Looking Ahead

LOOKING AHEAD by Wally Dobelis



We have gone a long way forward since the first Earth Day which this family seems to remember attending in Union Square Park, with masses of cheerful people. Expectations for future were high. History states that it was initiated in April 22, 1970 as a teach-in, by environmentalist US Senator Gaylord Nelson of Wisconsin, as a part of a Zero Population Growth movement. Although Earth Day observation dates vary, the concept has picked up momentum world-wide, and green concepts such as global warming became the main thrust around 2000. Wikipedia claims that it is observed by 500M people and 175 national governments.

Actually, whether we like it or not, New Yorkers are some of the greenest people on the earth, particularly Manhattanites. Where else are people living so close together, sharing heat through apartment walls in the winter and sunshine as well, through use of strategically distributed vertical density (highrisers, in common parlance) . We use our bipedal structure to perambulate rather than hop in cars to buy fresh bagels, and take common carriers – buses (oh well, sloppy diesel consuming rather than hydrogen, as in parts of Canada) and subways - for longer distances. There is some thought on part of the Mayor to place solar panels on public buildings and bridges, and make car use below 86th Street super-prohibitive.

It is therefore particularly pleasing to see commercial enterprises, such as the ShopRite supermarkets, embracing Earth Day 2009, April 22, the 39th anniversary of the modern environmental movement, to make public their participation. They were following the example of the three Piscataway NJ middle schools, where with an investment of $1.2M the school district installed 800 solar panels on the roofs of the schools, supplying 20% of their energy requirement and saving $67K in annual costs, more importantly preventing 45 tons of carbon dioxide from entering the atmosphere annually, equivalent of planting 13.5 acres of trees or not driving 125,000 miles a year. The ShopRite people at Wharton, NJ have installed 1,600 solar panels, apparently larger, cutting carbon dioxide emissions by 280 tons a year, ditto in Marlton, NJ, a store certified with the Energy Star designation since 2007, using 35% less energy than similar locations. Reduce, reuse and recycle is their slogan at Meriden, CT, where the recycle program has saved 50% of their trash removal work. This is where green Manhattan fails – while apartment buildings using city Sanitation Department program can recycle, commercial buildings, supermarkets and offices using commercial trash removal services are not motivated enough to apply the three Rs. Currently a startup project is investigating the possibility of employees in late working offices where they order takeout food -- law firms, brokers, IT shops - to reuse the plastic dishes, but that is just a research effort, as of now.

Reusing plastic is important. While plastic beverage bottles and food dishes can be made of tree and plant-byproduct sources, most of them come from oil based materials, isolated in refineries., as a polymer, polyethylene terephthalate (PET, labeled 1 on the bottles – you will find most plastics are numbered 1-6). Plastic pellets are preformed into tubes and expanded into thin lightweight bottles, a favorite material for cheap shipping. Recycling them is important for humanity (seriously), PET is not a renewable material. Consumers to note.

Some further ways to reduce energy use in tight Manhattan, consider changing your incandescent light bulbs to compact fluorescent bulbs (CFB), which will reduce your energy use by one third, and save $30 per bulb in their lifetime. The incandescent light bulb, which has not changed much since Thomas Edison invented it I 1879, a thin wire in a globe, is heated with electricity to 4000 degrees Fahrenheit until it glows. But 90% of the electricity is wasted in heat. A CFL borrows the light principle from fireflies that use chemicals in their bodies to glow without creating heat. The CFL is a fluorescent tube swirled into a corkscrew shape, with electrodes at each end that send tiny particles through a gas that fills the tube. The inside of the tube is coated with phosphors that release white visible light. Note that there is a small amount of mercury, 4mg per tube, so in case of breakage everything must be carefully cleaned up and disposed properly, as you do with paint, batteries and thermostats. The CFLs last 10 times longer than ordinary light bulbs, so you need not worry too frequently about disposing of burnt out ones.

Watch the media for NYC Earth Day activities and events in cleaning up and refreshing our environment. This article tries to concentrate on activities we can engage in every day, painlessly. Turn off your lights when not in use. Stop your car engine if you are about to wait for more than 30 seconds. Turn off your electronics – computers, televisions, stereos and chargers. The cost of such standby power adds up to $4B for the US, not much when you consider the astronomic figures for Washington’s bailouts and initiatives, but we are also talking about protecting the environment for our families, which is invaluable.

LOOKING AHEAD by Wally Dobelis







Following the news recently has been like living in history, and I could not stop reading the NYTimes, more exciting than a tabloid. There were two days of pictures of President Obama shaking hands with Hugo Chavez and listening to Latin dictators lambaste the US, for which he was shamed by the WSJ and by Patrick Buchanan, normally an understanding observer, in Human Events. The defenders of America may be forgetting that Barack Hussein Obama was doing his job, as he did in Turkey and Europe, the job that he may be the only person capable of doing on this Planet Earth – attempting to bring everybody together for economic recovery and peace.



There is one set of continuation stories this reader has been pursuing step by step, in guessing the eventual outcome, the collapse of the deeply indebted US automotive industry. The Chrysler repayment negotiations involve the Treasury (which has already loaned them $4B, and will loan a further $6B if the outcome of the negotiations is satisfactory), the company owner (Cerberus Capital Management), the bank lenders, UAW, Canadian CAW and a potential rescuer, Fiat of Italy. This day-to-day drama is slowly reaching its deadline, April 30. It is a day beyond my deadline, so we will have to leave the issue guessing at the outcome.



Washington obviously does not want a Chrysler bankruptcy, which would shut off essential Chrysler parts used by all US-, based car manufacturers, and has given $3.5 B to Chrysler and G.M., to support their part makers.



As Chrysler itself, the UAW, to whose health care trust Chrysler owes $10.6B, will accept repayment, half in company stock, without further concessions. UAW president Ron Gettelfinger knows that Chrysler will have to contribute $5B cash over next 10 years, a stretch. Gettelfinger has thousands of retirees, their spouses and other voters in the affected communities to back him in objecting to a bankruptcy solution that would decimate the health trust.



But other creditors, 45 banks and funds led by JPMorganChase and Citigroup, whom Chrysler owes $6.9B, might want bankruptcy, which puts them at the head of the creditors’ line. The Treasury is asking them for a major concession, to accept 15 cents on the dollar. Their counteroffer is to concede 35 cents, in exchange for 40% of the restructured company’s stock. The sides must reach a decision by April 30, or the company goes to bankruptcy court, with liquidation a prospect. The UAW counts on its 26,000 hourly rated workers, 86,000 retirees and living spouses, and a total Chrysler-based membership of 255,000 – a figure that seems a magnitude too large, though the Times also mentions a G.M. membership of 450,000.



Another issue is Chrysler’s potential agreement with Fiat, whereby for 20% interest in the company the Italians will provide small car design and technology but no cash. The idea is to get Chrysler back into the market with small cars offering high gas mileage, valuable in the expectation that fuel costs will go up. More issues involve the fate of the Canadian plants with 8,000 CAW workers, who are not tied to UAW and US elections. The Canadians appear to have agreed to reduce costs.



As of four days before the deadline, the UAW board claims to have improved its offer and will put it to membership vote on Wednesday before the Thursday, April 30 deadline. Unofficially, they will accept 55%of the reconstituted company’s stock for $5M of the debt, and expect a repayment of $8.8B by 2023, at 9% annual interest. To this reader, the debt has inexplicably grown to $13B+, but so be it, let this puzzle unravel later.



The stock situation is more complex, and if it were not for Daimler, the German owner of Chrysler from 1999 to 2007, at the last minute giving up its remaining 19.9% share in Chrysler, plus $600M to the UAW pension trust, to wash their hands of the deal, there would not be enough shares for all players. As is, the UAW’s 55%, plus 20% for Fiat, 10% to be retained by Treasury, leaves only 15% available to repay the banks.



The latest Treasury offer to the banks is to take 22 cents to the dollar, or $1.5B for the $6.9B owed to them, plus stock shares. The threat has been, from the getgo, that the banks, with such a meager offer would opt for bankruptcy court awards giving them more than the Treasury’s cash. Was the government’s reward of $3.5B enough to protect the US car makers from a disruption in parts flow, if bankruptcy were to ensue? Will the UAW risk the uncertainties of the union benefits and healthcare falling to the rehabilitators? With no offer from the 45 lender consortium, and barring a last minute deus ex machina, it appears that a bad conclusion is unavoidable.



P.S. Two hours after the T&V deadline, Wally Dobelis caught the news that the bondholders informed the Treasury of their willingness to accept 29 cents on the dollar ($2B for $6.9B). The drama continues.

LOOKING AHEAD by Wally Dobelis


US health insurance is dysfunctional and in need of repairs. Some 46M Americans are under- or uninsured. They abuse the hospital emergency rooms, at an average cost of $560 per visit of those under age 45, and $832 for 45-64 (2003 figures, per AHRQ). Later figures put the overall average at $2000 for admittedly senior-heavy Florida. The private insurance plans cannot accommodate all of us consistently longer-living Americans with increasingly expensive chronic healthcare problems at the same premium rates. The President has charged the US Congress with developing a reform program.

First, use of private insurance. Disingenuously, some newspapers (e. g. Miami Herald, 3/31) have discovered that people with certain impairments and using heavy drugs cannot buy insurance. They call it using a secret blacklist. They ignore the fact that insurance is the social remedy whereby people with like health history buy age-rated insurance to pay for those who get impacted by a disease, whenever it occurs. Rating up or excluding heavy risks is the just way to spread the exposure among like groups of population. The same people who readily complain that mortgages were issued indiscriminately, to both people with ability to pay and those who could not pay, thereby endangering both groups, not to speak of the national economy, now are complaining of discrimination, snooping and worse. Insurers, like banks issuing mortgages, do not want to buy a claim.

This puts privately financed 100% insured health insurance in the realm of impossible .Further, the reform measure of eliminating tax-exempt employer-provided health coverage and replacing it with private personal insurance (once McCain’s suggestion, now somewhat embraced by Obama), which deemed such employer contributions a tax break for the firms and their upscale employees, will not be bought by organized labor. It would profoundly upset the economy and personal lives. Single-Source Universal Coverage with decrees reforming physician and hospital compensation plans, like those already in Canada, UK and much of Europe, though totally revolutionary in social context for the US, would be much simpler to implement. That’s what was already in the hopper in the early 1990s Clinton years, eventually found useless and tossed away without much ceremony. Today, although both houses are in Democratic hands, it would take a longer wasted discussion effort to dissimilate.

There does not seem to be much doable in updating current insurance coverages, although it would help if the government were to establish qualified group plans, and improve premium rates for individuals and small businesses, along with simplifying procedure costs through uniform electronic health records. The latter has been objected to by defenders of privacy (HIPAA, Gramm-Leach-Bliley Act and ACLU) but should be overcome by rational record-keeping regulation processes. According to insurance actuaries, administration adds only 15% processing to the claims cost.

The best would be a separate public plan for uninsurable, high-risk and poverty-ridden members of the uncovered 46M demographic group. Such Public Plan (a truly catchy term apparently invented by NY Times that they think will really fly) could be a near-relative to early Medicare or Medicaid, and would be a means of slowing down the growth of health care costs, by using a CPT code- based schedule of payments. The Public Plan would be enable administration to negotiate lower standard rates with hospitals and physicians, meanwhile providing them with a steady controlled source of income and planned use of equipment, unlike the emergency room rush, which is a material source of higher insurance costs for employers and private insureds. The insurers and political ideologues may consider such a Public Plan a step towards Socialism, but the current anarchy and disparity in health care is worse.

An alternative to the Public Plan, or as a separate project, could be the establishment of low-cost publicly supported clinics throughout the country. Privately funded, they exist in some shopping centers and WalMart stores, 76 units in 12 states. WalMart intends to open 400 in next 3-4 years, expanding to 2000 by 2012. They cooperate with university and BlueCross/BlueShield teams in developing Dossia, an information technology system for privacy- assured recordkeeping and administrative functions. The independently owned clinics are established in cooperation with local hospitals.

Hospitals and doctors worry that a Public Plan might overwhelm its private competitors and destroy the public system, eventually turning into a fully equipped and organized single-pay system. The conservative economists feel that the public, when “properly informed” about the costs of full coverage for 46M of their fellow citizens, poor, overage and heavily medical cost-burdened, will not accept the additional load of taxes needed to provide it (I’d think better of us). They would replace the Public Plan with a portable insurance policy scheme, purchased either inside or outside the employment place. It would enable the insured to move from employment to employment, so regrettably common in the 21st century, without going through the COBRA (federal subsidy for 12mos extension of health insurance for laid-off employees) system, which has also grown very expensive because its utilization is riddled with anti-selection. Tax credits for insurance purchased would be provided. Of course, nothing mandatory in this ‘plan” about coverage for all.

I’d put my money on the WalMart Alternative, now that’s a catchy title (invented here). Washington to copy.

LOOKING AHEAD by Wally Dobelis



US health insurance is dysfunctional and in need of repairs. Some 46M Americans are under- or uninsured. They abuse the hospital emergency rooms, at an average cost of $560 per visit of those under age 45, and $832 for 45-64 (2003 figures, per AHRQ). Later figures put the overall average at $2000 for admittedly senior-heavy Florida. The private insurance plans cannot accommodate all of us consistently longer-living Americans with increasingly expensive chronic healthcare problems at the same premium rates. The President has charged the US Congress with developing a reform program.

First, use of private insurance. Disingenuously, some newspapers (e. g. Miami Herald, 3/31) have discovered that people with certain impairments and using heavy drugs cannot buy insurance. They call it using a secret blacklist. They ignore the fact that insurance is the social remedy whereby people with like health history buy age-rated insurance to pay for those who get impacted by a disease, whenever it occurs. Rating up or excluding heavy risks is the just way to spread the exposure among like groups of population. The same people who readily complain that mortgages were issued indiscriminately, to both people with ability to pay and those who could not pay, thereby endangering both groups, not to speak of the national economy, now are complaining of discrimination, snooping and worse. Insurers, like banks issuing mortgages, do not want to buy a claim.

This puts privately financed 100% insured health insurance in the realm of impossible .Further, the reform measure of eliminating tax-exempt employer-provided health coverage and replacing it with private personal insurance (once McCain’s suggestion, now somewhat embraced by Obama), which deemed such employer contributions a tax break for the firms and their upscale employees, will not be bought by organized labor. It would profoundly upset the economy and personal lives. Single-Source Universal Coverage with decrees reforming physician and hospital compensation plans, like those already in Canada, UK and much of Europe, though totally revolutionary in social context for the US, would be much simpler to implement. That’s what was already in the hopper in the early 1990s Clinton years, eventually found useless and tossed away without much ceremony. Today, although both houses are in Democratic hands, it would take a longer wasted discussion effort to dissimilate.

There does not seem to be much doable in updating current insurance coverages, although it would help if the government were to establish qualified group plans, and improve premium rates for individuals and small businesses, along with simplifying procedure costs through uniform electronic health records. The latter has been objected to by defenders of privacy (HIPAA, Gramm-Leach-Bliley Act and ACLU) but should be overcome by rational record-keeping regulation processes. According to insurance actuaries, administration adds only 15% processing to the claims cost.

The best would be a separate public plan for uninsurable, high-risk and poverty-ridden members of the uncovered 46M demographic group. Such Public Plan (a truly catchy term apparently invented by NY Times that they think will really fly) could be a near-relative to early Medicare or Medicaid, and would be a means of slowing down the growth of health care costs, by using a CPT code- based schedule of payments. The Public Plan would be enable administration to negotiate lower standard rates with hospitals and physicians, meanwhile providing them with a steady controlled source of income and planned use of equipment, unlike the emergency room rush, which is a material source of higher insurance costs for employers and private insureds. The insurers and political ideologues may consider such a Public Plan a step towards Socialism, but the current anarchy and disparity in health care is worse.

An alternative to the Public Plan, or as a separate project, could be the establishment of low-cost publicly supported clinics throughout the country. Privately funded, they exist in some shopping centers and WalMart stores, 76 units in 12 states. WalMart intends to open 400 in next 3-4 years, expanding to 2000 by 2012. They cooperate with university and BlueCross/BlueShield teams in developing Dossia, an information technology system for privacy- assured recordkeeping and administrative functions. The independently owned clinics are established in cooperation with local hospitals.

Hospitals and doctors worry that a Public Plan might overwhelm its private competitors and destroy the public system, eventually turning into a fully equipped and organized single-pay system. The conservative economists feel that the public, when “properly informed” about the costs of full coverage for 46M of their fellow citizens, poor, overage and heavily medical cost-burdened, will not accept the additional load of taxes needed to provide it (I’d think better of us). They would replace the Public Plan with a portable insurance policy scheme, purchased either inside or outside the employment place. It would enable the insured to move from employment to employment, so regrettably common in the 21st century, without going through the COBRA (federal subsidy for 12mos extension of health insurance for laid-off employees) system, which has also grown very expensive because its utilization is riddled with anti-selection. Tax credits for insurance purchased would be provided. Of course, nothing mandatory in this ‘plan” about coverage for all.

I’d put my money on the WalMart Alternative, now that’s a catchy title (invented here). Washington to copy.

LOOKING AHEAD by Wally Dobelis

Late in March we met up with an old friend, Forrest, who in the 1970s was president of the now defunct Murray Hill Reform Democratic Club, one of the key groups that did away with the Tammany supremacy in NYC. An IT expert, now a Floridian, he had a computer solutions-oriented radio program for some years in Sarasota.

Talk came to General Motors and a solution for American automotive industry, Forrest who drives a 1995 LeBaron which he repairs himself, is also a believer in the need to keep GM and Chrysler alive, and strongly disputes the $73 GM hourly labor rate which I trotted up as a reason for US inability to be competitive in the world automotive market.

My study in 2007 showed the UAW worker hourly cost to be composed of $32 pay, $19 current benefits and $22 legacy benefits for retired workers (30%), while Toyota in the “right to work” American South paid $47 ($32 pay and $15 benefits). Our dispute was the $22 cost of legacy benefits, which Forrest found to be unsupported and a management myth. There was no dispute to the fact that years of excessive benefits, mismanagement and nod-nod wink-wink union labor contracts had sunk such industries as steel (Bethlehem and US Steel) and airlines (Eastern). Forrest had worked in a missile factory where a ridiculous yellow line on the floor marked the boundary which Union A members could not cross, and had to hand work materials over to Union B members. There was also current evidence that UAW contracts have massive featherbedding – we had heard interviews of people who complained of UAW members with no-show and sleep-in-the-stockroom jobs, of sloppy work habits, a massive proof of management neglect.

Our conclusions were similar - US cannot afford to let its automotive industry go asunder, its loss will turn us unto a 2nd class country. Apart of the pay and benefits of 65K GM employees that are UAW members (also 42K at Ford, more at Chrysler), there are some 3 million jobs dependent on the car assembly lines, in parts manufacturing, supplies, dealerships and maintenance, and the collateral industries of feeding, housing, dressing and providing education in factory towns. There are also other scary sequels, such as a GM collapse leading to the Democrats’ loss nationally. The union is well aware of the political consequences, and UAW head Ron Gettelfinger will hold off reducing the $20.4B GM has to pay into UAW’s health care fund for retired employees until banks also restructure GM’s indebtedness. The Ford union has agreed to reduce its hourly rate to $55/hr, from over $60, and to suspend inflation- driven pay increases, performance bonuses, education benefits and similar. They have also accepted partial payment of indebtedness through company stock shares.

The financials are brutal, as current news indicate. GM lost $80B in 2004-08, a reason to fire GM CEO Rick Wagoner. To make money, GM concentrated on SUVs, since small cars generate no profit considering their high labor costs. A new structure of $14-29/hr for new hires was started in 2007, too late. The company owes $63B and cannot pay current balances of some $20B. No new bank loans and investor capital are accessible. Wagoner had success in employee cutting (177K to 92K, planned to go down to 42K by end of 2009), but not in reducing unit costs by cutting hourly rates for established workers – in 2003 hourly employee cost was $18.3B, of which $5.7B was legacy (31%). The total has been reduced to $7.6B in 2008, expected to be $6.5B in 2009, $5.4B in 2010 (legacy down to under $1B, probably through mortality?). In 2014 hourly costs would be $4.8B, and legacy $100K.

Looking at the dramatic employee total pay drop, 2003 to 2008, 58%, without a change in the hourly cost rate, one wonders whether union, management and creditors are not budging because they are betting on the Obama government paying for the entire rescue, $13.4 originally, plus $16B now, and more as time goes on.

Going forward, what is the solution? Chrysler will join with Fiat. GM has agreed to reduce their brands to four, the ever popular Chevrolet, Cadillac, Buick, and GMC. Pontiac, my favorite, Saab, and Saturn, the mismanaged future hope of the industry, will be gone, as well as the ego-trip Hummer, only one seen in Stuyvesant Town, home of rational thinkers. Taking out a brand is costly, in the 1990s the Oldsmobile discontinuance cost over $2B, including legal fees in settling dealership contracts. Further, because of the laudable interchange in using each other’s platforms and components, closing out a brand such as Pontiac will stop the manufacture of not only GM but also of foreign US-built cars that use Pontiac-made parts. However, since neither UAW nor management will take the necessary steps to reduce the unit cost, it looks like GM’s recovery will have to take place via the bankruptcy route. Sorry, America.