Yes, when it comes to Elon Musk, the logical disconnect between fantasy and reality is a wide chasm. Yesterday, Tesla’s first quarter earnings report came out but instead of talking about his leadership, Musk was busy on Twitter offering the faithful a quieter leaf blower; oh, and it wasn’t even his idea.
Here’s the story:
Tesla CEO Elon Musk says his company is planning to develop a new creation — only this time, it won’t be rolling on four wheels.
Elon Musk changing the subject away from cars
Elon Musk blowing more smoke on the Internet as his stock goes to pot
But come to find out, the quitet leaf blower wasn’t Musk’s idea.
Actor Rainn Wilson of The Office has accused Tesla CEO Elon Musk of failing to give him proper credit for the idea for a quiet leaf blower.
Wilson, who portrayed Dwight Schrute on the NBC sitcom, demanded credit for the idea in a tweet to the Telsa CEO on Wednesday, after Musk announced his company would be making the product.
Meanwhile, the 90-Day Cycle was not kind to Tesla. Even with lowered expectations, Tesla missed the numbers that Wall Street was expecting. The stock closed today at $235.14
Tesla six month stock results
December 13th was the high mark in recent months with a close of $376.79. From December’s high to today’s close, the stock is off $141.65 per share. Looks like it’s time to cue the dumpster fire graphic.
Ford Motor Co. on Friday regained its status as the No. 2 U.S. car maker in market value, leaving Tesla Inc. behind after a massive earnings beat that stoked a rally for Ford stock.
Ford F, -0.19% shares were at their best since July and amassed the largest one-day gain in a decade, bringing the company’s market valuation to around $40.7 billion late Friday.
Tesla TSLA, +0.90% shares traded at their lowest since January 2017, still reeling from the wider-than-expected first-quarter loss the company reported earlier this week. That brought Tesla’s market capitalization to around $40.6 billion.
We have many fictions in our society that are not true but regarded as such. The parable of the Emperor’s New Clothes is sadly more the case than not. One such fiction in our society is private property and/or home ownership.
Folks you don’t really own your home or the land that it sits on; you have it by the king’s pleasure. Don’t believe me then try not paying your property taxes and see what happens. If you really own it then the government couldn’t take it away. Furthermore, if you really owned your land then you wouldn’t need a hunting or fishing license to take game off your own land but the king claims to own that too.
While today’s blog is not about the California Legislature’s plans to dismantle Prop 13 which will happen under Garvin Newsom or plans for statewide rent control, it applies to that too. No, today I am going to briefly blog about a line in an article at the heart of property ownership dispute in San Francisco. Enter the Flintstone House.
A rich lady in San Francisco bought a house in 2017 for 2.8 million and is being told she must undo the decorations on the property. Owner, Florence Fang, doesn’t live in the home but uses it for entertainment and charitable events. She decorated it with the theme of the 1960’s cartoon, The Flintstones.
If you recall, the Flintstones theme song is “Have a gay old time” but invoking that motto hasn’t been enough to avoid conflict in this suburb of Bagdad by the Bay.
City officials said that Fang was given three stop work notices, a code violation citation, and then a hearing in front of an administrative panel made up of neighbors before a lawsuit was ultimately filed in March over unpermitted garden installations. “If the lawsuit is successful, the judge will order her to remove the statues and the mushrooms and the Yabba Dabba Do sign,” Hudak told KTVU. “There are some other safety code violations that she needs to correct and the judge would order that as well.” But an attorney for the 84-year-old told the Associated Press that snobby officials are after Fang’s constitutional right to enjoy her yard. “Mrs. Fang has made people smile, she’s giving them joy. What’s not to love about Dino, who acts like a dog?” Angela Alioto, a former San Francisco supervisor, told the AP. “What is wrong with these people?” While inviting reporters on a tour of the home this week, Alioto told the San Mateo Daily Journal the home is Fang’s “happy place.”
Having the Alioto family in your corner is a plus in San Francisco but that is not what caught my eye in the article. If you read down to the bottom, you will see this gem from one Tim Iglesias, a professor at the University of San Francisco School of Law.
“If they let her get away, then all the other wealthy people in Hillsborough can say, ‘Hey, I can do whatever I want with my property.”
Hey Tim, if she owns it and it’s not structurally unsound or a fire hazard then leave her alone. You have enough other crap to take care of in your foul city. Perish the thought that your city might have something for tourists to enjoy besides of needles, crap, and wards of the welfare state on your sidewalks.
Just look at the photo, the grounds are immaculate and maintained better than any part of the city that the taxpayers own. Besides, it’s her property. If she really owns it, the city has no grounds (no pun intended) to tell her what to do.
The Chief takes another scalp in this real-life story of how a jerk reacted to not getting his fries piping hot at a local Red Robin Gourmet Burgers in Elk Grove.
The jerk was unhappy about not getting his fries piping hot as described above, so how does he react? Well like any other irrational prick would when complaining on the Internet; he fills out the online survey attached to his receipt and proceeds to light both the store and his waiter on fire. I guess it makes him feel better. After doing so he said he didn’t want a coupon…a first for him, didn’t want free food, also a first, and said he will never go back because the experience was so bad. Keep in mind he paid $10 for a burger, fries and coke, and left no tip.
For those unfamiliar with Red Robin, they are a sit-down place not a fast casual order at the counter place. Leaving no tip is the ultimate jerk move, especially when you ordered the loss leader and complained about your order not being adequate.
The only comments I’ll make on Red Robin is they never have a consistent experience. I have always loved their burger, but the fries run the gamut of being piping hot; lukewarm, and soggy; and being almost straight out of the freezer cold. However, since they are “bottomless” I just order another basket and move on.
Bottomless fries–your temperature may vary (a lot)
I have always found the food to be decent. If a complaint is warranted, it would be they don’t have a niche market and are trying too hard to be all things to all people. All you can eat fries draws a certain crowd, high priced entrees draw a different crowd, just like a dollar menu draws its own crowd. Pick a lane, decide what customer you want to attract and go from there. There is a reason if I go to a fast food place that I go inside to order and eat. I’ve gotten short changed at the drive thru too many times! I never once felt like lighting the store up.
This however wasn’t even the best part of the story. Literally a week later, he spoke about wanting to go back to the same Red Robin for the same deal! Hubris? Holy smokes man, the embers aren’t even out yet, and here you are wanting to go back? For what? A chance to light them up again? Little does the jerk know, he paid with a credit card so the transaction has time and date stamped, so the store knew what he ordered and who his waiter was. Suffice to say the waiter was likely “axed” the question a few days later and terminated for having a horrible complaint filed. Like I said now you’re going to return to the scene of your 1-star service experience?
At least Steve Martin is funny, but not this jerk
The jerk doesn’t get it, and likely never ever will. The jerk consumes more television in a week than William and I combined in a month. He knows very little about current events or history, but knows everything going on, on every reality TV show or soap opera…. all while claiming that he watches no TV mind you. He embodies the millennial generation in a nut shell. He lit both the business and his server on fire, and then believed he could just walk on in and all will be forgotten? Sorry dude, your credibility goes out the door with me. A complaint would be justified if a trip to Morton’s or Ruth’s Chris was subpar, but a local chain restaurant? I also believe the jerk lacks cognitive ability to reason. A rational human looks at the experience and says, well I have never been here before, didn’t know what to expect, came in the door for the cheap meal, and left saying I won’t be back…no negative review needed or necessary. Alternatively, a rational person who is a regular might say he is disappointed but is willing to reserve judgment until a future trip can confirm said slippage of service and product. However, this would require far too much from your reality TV aficionado.
It’s Red Robin not Ruth’s Chris
It takes a very special person to light-up a waiter who buy the way, is likely doing this while attending school trying to eke out a little spending money on the side. Your complaint likely got him terminated, and likely got the manager a call from corporate about poor customer service.
PS Truth is I visit Red Robin maybe 4 times annually, and I know what I am getting as a result, I ignore the noise and tune out poor experiences.
Kraft Heinz Co reported earnings February 21st and the results were well, not great, Sales were up, but they literally cooked the books as far as compliance goes, slashed the dividend, and wrote down the value of their products.
Before I break down that long sentence I’ll give a little background. Heinz was bought out by Warren Buffett and his Berkshire Hathaway Investment arm back in 2013 for 23 billion. He partnered with a Brazilian PE Firm 3G Capital and gave them a mandate to cut expenses. 3G obliged and what used to be a great place to work and make a living turned into hell on wheels at Heinz.
Gordon Ramsey–Hell on Wheels who unlike Buffett tried to help people
Manufacturing plants were closed, employees could no longer have free products or a mini-fridge at their workstation. To make a copy, employee’s had to ask permission from their supervisor; plus, they couldn’t print in color and were required to print double sided. Essentially employees were made to feel like they were back in school, under a ruthless teacher.
Cost cutting class is in session
Every expense was questioned and if unjustified, it was denied. Executives installed by Buffett and 3G used to scold employees saying there is no work/family balance, you should devote all your time to Heinz. Layoffs were plentiful and executives were never afraid to swing the axe. After about 2 years of doing this, and out of ideas they bought Kraft. Buffett & friends, combined the companies and well…lather, rinse, repeat the same process. The combined company now loaded with debt, was aggressively trying to dig its way out…then the problems occurred.
Kraft Heinz fell victim to a corporate profit mentality. They are run by people who have zero experience in the consumer packaged goods field and the results show it. Jim Cramer of CNBC said it best, “Look at these products they make. They are tired and old and not healthy for you. Don’t believe me, look at the ingredients, could win a lot of scrabble games with some of those words!”
Jim Cramer–Mad Money Man
In today’s health conscious society people are reaching for products that are “organic, no antibiotics ever, and even buying the farm to fork lie.” Sadly this company offers nothing as far as those choices go. That being said, the advertising and development budget was essentially cut to zero, so I guess it’s a race to see how many bottles of Heinz Ketchup one can sell each quarter?
This the editor’s go to combo for eating mac and cheese, lots of ketchup
Kraft Heinz also competes in way to many segments where competition is stiff. Just a couple examples: look at the salad dressing market, it’s basically a race to the bottom, look at the competition and there is no more pricing power. The point I’m making is the store brand is selling for $1, it’s very hard to sell your product for $3. While the brand may be worth something, once you taste the cheaper brand and you see there is not much quality difference it’s not hard to make a switch. As a result Kraft Heinz was forced to lower their price to $1, and the margin on products sold for a dollar cannot be very high, likely you see a couple pennies in profit. The company has lost its way.
On to the disaster quarter. They cut the dividend 40%! Keep in mind, while people like Buffett get rich off this money, many retirees depend on it to subsidize their lifestyle. In addition Kraft Heinz was viewed as a stable company, not flashy, but stable in a sense they weren’t going broke like Sears. Also, heck everyone has at least 1 Kraft or Heinz product in their house. Kraft Heinz also wrote down the value of Oscar Meyer and Kraft by 15 billion, essentially saying the brands they paid for aren’t worth near what they thought they were. So in essence they loaded a company with unsustainable debt and now the brands aren’t even worth much anymore. Even more concerning was the report that they are being investigated by the SEC for accounting irregularities. I will say one thing, I don’t want the SEC investigating me for anything because they are not just a regulator agency; they can literally bring your company to their knees. To add insult to injury, the NASDAQ stock exchange has filed a report that the company is not in compliance with their rules after failing to file a 10-K report at the end of the calendar year. Ouch. Employee morale no longer exists, as evidenced by a 20 percent employee turnover rate annually. Also they have explored the idea of selling brands to try to pay down debt.
How to fix the company
If I were in charge, I would ask Buffett to buy the company outright. I would urge him to take us private and then we could work on the accounting and legal issues without being under intense scrutiny. There would be no dividend being paid out so that money could be put toward debt extinguishment. I would ramp up innovation and advertising dollars because it has become clear the brand power is no longer selling itself. Kraft Heinz has exactly two new products they have launched in the past decade, both were successes; Devour frozen food, and Just Crack an Egg by Ore Ida. This shows the company still has it when it comes to innovation. I would raise employee pay and while this may take a short term hit on profitability, I want employees productive and not looking to jump to a competitor. 20% employee turnover is something only a jerk would be proud of. Also there would be a moratorium on closing plants. Employees are the life blood of the company. I would create an incentive plan to bonus all workers based on production and quarterly sales goals.
As far as selling products for a dollar, that is gone. Advertising should be poured in to make our products worthy of customers trading up for value as opposed to buying it for a dollar because it’s on sale. When it comes to Oscar Meyer meats chock full of bad ingredients, the damage is done, I would create a different brand, with clean, simple ingredients and market it and price it as such. Regarding the current product mix, I would eliminate/sell several. Look at the barbecue sauce aisle alone; Kraft BBQ, Bull’s Eye, Heinz BBQ, and Jack Daniels line are all sold by the same company! In essence you are competing with yourself! Holy smokes, even the most uneducated will tell you they will reach for the cheapest one. Look at this example. Say the Chief kills a wild boar and brings it to Williams for a BBQ. William won’t care what kind of sauce I brought unless it’s a horrible tasting or very obscure one. Eliminating brands will go a long way to simplification and increase profitability. Paying down the debt and increasing employee morale, rather than looking for the next acquisition will go a long way toward getting back to prosperity.
Taxes were cut under the Trump plan. However, because of how it was done, some folks out there are pushing the lie that Trump actually raised taxes on everyone but the rich.
Here is yet another example, this time from Reuters.
NEW YORK (Reuters) – Only one in five U.S. taxpayers expect to pay less income tax this year as a result of the tax reform law passed in 2017 by Republicans who promised big savings for everyday Americans, according to a Reuters/Ipsos opinion poll released on Friday.
The tax overhaul lowered federal income tax rates for individuals as well as for corporations, but it also capped certain deductions, such as for state and local taxes, which could mean that some people will wind up paying more. The March 6-11 survey found about 21 percent of adults who had either filed their taxes or planned to said “the new tax plan that Congress recently passed” would let them pay less this year; about 29 percent said they would pay more; 27 percent said there would be no impact; 24 percent said they were not sure.
Did you note the deception that is the premise of this article? It’s subtle. The verbal sleight of hand is this, the only federal taxes you pay or don’t pay are solely determined on whether or not you get a tax refund on April 15th. If you get a refund then the tax cut is good for you but if you write a check then you are paying more taxes and thus you are getting screwed once again by the Republicans. This article totally ignores whether you got to keep more of your money each month last year (once the new tax withholding tables were enacted) or on the whole paid less than the previous year. To reduce the value of the tax cut down to whether you get a refund on April 15th is deception and ignorance. This is economic illiteracy.
This ladies and gentlemen will be one of the Democrat’s chief arguments against Trump in 2020. Not whether on the whole you got to keep more of your money and really did pay less but instead whether your refund was larger after the tax cut. Talk about economic illiteracy and low information voters…
Once upon a time, many in the West were fond of quoting the proverb, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” A biblical admonition also comes to mind “without a vision, the people perish.” Both proverbs contrast the idea of a life with immediate gratification versus long term goals.
Likewise, once upon a time, American companies spent a considerable amount of money in research and development. These businesses thought in terms of years into the future and what they could contribute to the betterment of their fellow man and make a profit by providing goods and services that made our lives better.
Sadly this is no longer the case. Modern corporations are only concerned with hitting their numbers for the next quarterly report. Should they miss the estimates of Wall Street there is financial hell to pay. No company has any real investment in or vision of the future. Business is only concerned with immediate cash flow.
I like technology but I get frustrated by the number of projects that get prototyped and cancelled because the idea can’t be monetized in the next quarter or two. Anything beyond that window of time is deemed risky and not viable for investment.
Here’s a few examples:
Microsoft Microsoft has been toying with foldable phones and tablets for at least five years but every project they attempted has been cancelled. All they have to show for their efforts is a large portfolio of patents. Microsoft is playing the 90-day game and anything that might be on a longer time horizon is likely to get cut as a risky investment.
Apple Apple under Steve Jobs wasn’t an innovator in hardware. Jobs took existing stuff, tweaked it and found ways of marketing it to the masses. In a sense, he sold “the sizzle”. Jobs could look at an idea and see a future benefit worth investing in and bring it to fruition. Under Tim Cook, Apple is playing the 90-day game like everyone else. Apple has ceased being a leader in technology, they can’t risk being wrong about the next big thing.
Google Google too is cutting long term R & D.
Google admits that its hardware business is not profitable enough to accommodate a large number of employees and therefore has decided to trim the fat. Google told dozens of employees working on its hardware division to find new jobs.
An internal source close to Business Insider told that Google is currently going through “roadmap cutbacks” and hence the decision. This will have a massive impact on Google’s hardware business as BI reports that projects on which the company was actively working on are now cancelled.
It’s more like the search giant wants to put a full stop to its long-term projects that were in development.
Everywhere you turn, it’s the same story. Long term projects are toxic in today’s business environment and nobody wants to spend on them. Instead, there is constant pressure to cut, trim, and reduce both employees and products. This is not just free market forces at work, something else is afoot.
But why?
Two big reasons come to mind.
First, Wall Street is the only place that most people can put their money and get a return on their investment. Wall Street is geared around getting an immediate return on dividends each quarter. The measure of a company is cash flow to investors. The way to attract and maintain investors is via immediate return. The so called “Blue Chip Stocks” don’t really exist anymore. The Wall Street logic is this: no return, no investors, then no company.
Second is the high burden of government. Companies must take baby steps to keep from getting crushed by all the rules and regulations that they are required to follow. This makes them risk averse. Making a profit is no longer enough motivation to pursue a project. If the return is not immediate and drastic, the project will never see the light of day. This stifles innovation. In a sense, corporations are trading security for freedom.
This 90-day cycle mentality is destructive to the market but in order for businesses to survive, they are forced into this attitude. People instinctively know this is true but often don’t perceive why.
Elon Musk seems to transcend this lethargy of innovation that people sense in the marketplace. The attraction of Musk is that he is unencumbered by the baggage that besets others. He talks of what should be and rejects the status quo. The problem is that Musk’s business model can’t succeed on an even playing field, he needs the heavy hand of government to intervene on his behalf with taxpayer money in the form of investments from public retirement funds, tax breaks, and rebates to consumers. However, government can’t really pick winners and losers in the market, when it tries it fails. Socialism always loses at the point where promises far surpass declining resources and productivity.
The 90-day cycle is an interesting phenomenon to watch but only in the same way that people will invariably slow down to stare at a traffic accident. It is an aberration to the normal way of markets and finance. The problem is that the longer this continues, the less that people remember or perceive the deviance from the ideal of what the market should be.
In our current environment, both business owners and consumers have lowered expectations of market capability. The farther from free markets that we get the better that the lie of socialism looks.
The business cycle has been reduced to the minimal form necessary for survival. The 90-day cycle is the sum total of management concern. Thought of the future is hard to envision when you don’t know if you’ll be here tomorrow. First world companies with third world values are a harbinger of bad tidings for all of us.
Wow, do we have a great one this week, coming live from Safeway in Elk Grove on a Thursday at noon.
While traversing the aisles of said grocery store, I was grabbed by an older lady, around 70. On occasion the thought of being grabbed by an older woman may have its appeal but this was no such encounter. This gal looked at me and said, “You look smart. I need to axe you a question.” I said, “Your first strike is assuming I’m smart but go ahead, just don’t axe me.” She looked at the pharmacist and said, “He looks smart right?” The pharmacist nodded in approval. The lady said to me, “Can you believe the shots for the flu are not free here?” My response was, “Well, this is a business so I wouldn’t expect them to give something away for free.” She looked at me in total disbelief. I added, “Corporations are in the business of making money and I’m not quite sure why she thought it should be provided at no cost to her.” She looked like her mind was in a total pretzel, so I said to her, “Well by no means should I be considered a census of the store. Feel free to poll other shoppers here. Take care and good luck with your free-for-all.” Her last remark was she is going to Kaiser because they give out shots for free.
Holy smokes! There is a lot to unpack here but to keep it simple, this lady should probably not be upright, let alone free to terrorize our shopping centers! It reminds me of a store concept that went out of business by Panera called “Pay What You Think its Worth.” Yes, that same Panera, the group thinkers, thought, well people would pay more to subsidize the people who didn’t want to pay at all, and viola…wrong.
Panera Bread is closing up its last pay-what-you-can cafe in Boston, admitting that the experiment aimed to combat hunger was “no longer viable.”
This lady, I mean, what the hell? Why would you get a shot for free? …Safeway doesn’t even advertise that. By the way this lady didn’t have a cart or basket so obviously she came for the free stuff only. This lady wants people to give, give, give, and she has zero intention of opening her purse! Say what you want about evil corporations, greed, and the like, but Safeway, through parent company Albertson’s employs thousands of people and is a source of their livelihood. Why would they just give things away, no strings attached? Sorry Robert Kraft, before you get too excited, the items with no strings attached here are groceries and shots.
People are completely unreal these days. The sad thing is, here in California, she likely found quite a few people to agree with her that it should be free. This type of thinking from her generation (Baby Boomers) has destroyed what is left of America. First they bankrupted Social Security and put Medicare on a very unsustainable tilt. Now they think everything should be free, but I’m sure the string attached is raising taxes on the working folks (err, the rich)…because they can afford it.
To people like this lady, corporations are evil, and should be driven out of business. Her ilk pay no attention to the number of people employed by said Evil Corporations. This person thinks Kaiser gives out shots for free; mind you….I guess she never became aware of Medicare or health insurance or well, just common sense? Sadly, the latter is in short supply these days.
Now her generation and their likeminded offspring want Medicare for all.
Free stuff for everyone. Isn’t that what our country is, “the land of the free?” The hidden secret is they want everyone paying in to keep the Ponzi going till after they expire then who cares. Perfect example, I pay $420 a month for healthcare. Imagine if the federal/state government got that action every month instead of Anthem Blue Cross?
Enough facts and logic, I would hate to confuse the naïve any further. Hopefully this lady didn’t have time to put out the bat signal in reference to the free shots because I guarantee you that 90-Day Guy and his ilk would have broken every land-speed record to get to their local Safeway.
Facing a cash payment of over $900,000,000 that is due and payable today (March 1st), yesterday Elon Musk took to Twitter and announced that Tesla was reshuffling the deck chairs. Tesla announced that they were eliminating their brick and mortar showrooms and opting for an online only purchasing option. Buy now and take delivery in June, (he hopes).
Tesla also announced that it is shifting sales worldwide to online only to “achieve these prices while remaining financially sustainable.” “Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected,” the company said in a statement. “Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers,” the statement continued. “The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla.”
Somehow this attempted misdirection was supposed to make Wall Street forgot that a huge chunk of their cash reserves evaporated today.
Tesla Inc. (TSLA – Get Report) shares traded sharply lower Friday after founder and CEO Elon Musk said a move to offer a cut-down version of its flagship Model 3 sedan will likely result in a first quarter loss, only weeks after telling investors he would turn the clean energy carmaker into the black.
“Given that there was just a lot happening in Q1, and we’re taking a lot of one-time charges and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1,” Musk told journalists on a conference call late Thursday. “But we do think that profitability in Q2 is likely.” That view was reiterated in a Securities and Exchange Commission filing Friday.
After my last post on February 6th, I was given a lot of grief about being pessimistic on Tesla but three weeks later their shares went from an opening of $316.50 on 02/06/2019 to a close today 03/01/2019 of $294.79.
Tesla week of 02-25-19
Please note the share price yesterday on the graphic as opposed to today’s close.
Elon is also being accused of violating securities laws because of his behavior yesterday.
William, the Blog Father, and I met for lunch a couple years ago and both us had our “tin foil hats on” according to the cheerleaders of this disaster of an economy. A ton of issues were discussed but one item I brought up could reign supreme very soon, the topic of the car loan market. More specifically I spoke about the fact that the market was being flooded with subprime auto loans (not standard loans, think the No Income, No Job, No Assets, No Problem loans for homeowners during the meltdown a decade ago).
For a time, my prediction seemed baseless and unsubstantiated. There was nary a word from any media at all, until Wednesday, when CNBC had an article about it. As predicted at our lunch many years ago, its jaw dropping folks. William runs this site and perfection is not asked for, it’s demanded. We stand behind our predictions, and in this case I wish I was issuing a retraction. Here are some brutal highlights from the article:
7 million American borrowers are at least 90 days behind on their car loan
1 million more than 2010, when we went through the credit crisis
Total auto loan debt has increased by 584 billion, the highest levels ever recorded by the FED
When I digest these numbers, even I myself, the “Nostradamus” of this crisis, am somewhat dumbfounded….aren’t we told that we are in a period of major economic growth and expansion? I am told the stock market is making new highs almost weekly; wage growth should be keeping up as well right? Problem is while most of the above is true, the results say otherwise. We have had economic growth, largely due to low interest rates; this carries over to the stock market increasing to all-time highs. What I am saying is you cannot earn a decent return in a savings account so as a result you invest the money, driving the market up. Corporations, can make loans on the cheap through a bank to finance a large acquisition, like Kuerig buying Dr. Pepper Snapple, or Pinnacle Foods being bought by Conagra. I cannot blame these corporations just like the ones who borrowed money just to juice earnings returns, but back to the car aspect of this blog.
During the last 9 years, banks were able to borrow money from the Federal Reserve Bank for 0% interest. Subsequently, they lent it out at far higher rates of return depending on your credit or FICO score. To sum this up, the bank is taking zero risk, and you the borrower are at their mercy.
So how does this pertain to the above article? Well you walk onto a car lot or dealership because you need a means to get to work. Just like that, you are circled by the vultures posing as car salesman. I say posing because they don’t care about you, they see you as a sale not a person. Don’t believe me then go see for yourself. These dealers will literally hire anyone. Still don’t believe me, these people make money only when they sell, not so much when they are standing around, so when they find a live warm body, you’re dinner! You’re literally their meal ticket because they are on commission and without selling to someone like you, they don’t eat.
Since you need a ride to get to work, they don’t want you to see the affordable compact commuter car. Oh, you have a family then you need that SUV, or crossover, or full size car….think about going to the beach, or snow, or grandma’s house then get our all-wheel drive car over there! You test drive several, and you make a decision. You decided to buy a little more car than you needed but it’s ok because it will pay off in the long run. The sales guy made you feel like a million bucks, sadly, you don’t have said millions so you finance the purchase.
The finance guy (known as “The Closer”) sets up a payment plan…0% APR right? Isn’t that what the ad said? Well not in your case but we can probably do it for 15%. Then he runs your credit. You can’t make the payment over 48 months, so….let’s make it 72 months, and maybe it becomes 29%, but you need to get to work and the payment works so you sign. Congratulations Chief, you are now the proud owner of a new car or used car. It’s a ton of payments but we know you can afford $475 a month. Read the last part again. You got taken but you don’t realize it yet. You whip out the credit card for the down payment, you need the car now but it won’t be ready until tomorrow.
Excitedly, off you go in your new vehicle. Typically you get 45 to 60 days before the first payment is due. The first couple payments are a bit of a struggle but you make them. Eventually a life event happens or other bills just increase as they always do. (Seen what rental prices are doing lately?) All of a sudden a couple years into the loan, you realize you bit off too much but too bad. The car sales guy, he may or may not work there anymore, the finance person, ditto however both got paid up front. Keep in mind there is no fiduciary duty law in this business.
Paul Blanco Auto–got a pulse, get a car
A local car dealership (Paul Blanco) literally runs ads saying we will get you in a car even with bad or no credit…and hence we have this auto loan issue. Frantically you call seeking to work out a payment plan…sorry the car is worth less than you owe, no refinance options exist Chief. Surely your credit union/bank can do something for you, you have been with them for years…negative Ghost Rider. Sadly your car is worth more repossessed even if you keep making payments on it. Surely this is usury or something, there has to be a way out…sorry, no one can help you. By the way, your car will be repo-ed and they will sell it again to another sucker, lather, rinse, repeat.
“Whatcha gonna do when they come for you”
If you pursue legal action, you have no leg to stand on since you signed the papers. You also will find out the law firm hired by the finance company is Dewey, Skrewem, and Howe…while the in-house finance company hires law firm Howie, Keepum, Kurent. You were took, and are now on the hook, just another statistic in the actuary’s book. The sad cold hard reality is you need a car to get to work, you bought too much car, and got saddled with a high rate loan on a vehicle whose value depreciated tremendously upon leaving the lot. We never learned our lesson from 2008, and we are going to repeat it yet again, in a way that is going to be cataclysmic to the economy and credit markets. As pointed out earlier on this website, you won’t be getting that large tax refund to bring your payments current.
In this case I do wish I was wrong, however I was Really Right.
Recently, I found myself at a chain restaurant called Firehouse Subs. I have visited this location twice, both unannounced. Here is my full report and experience.
The Firehouse Subs location that I visited was on Truxel Road in north Sacramento County. Upon walking in, a crew leader or watchperson calls out “12, 10…3..2..1”…..and every employee yells “Welcome to Firehouse.” This greeting is a copycat of Moe’s Southwest Restaurant. Frankly it is too much; especially since it’s called out each time someone walks in. When you dine at a chain restaurant and this kind of racket is breaking out every few minutes or someone is having a birthday and the siren goes off every ten minutes, its overkill. Stop copying the concept…. find something new.
Once you enter the place, you’ll notice that the décor is awesome. It’s all firehouse and emergency service: photos and gear like hoses and ladders. It looks like a firehouse!
Also donning the walls were copies of checks donated to the local firefighters and county sheriff departments; really nice touch. The employees were all gracious and dressed in shirts giving credit to their favorite sub…. pretty cool if you ask me. For the ambiance, décor etc. solid 4/5, just change the welcome to firehouse thing.
The menu board is semi-intimidating because some of the sandwiches have a firehouse/exotic name. Just to name a couple: Hook & Ladder, Engineer, and Firehouse Hero. Other subs have a standard/traditional name like turkey, bacon ranch, or meatball. The sub’s veggies can all be modified; you can even add/subtract things for no additional charge, unlike Togo’s or Subway where there is a fee.
All subs are served hot on toasted bread and warmed meat via a steamer but can also be ordered cold. The subs come in small 4”, medium 6”, and large 8” size, I ordered the medium both times and was satisfied. On my first visit, I ordered the Hook and Ladder which is turkey, ham, and Monterey jack cheese, which I was told comes “fully involved” meaning I get a pickle on the side in addition to my sandwich…nice touch.
You order, swipe, and take a seat, and your food is brought out to you in a neat little firehouse basket.
I devoured my sandwich, it never stood a chance. The sandwich was perfectly cooked, and the perfect temperature…..again, it never stood a chance. I found the warm bun and meat paired with cool veggies and mayo was right on point. The other visit I ordered the Firehouse Cajun Chicken which was cut chicken, cooked with Cajun spices, on a sub with hot peppers, onions and homemade Cajun mustard…..WOW, I loved it!!!!! 5/5 no question asked. Firehouse also offers soups, chili, chips, and soda, like most other sandwich places, I have yet to try the signature chili. There is also a hot sauce bar with roughly 30 hot sauce bottles all ranked 1-10, great touch. I tried several, came away impressed!
As far as price goes, the medium size subs are $8.99 which after tax puts you right around $10 which is the sweet spot for lunch. The price is a little more than a cheap Subway but less than a Togo’s and the flavor makes it very worthwhile. They offer a daily special like every other chain, have a rewards club, and have seasonal specials like the Cajun chicken sub for $5.55. 5/5 on price, very affordable and great value.
Overall solid 14/15
Bloggers note: On the 2nd trip to Firehouse, the regional manager from corporate was there, and I have to say it was a fairly awkward visit with him there. It was too bad really. I get it it’s a franchised operation and quality assurance must be made; however, this guy looked like Chuck “The Shermanator” Sherman from American Pie.
It was awkward. He did the strangest stuff during the lunch rush like pulling the ice dispenser in front the soda machine, taking photos and storing it on his iPad, or grabbing and squeezing every bag of chips…really weird. Firehouse needs to clean this up…. other than that, I love the place.
