Remember the "it's better to be lucky than smart bankruptcy avoidance rule"?
Yeah, me neither.
But I've written before about places that were unlucky enough to have a business in a shopping center where the street was being repaired.
For two years.
Not quite as common is the situation that arises when a manufacturing facility is raided based on an interpretation of a law in India.
And the implicit advice that Gibson Guitars was given was simple: use Indian Workers rather than U.S. Workers.
That makes me sad. Seems to me that if there was any question at all on any matter, all government agencies should ask themselves, "will this action take away jobs from U.S. Citizens?"
Now, Gibson Guitar has discussed its position on the raid, and understandably, Gibson is a little cranky about being put out of business, even if it's only temporary.
And the U.S. Workers who had been getting paychecks from Gibson? They're a little cranky, too.
Most Americans would prefer jobs to unemployment.
But here's the Gibson Guitar take on the issue; enjoy reading!
The people there work hard, and they have good engineers.
After the Weimar Republic, which overprinted money so much that you needed a wheelbarrow to do your grocery shopping (to take your paper money to the store, not to take your food home), Germany generated a war machine that required the combined efforts of the Allies to defeat.
But it was much easier to defeat German resolve to bail-out Greece.
Germany produces industrial products. A lot of 'em. So when it sells them, Germany makes a lotta Euros. A lotta, I tell you.
Greece makes sheep and wine and some cheese and tomatoes. They're all good, but they don't sell for as many Euros as a Mercedes.
That will be interesting, because onlookers will be able to tell what happens to a country that borrows too much and is then unable to pay.
Some of that is obvious now; government services and payouts have dwindled to a trickle in Greece, and the Greek Citizens have one primary indoor sport, called "how do I get my money out of this country so the Government can't take it all a way from me with confiscatory taxes?"
Germany, on the other hand, is going to play the part of the irritable lender in the play.
The Greek Politicians, currently, are beating the Greeks, and taking every possible opportunity to squeeze them for taxes, to show the world what good citizens the Greek Politicians are.
My guess is that whoever is currently in office in Greece will be out of office in Greece in about twenty minutes.
Giveaways to buy votes apparently last until the giveaways stop; when voters have to pay the price of the government's generous distributions, they appear to dislike that.
Germany is looking at two different scenarios; one involves Greece returning to the Drachma.
If I were Greece, I'd do exactly that, because then I might have some control over my future.
Apparently, when somebody else controls your money supply, you have less control over your future.
And when I say "landing", I'm really talking about a place seven or eight feet underground.
Why?
When countries are intertwined economically, and some countries (Greece is the current poster child, but many others are among the usual suspects) keep borrowing and spending on early retirement and big pensions for some of their citizens, and the countries don't make the money to support such lavish government spending, bad things happen.
In specific, the wheels come off the wagon.
Of the world economy.
Because when countries keep borrowing beyond their ability to pay back debts, they eventually hit a point where there is no more money to borrow.
And then things get bad. See Greece, for instance, which is currently the poster child for "bad".
I'm only a simple backcountry bankruptcy attorney, but it's clear to me that when the Chinese Economic Miracle sours, and the phonebanks of India fall silent, and all of Europe is dragged into the economic black hole by Greece, Italy, Spain and Ireland, bad things will happen in the United States.
And the article in the Evening Standard also points out that the United States has been bailing out banks for some time now, and the Bank of America may need a new round of bailouts.
Mostly I don't like it that so many U.S. jobs have been exported to Red China, and that the United States feels comfortable borrowing from a country that has frequently made policy statements about the destruction of the United States.
And I suppose the easy-going, humorous attitude about trademarks and patents shown by Chinese manufacturers also makes me a little uneasy.
But China has its own problems.
As trade slows down, unemployment is skyrocketing in China. You don't hear about it much because the statistical measures of unemployment in China don't count employees who voluntarily quit; and employees are pressured to quit, rather than be fired.
So the numbers coming out of China are cooked to a remarkable level.
Then there are the loans to businesses made by the Chinese banks.
The bubble associated with those loans will make the bubble in the United States look like...a bubble!
But one of the upcoming comeuppances for China is going to be the sort of early-warning signal that we've seen in the United States: a credit downgrade for China is in the works!
Now, I don't wish the Chinese any harm. As long as they send back the jobs they swiped from the U.S., and clean up their country so that the rivers don't run black with sewage and their cities are no longer invisible under a cloud of coal smoke, all is forgiven.
Actually, I guess that I have a Challenge for China.
Go Green, Guys!
We'll be happy to send you our EPA to help you out!
And, actually, that might be the fastest way to build jobs here in the United States.
p.s. the Chinese Economic Miracle is coming to an end, some experts believe. I tend to agree, even without a Doctorate in Economics. There's one simple reason: governments can't run businesses, and when they try, they fail. Every single time. See the country formerly known as the USSR. And the U.S. Post Office.
I don't know much about ShengdaTech. In fact, I only learned about the filing of the Chapter 11 and the unusual preliminary injunction this morning.
But if the SEC is investigating, and KPMG has resigned as the auditor, saying some disturbing things about the financials, one has to wonder if this if a perfect company.
This Chinese company was traded on our stock exchange because of a reverse merger into a publicly traded company.
Here's what I wonder: is this the tip of the iceberg? Are there other Chinese Companies that trade on a different board that also have creative books?
I'll watch that space and let you know if I find out.
Although I suppose that finding out might involve learning Mandarin.
Never mind.
I'll let somebody else find out, and tell you what they have to say!
And if that happens, do you think creditors will get paid more, faster, or less, slower?
My intuition is that creditors who use a threat of involuntary bankruptcy play a dangerous game.
Here in the United States, it's a threat that is seldom-used, because it's...dumb. If a debtor is forced into such an involuntary bankruptcy, the least that happens is that the mind-set of the debtor changes.
Take SAAB, for instance.
Right now SAAB wants to pay its creditors.
That's not easy when it doesn't have all the parts it needs to build cars, of course.
But once it becomes the subject of a reorganization, it may change its plans, because now it has the tools to work with, and the worst that could happen did happen!
And if SAAB believes that it will be the subject of an involuntary bankruptcy in a venue it doesn't like, do you think it'll look around for a debtor-friendly venue and a DIP financing package?
And do you think that irritating creditor will get paid last and least, if SAAB can manage it?
But I'm a little cranky about the economy, so I'll mock it anyway.
Note that I'm NOT mocking Catherine Rampell, the writer who lucidly explained the leaky rowboat that is the U.S. Economy, because she is ever so smart, and writes ever so well.
I'm just griping about the failure of folks who are running the show to fix things.
Now, other countries have had problems with their economies, and they have fixed those economies.
Canada, for instance, had a problem with excessive government spending, and it took a chain saw to its spending.
The consequence was simple: Canada's Economy became stronger when there were more resources in its private sector, and fewer in its public (government) sector.
There is a fairly easy test for collective wisdom about the economy.
That is the price of gold.
When the U.S. Economy is great, people put their money in stocks, or bonds (if they're risk-averse sissies).
When the U.S. Economy is in the white, swirling waters located next to to the "flush" lever, people stuff their money in gold, and its price goes up.
The price of gold is now gigantic at $1,739 or so, per ounce, and the value of the U.S. Dollar is clearly now approximately zilch.
This is a bad thing for a housewife buying groceries, for instance. Or a househusband. Or a college student. Or a Vampire buying True Blood.
Now, I'm not smart enough to come up with an idea to fix the economy, but I know what won't work very well: following the example of Greece, Italy and Spain, and borrowing until our arms fall off.
The new "austerity measures" in Greece are causing riots in the streets, and the Greeks are now paying the tab for their politicians' debt addition.
As to our politicians debt addiction, I'm starting to find some folks talking about taking a chain-saw to government spending.
And I may start to think they're right, if I ever think about it.
For instance, I have no good idea who Ron Paul and John Stossel are, but when I looked around for plans to fix the overwhelming debt in which the United States is drowning, I ran into those two talking about debt.
And they made some sort of sense to me. Note that insanity is doing the same thing over and over, and expecting a different result.
So here's something different that will get us a better result, if Canada is any gauge.
So here is one approach to the gigantic debt that caused the United States to lose its credit rating, and a fast way to make it go away. It's a little tongue in cheek, but the more serious guys out there appear to be afraid to say this stuff!
But I was discouraged when I saw that a Chinese Rating Agency (I don't know which one; remember, I don't speak Mandarin!) had downgraded the U.S., in the same way as S&P.
I also watched the video posted above, and even though I don't speak Mandarin, it did not make me feel good.
I'm proud to be a U.S. Citizen, and I don't like it when China is a lender to the U.S. in the first place!
I like it even less when Chinese Videos make fun of the United States!
I hope that Washington can get its act together.
I don't want the United States to go down the same road that Greece has traveled, and wind up with "austerity measures" crammed down its throat by our International Bankers!
If it were an individual, I'd say a bankruptcy was a pretty fair prospect.
But Italy is going to keep doing what it's doing; there will be no resignations, and there will be no major changes, because that would make it harder for Italy to keep borrowing.
I'll be interested in seeing exactly what happens when the Eurozone becomes the Insolvency Zone; and it appears to be approaching that right now.
I am entertained about the idea that Italy may become the next European Country to require economic "assistance". My guess is that the Greeks will rue that assistance for the rest of their lives.
And the only assistance that Italy needs right now is some self-control, so it stops spending more than it makes!
The grass is greener in Ireland, of course, because it always is! But its economy is far from the days of the "Celtic Tiger".
Note: when Europe and the EU falls apart, and the Euro is worth only the paper it's written on, wealth will flow to U.S. Markets and it will look as though things are rosy here in the U.S.
Apparently, from his particular viewpoint, the governments of various countries are issuing surreal press releases about the economies of those countries.
And he doesn't leave his beloved Japan unscathed by his critical analysis.
All in all, it's a very interesting article about many countries around the globe that seems to have a real problem with addictive spending disorder.
And putting it a slightly different way, it appears that from the viewpoint of Professor Noriko Hama, the Economic Emperor has no clothes!
He is obviously sincere in his desire to improve the economy of his country; he wants to avoid a state bankruptcy, after all.
And the beatings will continue until moral improves, right?
This is only one illustration of the way that State-dominated economies work poorly; in an economy where people are driven by a profit motive, business owners only work half-days.
Either one of the two 12-hour shifts.
Their choice!
p.s. you think you've got a lousy job; think about working in a country where the President releases the hounds to track down slackers!
