The Car Allowance Rebate System is a US federal program that helps US citizens to purchase a new, more fuel efficient vehicle when trading in a less fuel efficient vehicle.

Thousands of Americans are rushing out and trading in their old cars to receive a $3500 or $4500 discount towards the purchase of select new cars. This may sound great at first but there are many hidden facts the majority of the population may not be aware of.

• The program is designed to get old cars up to 25 years old with under 18 MPG off the road and replace them with brand new cars that have a higher MPG rating.
• Depending on the age of the vehicle you will ether qualify for $3500 or $4500 off of the purchase price of the new car.
• The old car must have been owned, registered, and insured for the past year.
• The dealer is required to disable the old cars engine by draining the oil and replacing with a water and silica solution, permanently destroying the engine.
• The old car must the crushed and the engine and drivetrain cannot be sold for parts, this prevents the sale of the car in the United States and elsewhere as a vehicle.

Many of the cars being turned in as “Clunkers” to this program are still perfectly fine and are being turned in just so the owner can get a new car, but because the car is required to be destroyed hundreds maybe even thousands of cars are being destroyed. But is this really the best way to get people to buy new cars? Why go to the effort to destroy perfectly fine cars that may only be 4-5 years old.

Let’s say all the cars that went to the program that were newer then say 1998 were taken into a low income car program, helping get the “real clunkers” off the road.

It could work as follows:

• The total household income is less then a certain level.
• Each household would qualify for only one vehicle trade.
• The traded vehicle must need more then $500 in repairs to qualify.
• The car must be less then 35 years old, but mileage does not matter.
• The car must be owned for the last year but is not required to be registered or smogged.

This would help get the “real clunkers” and unsafe cars off the road and help clean up the roads. But why was this not the way the Cash for Clunkers program was designed? We can only guess that it has to do with the fact that the Government has recently bailed out both GM and Chrysler. By requiring people to purchase a new vehicle they are protecting there investments.

Another theory about why they don’t want to have a low income program is “Keep Them Stupid and Poor” consperacy that has been floating around the internet. I think the government has been brainwashing the population, there is so many stupid laws and programs right now and the majority of the population appears to be going along with it.

I see this first hand as I am an unemployed, student. Like many others I have been in search of a job for many months, but because of the current economy there has been very little interest. Another major issue is the cut to education budgets, just this summer I had a class I was attending get canceled after the first week was over because they were two people short of the twenty person quota. I feel that as an American I am not getting what I should, if I pay my taxes I should be able to use that money, and I feel it unfair to allow this program to only benefit the people capable of making monthly car payments. What about the rest of the population?

Silicon Valley's unemployment rate -- which was below California's average and largely tracked the national average last year -- has soared, surpassing the state average in May. By June, the area's unadjusted unemployment rate was 11.8%, worse than California's 11.6% and the national rate of 9.7%, according to the latest figures from California's Employment Development Department. The rate of job losses was particularly steep in sectors such as semiconductor manufacturing, where employment dropped more than 13% in June from a year earlier.

in teaching or financial consulting. People are leaving tech as “more tech companies are offshoring and some are shrinking, plus people are burned out and tired from having been there and done that,” says Ms. Brock.

Community colleges and job centers in the area are reporting a increase in enrollment of out-of-work techies, and many are looking to move into other industries.

Others are happier to leave tech. Minda Cutcher, 53, was laid off as a finance manager at telecommunications company Covad Communications Co. last year after a decade at the San Jose, Calif., firm. In May, Ms. Cutcher launched her own financial-consultancy business for the elderly.

Ms. Cutcher says she doesn’t regret leaving tech after working in the industry for 30 years. “I did a real re-examination of my priorities,” she says. “I’m done with high tech and fancy titles. Now I’m going from high tech to high touch.”

Life in America

Interesting idea, but why hasn’t it worked?  The answer is simple; Greed.    The majority of a corporations profits go to the top executives for allocation.  That part works fine.  But then, IT STAYS THERE!  NO WAY DOES IT “TRICKLE DOWN”!

It’s no secret about  the enormous salaries, bonus, and benefit packages received by the top guys and gals in major U.S. corporations.  Ex-Hewlett-Packard CEO Carly Fiorina comes to mind.  She got a severance package worth about $21.4 million, but stood to get another $21 million after she was forced out by the company.  Nice pay for messing things up royally (consider the logic of such packages: the board hires a CEO, gives them an incredible golden parachute.  If they fail and are thrown out, they get rich.  If they succeed, they get rich.  What a Motivator!).

I was a first hand witness during that time, working for HP as a consultant, and it was a blood bath.  I’ll never forget the pain she caused thousands of employees as she ruthlessly changed HP’s gentle and relatively caring culture to a culture of “the bottom-line”.  What did she bring to HP as a result of all that pain (besides a lighter corporate pocketbook as she exited stage left): nothing.

Of course our more current stories come from Wall Street and the banking industry, and of course good ol’ AIG.   The Feds pump millions into these companies to cover for basic failure in their management, and, of course, the ravages of Greed.

I also witnessed Greed at work first hand, when working for a small tech firm in Colorado.  When I first joined up, the company was small, with only 5 of us working hard to build up the business.  The owner at that time, was very humble, and appreciative of our efforts.  What profits we did have, he shared generously.  However, over the years, he (the CEO/President), changed.  As his own personal fortune grew, he grew more and more reluctant to share the wealth with the rest of us (“exit strategy”?, what exit strategy?  Stock?  No way!).  Getting a raise was like pulling teeth, and he became unilateral in his decision making, not wanting to make things messy by input from “the rabble rousers”.

To add insult to injury, he was from India, and got most of the companies work through a federal program that gives minorities a competitive edge during the bidding process for federal contracts.  His “payback” to America?  Keep the majority of profits for himself and his family, send massive amounts back to family members in India, and what was left, might, if it was a good year, result in a 1 or 2% raise for us working-stiff American citizens.  “Much thanks America!  Adios!”

Greed is the sand in our industrial wheels.  Unfortunately, it is now up to government to come to our rescue and regulate against one of the worst of the “7 deadly sins”, greed, and with these insane bailouts,  to regrease the wheels in hopes we can live for another day.

PS for MBA Students: Case Study: “The Carly Strategy”:  Come into the organization like a whirlwind.  Be authorative.  Create massive amounts of smoke, dust-in-the-air, and fire people so that no one (esp. the members of the board) can tell that you have no clue what you are doing.  Rape, pillage, and create massive amounts of personal wealth for yourself.  Exit.  Write a book telling the world how tough it is to be you.

Exactly. Based on the reports, the profits of Wurzelbacher’s small business are well under $250,000, so Obama’s proposal wouldn’t adversely affect him at all. He’s apparently concerned that he may someday have those kinds of profits, though, which is obviously his prerogative. In the meantime, depending on some of the details, Wurzelbacher would probably get a tax break under Obama’s plan, and if he’s like most of the middle class, his break would be bigger under Obama than under McCain.

Joe the Plumber” is a perfect example of a puzzle I’ve been trying to solve. Help me understand this. I can’t figure out why anyone making less then $250,000 would vote Republican. Their basic domestic economic theory is “trickle down”, which means they tend to put money in the hands of corporations (in the form of tax breaks, etc. Already it has been shown that most corporations pay ZERO taxes!) and subsequently their top management, hoping that they will use the money to hire more people. Of course we’ve all heard of the outrageous salaries corporate managers pay themselves, but I suppose some of the money does get down to “the little guy”. But why would the ordinary worker want to purposefully put money in the hands of someone else, in the hopes that they will see some of it in some form or another, rather than put it directly in their own hands? Why would they want to forfeit that control? For power and control, always look to “where the money is”.

In Republican ideology, they want to put the money in the hands of your and my boss. This puts us “worker guys” in a compromised position, hoping that “the boss” will share the gold. In my experience, most bosses I’ve worked for take the majority of it home for themselves. If you’re demanding enough, he/she might share a piece of the pie and give you a raise. But again, if you control the money, you control your financial future directly.

It’s puzzling to say the least.

It was supposed to be not much more than a photo-opportunity, a demonstration of national unity in the face of economic crisis. There, for the first time in anyone’s memory, the incumbent President was meeting the two candidates battling to succeed him, together with the entire leadership of the Senate and the House of Representatives. The aim was to conclude the week-long deliberations over the plan announced by Hank Paulson, the Treasury Secretary, for a $700 billion bailout of the nation’s banks and to get legislation through Congress by the weekend.

When the photographers had been dismissed, President Bush spelt out what was at stake. According to senior advisers briefed on the detail of the meeting, he told the assembled leaders that it was not just the US financial system that was in peril. He made it clear that the entire architecture of the global economy was at stake.

John Boehner, the leader of the House Republicans, had been listening with evident irritation. Now he spoke up to denounce the Paulson plan. Mr Boehner and his party colleagues had been deluged all week with angry calls from constituents protesting at what they saw as a huge taxpayer giveaway to undeserving Wall Street bankers. He told the gathering that he and his colleagues could not support the plan and produced one of their own.

As the meeting seemed to be breaking up in disarray, the focus of administration turned to Nancy Pelosi, the Democratic House Speaker. Numerically speaking, with a big Democratic majority, Mrs Pelosi already had enough votes to pass the plan. With a big majority assured in the Senate, why did she not just press ahead, she was asked? The whole deal could be done without the House Republicans.

But Mrs Pelosi would not take the political risk of passing a potentially unpopular measure with only Democratic support, leaving Republicans free to attack her and her colleagues in the campaign for congressional elections to be held in little over a month.

An agitated Mr Bush said, as the meeting finally unravelled: “If money isn’t loosened up, this sucker could go down.”

I try to project being in that meeting, to feel the tension and hear those words from the President of the most powerful nation in the world, home to over 300 million human beings. After all that we have gone through, revolution, civil war, WWI, WWII, emancipation, absolution of slavery, ups, downs, and sideways, one man, sitting there in that crowded room, he says this “sucker” could go down.

I can’t help but wonder what kind of man could put it in those terms. It’s as if a single man, head of a single government with an out-of-control financial system that is primarily to fault of his administration, shrugs and says “oh well, it was fun while it lasted”. Good luck, and good night.

The new program, announced Wednesday, is on top of the $85 billion the federal government agreed to lend to AIG last month to prevent the global company from collapsing. AIG said last Friday it had drawn down $61 billion (no wonder, those parties are expensive! See previous techimoto article about AIG spending $440,000 on a party at the St. Regis!).

The latest announcement does not jeopardize the government’s ability to recoup its loan to AIG, experts said.

“AIG will repay the loan,” said Stewart Johnson, portfolio manager at Philo Smith, an investment bank specializing in insurance. “It’s just a matter of how much of themselves they will have to sell.” (NOT MUCH IF THE PARTIES CONTINUE!)

“We fully expect to emerge from this with a capital structure that’s fit to fight (AND DRINK?) ,” he said. “Our insurance businesses…are strong and well-capitalized.”

But some analysts are more skeptical. “The current disruption in the credit markets could make it difficult to sell businesses at attractive valuations,” ratings agency Standard and Poor’s said.

Hey dude, those parties are expensive! They need more capital! Partey on dudes!

What I can’t figure out is how the government decides who gets bailed out, and who doesn’t. Campaign contributions?

Hmmm, I just got to get me one of those “lobbyists”.

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Most corporations, including the vast majority of foreign companies doing business in the United States, pay no income taxes, according to a Government Accountability Office report released Tuesday.

    During the eight-year period covered by the report, 72 percent of foreign-owned corporations went at least one year without owing taxes, and the same was true for 55 percent of domestic corporations.

    Small companies were much more likely to pay no taxes than larger companies. Still, more than 3,500 large domestic corporations – with more than $250 million in assets or $50 million in gross receipts – did not pay taxes in 2005.

    The report said about 80 percent of the companies studied paid no taxes because they didn’t generate any profit after expenses. Money-losing companies can legitimately owe no tax, and others can use provisions of the tax code to lower or eliminate their liability.

    But the lawmakers who sought the data seized on the report as proof of corporate gamesmanship.

    ”It’s shameful that so many corporations make big profits and pay nothing to support our country,” said Byron L. Dorgan , D-N.D., who requested the report along with Carl Levin , D-Mich. “The tax system that allows this wholesale tax avoidance is an embarrassment and unfair to hardworking Americans who pay their fair share of taxes. We need to plug these tax loopholes and put these corporations back on the tax rolls.”

    The report covered the period from 1998 through 2005. During that time, corporate income taxes as a share of gross domestic product dipped, from 2.2 percent in 1998 to 1.2 percent in 2003, the lowest share since 1983. But receipts jumped after that, hitting 2.7 percent in 2006 and 2007, according to the Office of Management and Budget. That was the highest share since the late 1970s.

    The GAO report also found that foreign-owned corporations were somewhat more likely to report no income than domestic corporations. There are several possible reasons for that. Foreign corporations may be younger, and startups are more likely to have no net income after expenses. They may also be in industries with lower profit margins.

    Another possibility could be the use of transfer pricing, which companies use to account for transactions between subsidiaries in different countries. Creative, rule-stretching use of transfer pricing can allow companies to push their profits into lower-taxed jurisdictions. The report does not attempt to examine whether illegal transfer-pricing caused the difference between foreign and domestic companies.

    But companies looking for lower-taxed jurisdictions often take profits out of the United States. The country’s 35 percent top rate on corporate income is among the highest in the industrialized world.

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So, evidently our government, in conjunction with it’s Suger Daddy corporations, has found a perfect way to make us “feel sorry” for corporations, while behind the scenes they are getting away with murder.  They have the highest corporate tax rate in the world, yet the majority of them pay no taxes.   Hmmmmmm.  I guess it’s easy to show little or no profit on your tax returns when  you are making huge “campaign contributions” (read “bribes”) to your local congressional rep. while also paying your top executives astronomical salaries for coming up with innovative tax dodges.

The US consumes about 140 billion gallons of gasoline each year. A team of researchers led by John Heywood has completed a five-year assessment of what can be done to slash that and save fuel for the nation.

They looked at how gas and diesel engines, as well as hybrid electric cars and plug-in cars, are likely to evolve between now and 2035. They also assessed what can reasonably be expected from new fuels such as hydrogen and biofuels.

“Improvements” in cars in recent years have largely focused on increasing performance, driven by the demand for ever-larger and more powerful cars. As a result, no significant fuel consumption gains have been realised over the past 25 years, says the team.

They call for car manufacturers to focus efforts on improving fuel savings over performance.

Lighten the load

A seemingly simple way of reducing the amount of fuel used by cars without a big change in consumer preferences would be to produce lighter cars. Heywood’s team estimate that the average US car 25 years from now could feasibly weigh between 20% and 35% less without compromising on security and convenience. This alone would cut fuel consumption by between 12% and 20%.

I’m always amazed to see that one of the obstacles constantly cited by developers of smaller, alternative, and more fuel-efficient cars is that they “don’t pass safety tests”.  Um, how about we reevaluate the safety tests?  Right now it seems to be a demolition derby mentality out there; in other words, who can own and drive the car (read SUV) that can smash into you and sustain little damage.  A kind of “my car can smash up your car” way of thinking when we go out to buy something new. 

So, how about we change the rules.  If everyone were driving lighter cars with less “protection”, then a hit from another car would be relatively OK.  “Relative” is the key word here.  A large heavy car (again, read “SUV”), running into a small car, say a Prius, could be very damaging to the Prius and it’s owner.  However, if most people were driving light, and hence more fuel-efficient cars, then a Prius hitting say a Mini Cooper would be relatively (their’s that word again), OK and undamaging.  So, why don’t we redo the safety rules, giving light weight cars a whole catagory of their own.  This would greatly lessen the bureaucracy that the innovators in transportation have to wade through, thus leading to more fuel efficient cars SOONER.  Make sense?

True, for awhile, until all the SUV’s in the world are retired, it will be a little hairy out there.  But, hey, this state of affairs will be temporary, and the carnage can’t be any worse than Iraq, can it?  And the long range benefits to the death and destruction would be FAR more tangible!