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Isn't a Bainful Turnaround What America Needs?

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Kudlow puts Mitts expertise front and center. This is a well researched article and the numbers are expecially stark.

 

Isn't a Bainful Turnaround What America Needs?

By Larry Kudlow

 

There's a very troubled company out there called U.S. Government Inc. It's teetering on the edge of bankruptcy. And it badly needs to be taken over and turned around. It probably even needs the services of a good private-equity firm, with plenty of experience and a reasonably good track record in downsizing, modernizing, shrinking staff and making substantial changes in management. Yes, layoffs will be a necessary part of the restructuring.

 

A quick look at the income statement of this troubled firm tells the story. Just in the past year (FY 2011), the firm spent $3.7 trillion, but took in only $2.2 trillion in sales revenues. Hence its deficit came to $1.5 trillion.

 

Just in the first three months of the new year (FY 2012), the firm's troubles continued. Outlays for all purposes came in at $874 billion, but income was only $554 billion. So the shortfall was $320 billion. No hope of a self-imposed turnaround here. Indeed, both the senior management and the board of directors show no signs of making major changes to their business strategy.

 

Hope for future profits? That's out of the question. The firms only chance of survival is a takeover.

 

Worldwide employment for U.S. Government Inc. is estimated to be over 2 million, a completely unmanageable number for a venture like this. Total compensation for this company is roughly twice the level of its private-sector counterparts. And its retirement and health-insurance benefits are so large in relation to contributions paid that its benefit plans are careening toward insolvency.

 

In fact, the total debt of this firm now equals its total income -- an unsustainable position that suggests to many observers that future financing needs will not be met.

 

The product line of this troubled firm has been rejected over and over by growing segments of its customer base. And its product pricing (taxes) is not even remotely competitive. Even worse, heavily unionized work rules and regulations are so onerous that the prospects for even reasonable productivity and efficiency are long gone.

 

Its credit rating? That's been marked down, with more downgrades expected in the future.

 

The very troubled U.S. Government Inc. had long been either number one or in the top three worldwide in terms of economic freedom. But as a result of all these deteriorating conditions, it has fallen four years in a row in this category, slipping all the way to 10th. In fact, over the past 10 years, the firm has barely grown and its share price has been flat. Without the kind of radical change that comes from a takeover and turnaround, more economic slippage is baked in the cake.

 

Restructuring this company seems a hopeless proposition. But wait a minute. There's a highly regarded private-equity operation located in Boston that has a good (but not perfect) track record in turning around hopeless ventures. Though there have been failures for this firm, notable successes include Staples, The Sports Authority, Domino's Pizza and Steel Dynamics.

 

Anyone operating in business knows full well that even the smartest reorganizing firms are prone to failure as well as success in our free-market capitalist system. But the customer base of the troubled U.S. Government Inc. seems like it is desperate enough to go the takeover route.

 

Some are concerned that private-equity specialists are too hard-hearted. But in these tough times, people are willing to take a risk. That even includes the current CEO of the failed U.S. Government Inc., one Barack Obama. He just announced plans to merge the Department of Commerce, the Small Business Administration and the Office of the U.S. Trade Representative. In other words, he's borrowing a private-equity tactic.

 

Alas, this move is way too small and way too late. Much more radical surgery will be necessary.

 

At a recent family election in New Hampshire, the former head of the Boston takeover firm, one Mitt Romney, emerged victorious with a sweep of all the key voter segments. Sounding like Ronald Reagan on the evening of his victory, the former turnaround CEO expressed confidence that the troubled U.S. Government Inc. could be saved. He was even optimistic.

 

But he warned that if family members expected a bidding war for more unpaid-for benefits with excessive price tags, well, he wouldn't be the man for that job. Tough measures would be necessary instead.

 

So now the question is, will America Inc. ask this former turnaround CEO to prevent the bankruptcy of U.S. Government Inc.? Isn't a Bainful turnaround exactly what America needs?

 

 

Lawrence Kudlow is host of CNBC's The Kudlow Report

 

 

An excellent question.

 

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"There's a very troubled company out there called U.S. Government Inc. It's teetering on the edge of bankruptcy. And it badly needs to be taken over and turned around. It probably even needs the services of a good private-equity firm, with plenty of experience and a reasonably good track record in downsizing, modernizing, shrinking staff and making substantial changes in management. Yes, layoffs will be a necessary part of the restructuring."

 

 

"Yes, layoffs will be a necessary part of the restructuring."

^^^

That's too baneful for government employees.

 

:D.:D.:D

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I don't believe anyone with an ounce of sense can deny what he said. Really, the people who vote for Obama and company in this election are voting for national suicide.

 

I would rather have someone a bit more conservative than Romney but he is by far the most electable. My issue with him will be -- will he do the right thing after he is elected and the heat of all the pressure groups begins in unison with the wailing and gnashing of teeth.

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I wouldn't say that we are "teetering on the edge of bankruptcy," rather, we are being led to believe it by the right-wingers, as a permanent election ploy. I say, if anything, we are headed in a prosperous direction because of the good work by George W. Bush who averted disaster by keeping the economy from tanking.

 

2012 Economic Outlook: Why Things Are Better Than We Think

Dec 27, 2011 4:45 AM EST

The U.S. is not in desperate economic times. But we believe that we are. From employment to debt to manufacturing, Zachary Karabell on why things are looking up for 2012—really.

 

http://www.thedailybeast.com/articles/2011/12/27/2012-economic-outlook-why-things-are-better-than-we-think.html

 

Years from now, when we look back at 2011, it may be remembered as one of the best worst years of the early 21st century. You’d be hard-pressed to come up with an extended period where people were more negative, yet remarkably, in the United States at least, not much actually happened. A summer debt impasse looked dramatic but in the end was resolved, and markets went up and down wildly yet ended largely where they started or better. Judged by every major economic indicator, it was the most stable period in a long while, with every sign that 2012 will be better yet. There is only one not-so-small problem: almost no one believes it......

 

Click link for more

 

 

From merril-lynch-economic-outlook

 

http://www.marketingcharts.com/direct/cfos-take-dim-view-of-us-economy-20410/merril-lynch-economic-outlook-2011-2012-dec11gif/

 

Although CFOs hold a fairly pessimistic view of the economy, 56% expect their corporate revenues to grow in 2012, although that proportion is down from 64% a year ago. Similarly, while 41% are forecasting profit growth, that proportion is also down from 55% one year ago, and a significant 15% of respondents predict declines in the year ahead.

 

Consumers beware: prices look like they will trend upwards next year. Half of the CFOs surveyed intend to increase the prices of their products in 2012, while 44% will keep them steady and only 4% will lower them. On a brighter note: 46% expect their companies to hire employees, unchanged from last year, while only 7% anticipate workforce reductions.

Government, Budget Deficit Top Concerns

 

The leading economic concerns among CFOs (rated as a 8,9, or 10 on a scale of 1 to 10) are the effectiveness of US government leaders (70%), the US budget deficit (63%), and healthcare costs (60%). In addition, 58% list unemployment levels and 55% see consumer confidence as concerns. By contrast, last year’s top concern was healthcare reform, chosen by 54% of CFOs.

Consumers Set More Optimistic Tone

 

Americans’ economic confidence appears to be rising, though: according to BIGresearch December figures, 27% of consumers say they are confident or very confident in the chances for a strong economy, representing 14% growth from 23.7% in November, and putting confidence on par with December 2010 (27.3%). Meanwhile, Gallup data indicates that while economic confidence remains weak, it has continued to steadily improve during early December: Gallup’s Economic Confidence Index reached -39 during the week ending December 11, its best level since July, though still weaker than the -32 of the same week a year ago......

 

 

Click link for more

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The point is if all doesn't go well we may lose control of our own destiny despite a better outlook.

 

 

All we need is a war w Iran and oil at $200bbl and we'll be on our knees in a heartbeat.

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The point is if all doesn't go well we may lose control of our own destiny despite a better outlook.

 

 

All we need is a war w Iran and oil at $200bbl and we'll be on our knees in a heartbeat.

 

We should stay the hell out of Iran.

 

The ground wars are the real bank-breakers.

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Hmmmm Daily Beast, ultra liberal blog who will publish anything to fortify the Messiah and ML (I have a portfolio there) will always be upbeat to sell stocks/bonds. it is how they make their living.

 

Try $15+ trillion in debt with the Pres. asking for another Trillion on top of it. Try 14% real unemployment.

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Hmmmm Daily Beast, ultra liberal blog who will publish anything to fortify the Messiah and ML (I have a portfolio there) will always be upbeat to sell stocks/bonds. it is how they make their living.

 

Try $15+ trillion in debt with the Pres. asking for another Trillion on top of it. Try 14% real unemployment.

 

Why don't you try commenting on the body of of the post instead of dismissing it because its a liberal rag?

 

go to - www.rightwingnutjob.com and pull up a rebuttal. :th:

 

 

Knight, not all US debt accrues interest.

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MD,

 

I already posted what I believe in this thread on another post farther up. Spin meisters are going to spin until the cows come home on both sides. But what I posted about unemployment and debt are actual facts, and they are stubburn things. The Debt did not get that way overnight or with just Obama. We've been piling it on for decades, since FDR and Keynsian(?) economics. I believe we are at a turning point and a breaking point. We now have as much debt as we produce.

 

The unemployment rate will not fall much until we have our financial house in some order with government spending, regs, etc. going in a different direction. FDR tried to deal with the great depression throughout the 30s the same way Obama is going now...he tried to spend his way out. It didn't work. 12/06/41, unemployment 12.5% WWII put us further in debt but we were able to industrialize our way out in the 40s, 50s and 60s because we were the only people who still had an industrial base which wasn't blown to smithereens.

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MD,

 

I already posted what I believe in this thread on another post farther up. Spin meisters are going to spin until the cows come home on both sides. But what I posted about unemployment and debt are actual facts, and they are stubburn things. The Debt did not get that way overnight or with just Obama. We've been piling it on for decades, since FDR and Keynsian(?) economics. I believe we are at a turning point and a breaking point. We now have as much debt as we produce.

 

The unemployment rate will not fall much until we have our financial house in some order with government spending, regs, etc. going in a different direction. FDR tried to deal with the great depression throughout the 30s the same way Obama is going now...he tried to spend his way out. It didn't work. 12/06/41, unemployment 12.5% WWII put us further in debt but we were able to industrialize our way out in the 40s, 50s and 60s because we were the only people who still had an industrial base which wasn't blown to smithereens.

 

I wasn't alive during WWII, so I cannot comment on that........I'm not an economics major, so I cannot comment on that......crap!

 

Tell me what to say......I just want to participate! :(

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We should stay the hell out of Iran.

The ground wars are the real bank-breakers.

 

It won't have to be a ground war or even have have the US be directly involved to make the oil market $200.

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I wasn't alive during WWII, so I cannot comment on that........I'm not an economics major, so I cannot comment on that......crap!

Tell me what to say......I just want to participate! :(

 

Chin up, my good fellow.

 

Accept that the USA is going downhill (economically) at break-neck speed.

 

Somehow or another, we have to reduce the activity of our Federal Government. It is spending an un-holy amount of money on many less than useless things (green energy (bankrupt companies)), and is over regulating everything it can think about.

 

I know I am smart enough to know, I can see it needs to be done, but don't know how or where to start. It won't be simple sound-bite solutions, and every citizen will have to make changes it how & what they do.

 

It will not work with constant ankle biting, back stabbing, both sides of this monster ship will have to be rowed by he masses.

 

I think the choice might come to being willing to work on it or leave.

 

Should the Grand Canyon (Colorado River, dumps out in Mexico) be used for all the unwilling to change to jump into or be pushed.

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I don't think slamming the economic brakes on would be a good thing for the economy. The Feds have their fingers everywhere, and to remove them all of a sudden would send shock waves through out the economic network.

 

There has to be some kind of orderly shutdown.

 

That is why action has to be taken now, while we have a hope of controlling it.

 

Sooner or later the Sheriff is going to come to take the house, and it's best to have some place to go.

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