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WHAT BARRY SANDERS SAW THEN (FINAL EDITION)
By Charles Payne, CEO & Principal Analyst
11/18/2009 9:37:42 AM Eastern Time
There have been many exciting football players in the history of the National Football League, but maybe a handful can claim to be as electrifying as Barry Sanders. Drafted third in the 1989 draft, he was not only one of the best ever but he was humble as well. Case in point; he took himself out of the last game of the season although he only needed 10 yards to win the rushing title. Something like that would never happen these days when it’s all about “me” and reality television shows. Still, even with his reputation for being humble few could understand when he called it quits at the height of his career. It took years before the tight-lipped Sanders confessed to quitting because of a culture of losing in the Detroit Lions organization, saying it was too much to deal with. Sanders went on to say that the culture robbed him of his competitive spirit and he saw nothing to suggest things would ever get better. He began crying at the end of his last game.
Well the crying continues in Detroit where the entire town has been
This is really shockingly sad, but has to serve as a lesson to all. It’s not about bashing unions or Democrats, or the idea of fighting against corporate prosperity, but those things helped to sink the city that had capitalism flowing through its veins. The town that was the birthplace of the U.S. auto industry and rags to riches stories like Motown is now boarded up and falling apart. There is hope as a notion of creative destruction is forcing its way into the realities of the city, which must find a way to compete. Companies like Compuware (CPWR) offer hope, and a revitalized Ford (F) fights on with the spirit of 1908 (introduction of the Model T). There are other templates on how to turn it around, including Pittsburgh, which has managed to maintain a culture of winning on the football field and in other sporting endeavors. (That new television series “Three Rivers” sucks, however.) We’ve witness the fall of a great American city, we know how it happened and it should serve as more than a cautionary tale.
It’s not a coincidence that Ford’s stock peaked in the summer of 1999, back then Detroit had already begun losing market share but it didn’t stop management and unions from battling each other while their foreign rivals were pushing ahead.
One has to ask what the heck was Barry thinking about to walk away from all of that money even on a team that didn’t embrace a winning culture. It’s plain to see now he made the kind of tough decision many people don’t want to make these days. Taking the pain and acting out of principle in a period of stimulus spending, TARP, zero percent Fed fund rates, and other measures designed to mask the pain and create a soft landing do nothing to address how things will actually get better. Not only do the policies of the White House and Federal Reserve breathe life into the notion of propping up failure, but it is further deepening a culture that long ago derailed a great American city.
Ford is turning the corner the hard but right way and as a result its shareholders are beginning to be rewarded. Of course, the unions are treating it differently than General Motors or Chrysler, but some cultures never change. I’m rooting for Detroit and I’m rooting for Ford. One understands what has to be the done while the other just took a $55.0 million haircut on a piece of property that was once a jewel.
Stop me if you’ve heard this one before…
Democratic leaders are saying that they are working on passing a bill aimed at jump-starting highway construction projects and providing small businesses with tax credits. House Majority Leader Steny Hoyer (D-Maryland) says the employment situation is such that action must be taken. I’m glad that at 10.2% unemployment the situation is finally resonating on Capitol Hill. Of course I thought, when Stimulus I was being rammed down our throats it was for shovel-ready jobs and would halt the growth of unemployment at 8.0% or less.
The President says that there is a chance of a double-dip recession, and I’m not sure if it’s a sign of the apocalypse, a wake-up call, or a public relations move designed to take advantage of panic. It would allow the White House cover to finish pushing through the agenda that is obviously losing steam.
Economic Data
Housing Starts/Permits
The latest on housing starts and permits was a bit of unwelcome news. Permits were down sharply in the South and West regions. Starts were lower in all regions, with particular weakness in the West. Now that the tax credit has been expanded and extended, it’s possible that these numbers begin to pick up in November.
Consumer Price Index
Consumer prices were contained in October as the lingering impact of the recession weighed on pricing power. Core CPI for the month rose 0.2% (consensus: +0.1%); excluding new and used vehicles, which accounted for 90.0% of the core increase, prices were clearly under wraps. However, the headline CPI rose 0.3% (consensus: 0.2%) as prices for raw materials advanced. Higher energy prices are not yet being reflected in consumer prices as corporations are eating these outlays. But if they continue to trend higher, it’s likely that corporations, who have cut deeply into their economic models, will pass along these costs.
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