside the box for tracking. Total cost, including duct tape? $148.

The package reached nearly 18 miles high and took 40 minutes to hit the ground after the balloon popped. Granted, 18 miles may not be all that high--the International Space Station rocked an altitude of about 215 miles yesterday--but it's still quite an accomplishment. They have pics and details at their site, space.1337arts.com.

So next time you decide you need an air conditioner, a stylish bookcase, a WiFi antenna, or an iPod dock, take some inspiration from the MIT guys. See if you can do it yourself for way less than retail.

 http://www.flickr.com/photos/37456174@N05/ / CC BY-ND 2.0

By Brandon Goldner on September 23rd, 2009 • Health Care, Life

Often, we rely on pharmaceuticals to ensure physical or emotional well-being.

When it comes to something as important as our health, we rely upon professionals to guide us toward making the right decisions.

How, then, are we to react when we learn that some doctors are looking out for their own interests more than ours?

It was recently reported that Forest Laboratories maintained a massive marketing and advertising campaign for its drug Lexapro (check out the list of warnings) that goes far beyond tote bags and TV commercials. They paid millions of dollars to thousands of primary care doctors and psychiatrists to promote their product with their peers.

This isn’t illegal: it’s only against the law for doctors to be paid for prescribing medications to their patients, not to urge their colleagues to do the same. But while Forest was lining the pockets of doctors to promote its products, there was no evidence suggesting that Lexapro was any better than generic versions of similar drugs that can be purchased for much, much less.

Plus, Forest is involved in a civil lawsuit with federal prosecutors for illegally marketing Lexapro, and drug giant Pfzier was recently blasted for more than 2 billion dollars in a settlement stemming from the illegal marketing of one of their painkillers.

All of this to say that we need to be savvy consumers, because Forest Laboratories isn't the only drug maker to pay doctors to promote products: industry leaders Eli Lilly, Pfizer, Novartis and Merck also use this tactic. Hopefully you have a doctor you can trust and respect, but whether you do or don't it never hurts to ask questions about the medications you're being prescribed.

If you’re not quite sure about ingesting a generic brand, the FDA has set up a site where you can find equivalents for big-name pharmaceuticals that are proven safe.

 

Today's financial term is: ankle biters. Ankle biters are stocks with market capitalizations of less than $500 million, making ankle biters the small fry of small-cap stocks.

In comparison:

  • small-cap stocks have market capitalizations between $300 million and $2 billion.
  • mid-cap stocks have market capitalizations between $2 billion and $10 billion.
  • large-cap stocks have market capitalizations of greater than $10 billion.

Because ankle biters (and small-cap stocks in general) represent smaller companies, there's a lot of growth potential as the companies look to expand. This can make ankle biters a profitable investment, although ankle biters and other small-cap stocks are more volatile (higher risk) than larger cap stocks. 

For more information on ankle biters and small-cap stocks, visit fool.com, businessweek.com, and kiplinger.com. Also check out forbes.com's list of "trustworthy" small cap stocks.

Finally, before you get started in any kind of investing, read the brass article Investing Information.

http://www.flickr.com/photos/mrvjtod/ / CC BY-SA 2.0

Back to school.

The phrase conjures up images of freshly waxed hallways, starched jeans, and plastic shopping bags full of supplies.

And while retailers are struggling during a season which usually brings a modest increase in sales, consumers are rediscovering an age-old method of paying for the things they can’t quite afford: layaway.

The premise is simple. You see something you like, look in your wallet to find you don’t have enough money to pay for it, fork over what you can, and ask the store to hold it for you while you scrape up the rest. It’s a novel idea, and one that makes credit cards look silly by comparison. Why pay interest just to have something right this second when you could pay for it interest-free and have it a short time after?

There are restrictions: most stores ask that you pay a certain amount before they guarantee to hold the item for you (usually about a third of the total price), and they won’t hold it forever. If you wait too long--often after a few months--you may have to pay a restocking fee.

It used to be that layaway was only for bigger purchases. Over the last year, I’ve had a $160 longboard and a $400 bike both held and paid for through layaway programs. But as consumers spend less money, they’re choosing to layaway items that would normally be bought without a second thought. The average price of a layaway purchase dropped to $330 from just less than $600 a year ago.

People are even putting basic school supplies such as calculators, pens and pencils on hold as they find creative ways of avoiding debt.

So ask your retailer if they have a layaway program. It might be your best payment option, and it comes with a level of satisfaction that credit cards don’t offer. You’ll also find yourself accumulating less debt, which--in this economic climate--is a very good thing.

 
 
By Jens Odegaard on September 16th, 2009 • Health Care, Life

Swine Flu--the less official and more awesome name for 2009 H1N1 Flu--has been thrusting it's snout all over the place lately. Media coverage has ranged from describing it as an "epidemic" to satirization, and back to concerned, educational news spots.

Forgetting the hyperbole, here's the truth straight from the Centers for Disease Control and Prevention.

Click here for advice on how to prevent contracting H1N1. For an overview of the 2009-10 flu season in general (all types of flu), click here. Click here to find a clinic that offers flu vaccinations in your area. To find out the economic impact of the Swine Flu, click here.

Finally, remember that it's OK to eat pork, because Swine Flu is not spread by food. So enjoy those applesauce-basted pork chops with a side of bacon fat and two plump sausage patties.

http://www.flickr.com/photos/beeldenzeggenmeer/ / CC BY 2.0