Midwest

Who Thinks This Recession Is Over?

I haven't waded through, what appears to be, a meticulously researched article. I will definitely do it as I prefer facts over opinion, or opinion based on well researched facts.

There will be no recovery until until consumers feel confident in their jobs and until significant consumer deleveraging has taken place. This may take as long as 2-4 years to complete the cycle of debt reduction and confidence rebuilding.

Should American corporations continue the vicious cycle of downsizing employees in the name of shareholder interest (fiduciary duty first, the American economy second) we will continue to see a hardening of spending habits and a long term pullback on consumer spending which will exacerbate the downward pressure on the economy.

Cut taxes on the middle class, to stimulate the free flow of capital, wait for consumer deleveraging to complete and quit firing Americans and moving jobs overseas and this economy will get some legs sooner than later.

Hold ground against special interests in the financial sector and bring some smart regulation back to the Wild West that Wall Street became. Unfettered capitalism is as dangerous as Communism or Facism. To assume otherwise means a repeat of the meltdown we're still experiencing.

BTW- No, the recession is not over. Yet.

The Hopefully Not So Great Next Depression

There is no quick fix to the problems we're facing. It's going to be tough and long before things get better and continuing to ignore that fact is foolish and will only lead to greater despair as predictions of recovery are dashed.

Unfortunately, there is no easy answer to this problem. Consumers must spend within their means, corporations and small businesses alike must lower their earnings expectations and the Wall Street chicanery of the last 12 or so years must be brought under control by smart regulations and a swift and decisive legal action taken against those that so artfully played with investor's money to their own benefit.

Trust is the bedrock of our financial system but it has been ruined. The heads of financial institutions must be held accountable for their actions that led to these problems. When the heads of giant organizations like Lehmans claim they didn't understand the true nature of the CDOs and other financial instruments they were pawning off on investors then somebody's lying. This isn't about being incompetent, this is about shading the truth from the government and investors in order to be paid tens of millions of dollars a year. In any language, it is theft.

America must reassess how it will spend the money it has and how it will invest in the immediate future. Bailouts were just fine when Bush was president but now Republicans are suddenly against additional bailout money. It appears to be politics as usual in D.C. when we can least afford it. Bailouts are not the answer but rather part of a much larger solution that must be put into action immediately.

1) Cut middle class taxes buy a significant amount. A $1,200 tax break to someone earning $50,000 a year is not going to change their lot in life. Cut them by $5,000 or help companies pay their people more money by lowering their tax burden IF they raise the pay of their rank and file. By floating the boats of the middle class, the economy will right itself far more quickly.

2) Continue to lower the dependence of oil as the major stream of energy for the nation. Give dramatic tax breaks to companies developing cost effective alternative energy sources, especially for those that involve transportation of people or goods.

3) Draw down our military's presence around the world and save on those significant costs. We should not withdraw from the world stage but rather not spend when we don't NEED to spend. There are no imminent threats facing our nation right now. A terrorist attack will not topple our nation and we should not be throwing our military might at a buzzing fly. Appropriate responses to issues will save us money and help restore America's image across the world.

4) Pay down our national debt while investing in infrastructure. This can be done at the same time. They are not mutually exclusive.

5) Restore confidence in the financial system by instituting regulations that make honesty and transparency non-negotiable requirements.

Are We Already in a Depression?

I believe we are on the verge of a depression with a 50/50 potential of entering one in the next six months. The economic factors may not be pointing to it at this moment but each day, the news gets worse and more unfathomable developments come to light.

When the credit crisis first became front page news, talking heads spoke of a less than trillion dollar bailout while "the fringe" was exclaiming loudly that $2 trillion was the real number and some even noted figures of $4 trillion were required.

Their point being that more derivatives were going to come due in the next 12 months and cause major havoc. Unfortunately, for us, that has come to pass and now the numbers more often cited by respectable, mainstream, talking heads is well north of $2 trillion.

If we face such ridiculous sums of money in order to get out of this problem, then the American taxpayer must own the businesses they are bailing out. It may take 10-20 years to recoup the investment but at least the money will not go to public companies that are acting far more like private companies with no level of accountability to their shareholders (the public) and we might see a return to saner levels of pay for these elite thieves that have wreaked so much havoc on the American economy.

Nationalization of some institutions will not see us moving toward a socialist society or anything remotely like that. Those claims are hysteria and must be viewed as the outliers that they are. We are in the midst of a staggering economic mess (one that has cost me my job) that will require the harshest of actions. Investors that are in these institutions are already wiped out. Getting your money back will require 10 years of sitting on those stocks if, and only if, those companies survive their self made mess. Nationalize now to help move these companies beyond this pyre and into some slow movement toward solvency.

Without drastic actions (mortgage term overhaul for homeowners, massive tax cuts for the middle class, a return to sane financial regulation, etc.) we will be in this mess for 10 or more years. Remember that Japan's housing market lost 66% of an individual house's value before bottoming out. How will the American middle class survive such drastic depreciation? Frankly, they won't and unless we do something dramatic, they face just such losses.

America has learned the lesson that we are not immune from stupidity and avarice on the part of a powerful few that can knock our economy to its knees. If we're stupid, we could go from our knees to our backs and that would easily put us into a deep economic depression. One that will rival the 30s and have a substantial impact on the global economy as America has been the customer to the world and, without us, the other economies will be just as sick.

I other words, a depression could easily spread to many other countries leading to a very bleak future for all of us. Don't dismiss that notion too quickly as some were noting that our countries "economic fundamentals are sound" during the last election and we all know how far off that proclamation was.

We are not in a "mental recession" but rather in a very real, but still manageable, recession that will require very tough choices and tougher actions. If we avoid making big moves now, we are destined to flounder and sink far deeper than we already have.

Where's the Outrage at the Banks?

No Sympathy has his facts skewed.

The rant is more RNC talking points but it conveniently fails to embrace the harsh reality of the report created by the Bush Administration's "President's Working Group on Financial Markets" in 2007, which clearly and decidedly puts the blame of the mortgage meltdown on greed over laws supposedly "forcing" lenders to give money to the unqualified.

Try to get beyond Newsmax and Fox before spewing more completely discounted "facts". Greed and horrifically bad government oversight allowed this to happen.

www.mcclatchydc.com/25...

Sincerely,
One Mad As Hell Former Reagan Republican

Made in USA Is Alive and Well

America may still "own" certain categories of manufacturing as noted by the author, but each industry is being chipped away at by LCC's (low cost countries) who are mastering all kinds of new skills in the supposedly safe industries.

After these countries have proven themselves capable, American corporations will simply move all of their manufacturing needs across borders leaving behind even those categories presently deemed safe. Boeing moving everything to Mexico? Bet on it.

But of course, the long term prognosis of any industry that outsources to another nation is that those that win the contracts to produce goods quickly learn the skills needed to become a manufacturer themselves, and usually for much less. American corporations become expensive dinosaurs when compared to new, sleek, and extremely cheap companies based in LCC's.

Each corporation that exploits foreign labor (Yes, first world economies exploit foreign workers, deal with it) is merely teaching them how to become the competition. Unfortunately, the learning curve of these countries has become flatter and flatter over time. Intellectual property will become fair game and loss of superiority over the competition will come down to a race to the bottom. Whoever has the cheapest price wins.

Good luck with that, America.

Living on $500K a Year?

The entitlements that these people (said with dripping disgust) are claiming are their right is something you would not believe if you read it in a fictional story. Their greed, combined with a staggering level of incompetency, has led us to the brink of a massive repression and most likely, a depression.

It will take a few companies to put their foot down and tell potential CEOs that their pay will be brought to earth before others follow suit. The trend toward astronomical pay will only end when corporate boards grow a spine and are reminded that they have a fiduciary duty to the shareholders, not to their buddy in the corner office who also sits on the board of their company.

Stock options must either end or be counted as an expense that comes right off the bottom line for each year they're awarded, not exercised. And the amount charged against the bottom line must be the market value of the share, not the grant price. If those shares were sold on the open market, then the company would enjoy the market value price not the artificially marked down price that CEOs get.

Stocks used to be a way to raise capital for investment in the company but now they're little more than a way to fleece the shareholders through dilution of share strength. Corporations are giving away the very instrument that is used to raise funds for expanding the business or reduction of debt.

We are now in a moment of staggering surrealism where the moneyed class can steal like Madoff and be held under house arrest while struggling Americans are facing immediate jail if they rob a bank to pay for food for their family. This is an injustice of historic proportions.

This crisis is not because of lethal financial instruments gone wrong, it is due to greed and avarice. Boards refused to be held accountable, CEOs felt legal obligations applied to others (See Hank Greenberg at AIG), investment bankers hoodwinked investors into buying CDOs that were riddled with unrecoverable loans, and average Americans spent so far beyond their means that this outcome was inevitable. It was an unsustainable curve destined for a huge blowout with extraordinary damage to average people.

The only comfort is that so many of the privileged class are getting a mouthful of what has been force fed to so many Americans for so long. This is a harsh wake up call to all levels of society. This one is going to hurt, and for much longer than we think.

Expect the first bottom in 3Q of 2009 with cyclical bull runs followed by additional bottoms for 2-4 more years. During this time, I can only hope that American consumers reduce their debt, save some money and start us down the long and painful road to recovery. There is no easy solution to what is happening. Just hard work and tough decisions.

Outlandish CEO Pay: How to Fix the Problem

Maybe this is too simple of a solution but it has its merits.

Only pay the CEO with profit that they actually helped generate. No stock options at all. No grants. No perks. No gross ups...

If you actually made a profit, then you get a share of that profit. Kind of how it works for everybody else in this world.

Sure, this could lead to window dressing and other sorts of problems but CEOs are more and more hesitant to overstate earnings for fear of straight up fraud allegations. Clawbacks would have to be in place in case of errors or lying.

No profit = smaller paychecks.

CEO pay coming off the bottom line would also generate far more interest from shareholders as they watch profit distributed to executives instead of themselves.

No more stock options. They're a crime waiting to happen. They're not incentives, they're theft from shareholders.

Sickness May Be the Cure for the U.S. Economy

Although this article makes a few good points, it has one very glaring error. Mortgage lenders were NOT pressured by the government to provide subprime loans to unqualified buyers.

President Bush's own President's Working Group on Financial Markets made it very clear that the position taken by this article is simply not true and has no basis in fact. The report was issued in last year and it debunks the oft repeated claim of pressure to supply loans to unqualified buyers is at the core of our problems. This stance is far more partisan than the author would be comfortable admitting to.

www.mcclatchydc.com/25...

"Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans."

The mortgage bubble is a large portion of our problem but it is not the only one. Bankers played fast and smooth with money that did not belong to them, made outrageous bets on the future that failed, homeowners saw their homes as ATMs, credit card companies provided billions in credit to people that could not afford it, the consumer continued to live far beyond their means and this contributed to a perfect storm of events that are currently unfolding before us.

There is plenty of blame to go around but this article relies on a premise that is not true and fails to examine the larger picture and to offer a realistic solution.

We are not headed toward socialism as this article asserts but rather taking uncertain steps toward an uncertain future. Do not forget that the current mess we are in was deeply worsened by a Republican controlled Congress and SEC. Their failures to assert control over the growing problems several years ago let a fire turn into a conflagration that is currently consuming us.

Nationalize the larger banks, mark-to-market their current assets and loans, take the enormous write downs NOW so we can move on. Once the new values of the assets are realized then the economy can begin to rebuild.

Executive Compensation: Don't Whine, You'll Still Be Rich

I couldn't agree more. The sense of entitlement these incompetent CEOs have assumed are staggering.

From gross ups to lifelong insurance and private jet service, the investing public has been paying dearly for poor management. The last decade or two of top tier management is now being revealed as chicanery of the highest order.

This is best exemplified by Jack Welch's claim of running GE so beautifully that he should receive hundreds of millions in compensation all the while he hid the damage being done by Swiss Re's underfunding-

www.smartmoney.com/inv.../

"During the last five years of the Welch era, ended in 2001, GE's reported earnings jumped from 72 cents a share to $1.37, a rise of 65 cents a share, or 90.2% — spectacular for a behemoth like GE. But without a massive under-reserving at its reinsurance unit, the company would have shown a cumulative earnings gain of just four cents, or 5.6%."

Of course, Jack has been uncharacteristically silent about the debacle he left behind and the reality of GE's earnings during his much ballyhooed last few years. In short, Welch did not deliver and his business acumen is nearly worthless. He sits upon a crumbling throne, a poster boy for all those thieving CEOs that followed in his wake.

Add into that mix the fact that Welch cheated on his wife with a much younger woman and the resulting divorce settlement is what began the revelations of his outrageous pay and the extraordinary level of perks he was receiving. Essentially, Jack was doing the same thing to his paramour (now his wife) as he was to the shareholders.

Corporate boards of public companies are responsible for stewarding the company effectively and in the best interest of the shareholders, not those inhabiting the ivory towers. It is time that boards are held liable for their decisions and face the music in a court of law. Maybe, just maybe, they then might change their tune and begin demanding realistic pay for their "hired hands" and a verifiable level of results. Enough is enough.

Stick a Fork in the Current Bear Market Rally

I'm no stock analysis wiz by any stretch but any equation regarding the bear or bull markets yet to come must include the variable of consumer spending in the mix.

Personal income will continue to decline for the foreseeable future as additional layoffs and uncertainty in the eyes of the American consumer will continue to drag sufficiently on the economy to keep it in a no growth or declining growth trend.

The slowing of the economy will lead to more pullback on consumer spending, driving the economy's slowdown in a vicious cycle of tightening wallets and company's canning more people. The cycle will not be broken any time soon.

Normal cycles of bear and bull runs may not be predictable due to the extreme nature of this meltdown. Although there are many similar aspects to previous downturns, this one is unique in its severity. It is worldwide and there are few dire predictions that should be discounted or thought impossible. Each week brings news of more financial foolishness that will only keep the most educated among us grasping at straws as they look for answers.

Stay in super safe mutual funds and bonds for now. Although the bond market is deemed as overheated by several pundits, it is a safer spot than most. Individual stocks are a game too dangerous to play for the next 1-3 years. Money can be made but the downside risks are huge. It is not worth making the move right now as there are plenty of shirts still to be lost in the coming months.

Stay safe, assume a bear market will dominate for the next 12-18 months and don't jump in too deep when testing the waters. There will be plenty of head fakes in the near term trying to get us to think that a bull market is coming back but don't buy it.

Until consumer incomes level off and layoffs abate, the economy will continue to be shaky. Rely on basic fundamentals of the economy to predict future market movement. Without a positive and confident consumer, there is no recovery.

Why Is Everyone Blaming the CEOs? It's the Government's Fault

My, my, my. One more Republican apologist finding the time to write this swill and expecting us to swallow it hook line and sinker.

Not only is the article rife with half truths and innuendo, it lacks substance and relies only on the old red meat tactics the public used to respond to.

Sorry folks, but you lost the the Congress and the Presidency because you failed to recognize that your "strategeries" were based on little more than empowering an entitled class of elites to "manage" the financial system while reminding the rest of us foolish, uneducated sods that we should be happy to accept the scraps off your tables.

Well, we all know where that got us.

So, for starters, let's address the claim that banks were forced to give out subprime loans to less than stellar recipients. This is a talking point memo subject and little more than that.

If you believe this assertion, then you'll have to disagree with President Bush's own Working Group on Financial Markets report delivered last October that makes it crystal clear that private sector loans were the root cause of the mortgage meltdown and not government mandated loans made by Fannie Mae or Freddie Mac to undeserving recipients.

Please note that the President's Working Group on Financial Markets was set in motion by executive order of President Reagan in 1988. It's clear that the group has roots in the modern conservative movement and cannot be impugned as some kind of creation made by liberals.

www.mcclatchydc.com/25...

"Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans."

So, who should we believe? Fox News or President Bush's own report on the mess?

Lest you think I'm specifically bashing the former POTUS, read on.

Anyone that thought we could sustain the rise in housing prices was a speculative fool. The mortgages being offered to undeserving recipients were literally, a fool's game of unsustainable Ponzi like scheming by mortgage companies, banks and Wall Street liars willing to screw over anybody they could.

Of course, within weeks of the home loan being made, the loaner had moved on, the loan had been bundled and sold to someone who believed the infallibility of the CDO they just bought and none who created the mess were liable for the meltdown. What a perfect storm of deceit, unethical behavior and perfectly stupid consumers willing to take on so much debt.

This is not a making of the Congress but what happens when we lack smart regulations and management. Blame Congress? Sure, why not. They could have done something about it but chose not to. The dirty little secret is that Congress was run by Republicans for the vast majority of the bubble build up and they had a chance to do something about it but chose to turn a blind eye.

The notion that banks were "forced" to accept TARP money and that they can't pay it back unless some kind of draconian expectations are met is ludicrous. BofA made huge blunders but I imagine that was caused by Democrats and liberals, correct? The author of this tired and repeatedly disproved mess of ramblings has failed to dig beyond Newsmax or Fox's biased "news reporting" to find anything does not fit a predetermined point of view.

Please link us to where it says banks were forced to accept TARP money.

Our predicament was caused by greed. Banks and Wall Street saw easy money in providing mortgages with absurdly bad terms and consumers lapped them up like cats at a bowl of warm milk. Housing prices skyrocketed when home sellers realized they could jack up the price of their house and the buyer could still get a loan for the new, and totally underserved, asking price. This is the same recipe that drives any bubble. Cheap money, fools for customers and very, very smart sellers.

As for Congress and their hearings being so tough on the bankers...

Please, spare us the excuses you've made for the heads of the banks that got their hind ends called up before Congress. These people are paid MILLIONS of dollars to run the company effectively and sustainably. They failed spectacularly on both account but still made larcenous sums of of personal income.

Americans have become immune to the paychecks of these cheats. $50 million is now seen as nothing special when it comes to paychecks but it is not just ridiculous, it has the makings of a revolution. The kind where the monied class once said "Let them eat cake" before the blade falls. However, the arrogance of these cheats is so complete that before the blade falls, they will utter the words, "They should have been grateful to us".

I'll take a Frank or any other politician willing to call these liars and overpaid thieves out for their misdeeds and ridiculous paychecks. Without them, all we have are "free marketers" claiming that the market will set itself right all the while we've been watching that exact thing happen for the last 10 years.

By the way, I self managed my 401K to a less than one percent drop last year so I have a small idea of what I'm talking about. However, I still managed to get laid off with 249 others this January due to this stellar economy's downward slide. Maybe I'm not so smart after all.

What a joke we've become and for good reason.

To the author of this story- Really? Is that ALL you could dig up? More tired arguments against liberals and Democrats? Really?? Come on, we need answers not more finger pointing at the other side of the aisle.

Talk about how we can get through this mess, not move backwards into political kvetching about the "other guys".

Has the Economic Crisis Wrought a Permanent Change in Consumers?

I'd like to think the American consumer will be permanently changed by this crisis but I don't believe they will be.

I am in the middle of this crisis and a victim of it, too, as I was laid off for the first time in my life and from a six figure job, to boot. However, I was smart enough to move my 401K funds around in late 2007 and rode 2008 with a less than 1% drop in my 401Ks value. I was both smart enough to do that but not smart enough to avoid being a target due to my relatively high salary.

My family and I came to a tough conclusion in September of 2006 about our debt load and we took significant steps to consolidate and reduce our debt via a second mortgage and tearing up all but one credit card. Have our spending habits permanently changed? Or is it a temporary blip on the road back to stupid spending? I don't know yet as we have gotten in trouble twice before this and dug ourselves out, only to repeat the sins.

I would only venture this much of a guess about the American consumer and their spending- Only one small group has learned a permanent lesson and that group is a bunch of middle aged men that weren't listening to common sense for the last twenty years and who put their own hind ends in a sling for a third car and a vacation home (I have neither and never have had either) and got themselves caught in a bad way.

I think these people (me, among them) are now permanently changed. We cannot afford to make the same mistakes and to be exposed to such horrific changes to the economy while we get caught looking. We will start saving and be sure we have enough to cover our bills for six months the next time our heartless companies decide we're suddenly "too expensive" and show us the door.

We are not most of the people but we represent a significant portion of spenders and our decision to cut back will be felt across the board.

The twenty somethings will barely remember this meltdown. Their peak earning years are 20 years away and in a much better time for the economy (I hope) so they will likely repeat the same mistakes I have made. The thirty somethings are going to smell the smoke but survive with some extra insight into their own mortality but likely to not change their spending habits.

In other words, most consumers will blindly buy the stuff they don't need once they feel comfortable in their jobs and finances. Permanent change is not ever going to happen to the American consumer, or any other consumer in the world for that matter. Once things get better, it will be like this never happened.

New York Times CEO: We Know What’s Wrong With Our Business. But We're Not Sure What to Do About It

Print is dead? That's been said for more than a decade with no real movement toward that realization. Ad dollars are migrating online only because it's so cheap for advertisers. Otherwise, it's a huge waste of money.

The internet's ability to deliver ad revenues is anemic and for good reason. Advertising online is a fully measurable endeavor and yet no venue for advertising online trumpets the click through rate because they're abysmal. Internet advertising is crap and will remain that way permanently because the method of delivery is so scattered that it is horribly ineffective.

It's efficient to push electrons? Of course it is. That is is unquestionable but the internet requires a computer, an ISP and a monthly fee. A printed piece only requires light to read it by and there will always be a place for that in this world.

The only industry that lost out on technological changes were the town criers who were replaced by print. Print did not lose out to radio and radio did not lose out to TV. Each claimed its own portion of the market and each will survive but with different proportions of the business.

The newspaper industry is in a tailspin ONLY because it decided to give the news away for FREE online. What kind of idiot decides to give their product away for free? The vast majority of the news is not gathered by the newspapers themselves but rather via news services who are not adequately monitoring how their news stories are being disseminated and reused across the web. This is a case of massive copyright infringement going unpunished.

If people want the news, then they should have to pay for it and once the yahoos who decided to give it away for free realize that their new model is killing them, they might find a foothold and stop their slide toward oblivion.

I get my news from all sources, like most of us do. I read the paper, magazines, troll the web, watch TV and listen to the radio. The web will not own it all when this is all said and done unless providers totally capitulate and keep giving their lifeblood away for nothing. Advertisers are free to put all of their ad dollars online but I guarantee you the results will kill their business.

How do I know this? Because I work for a large publisher with highly successful websites, print and TV outlets. The company HOPES to get to 10% of our revenue from the web at some point. Right now, we've sputtered out at a little more than 5%. That means 95% of our revenue continues to come from print and TV (a billion dollars in print revenue alone).

If you get your news or information from only one source (web, print, TV or radio) you are an outlier. Average people are connected to multiple media and no single one will dominate.

As the web matures, it's starting to look a whole lot like cable TV. We've gone from simple text, to some images and text, to more images and text to video to a whole lot of video and multiple outlets (channels) online. The web will just be one giant cable network before long and the newspapers will survive IF they change their ways.

What Hearst Hiring a New VP Digital Says About It - and Yahoo

In the past, I have worked for the same company as Mr. Cordray and he is one sharp guy. He's realistic and smart.

However, Hearst is bringing in someone that supposedly can monetize more content but this smacks of a realization that the digital world is probably always going to trail traditional media in ad revenues. This is a Hail Mary pass.

Neeraj Khemlani may be seen as some kind of magic bullet for Hearst but Hearst would be smarter to realize that the digital world only exists because of the content made for traditional media makes digital media cheap enough to push out to the consumer.

If digital media faced the production costs that traditional media faces, there would be no digital media of any kind. The revenues generated by digital delivery is a fraction of the cost needed to make the content and it would be bankrupt in a month if was not feeding off the teat of print and TV.

Neeraj Khemlani faces an uphill battle and I believe that Hearst will have one expensive employee wholly unable to deliver on their unrealistic demands.

Yahoo may be the core of this article but it is another symptom of how the digital world is failing to deliver.

Outside of Google, there are next to no sites that deliver a service (like search, for example) that make money. The home runs in the digital world obscure the fact that the vast majority of sites are making incremental changes to a company's bottom line while adding tons of headcount to their company's payroll.

The day of some companies reining in their web site costs may be sooner than we think. You may see some major sites being shut down as the additional revenue may be seen as inadequate, especially in light of the real costs of maintaining large sites becomes an issue. Digital delivery is no longer cheap and the upkeep is slowly becoming more and more difficult to keep low.

My former company added nearly a floor of people simply to keep their sites up and running but that many heads do not come close to generating the same revenue as a half floor of employees dedicated to my former company's core deliverable (print media).

Consumer Spending Outlook Is 'Grim'

Consumer spending is the most critical aspect of our economy's future. Since two thirds of our economy's power comes from the ability of consumers to spend or support the economy through other means, any recovery will begin with a confident consumer. For now, the confidence level will not return for the foreseeable future. Even a 12 month window looks bleak as layoffs and an unending supply of negative news continues to demoralize the American public.

Even anecdotal evidence is sufficient to determine the direction of consumer spending. Local news in most communities includes the folding of more and more companies across all industries, both large and small, which is is a direct outcome of tightened purse strings.

If corporations and businesses want to stem the staunch the flow of red ink, then they should quit firing their employees. For each employee that is let go, the economy has one less person capable of supporting businesses or paying taxes. Accept smaller margins, lower profits and survive for now and let go of the notion that you can grow though this downturn. Now is the time for keeping the lights on and making sure that Americans stay employed.