Rick Newman
-
How Toyota Gets Back on Track
Continue reading… 0 CommentsBy now, the irony is obvious: The automaker that trounced rivals with top-tier quality and reliability is embroiled in a series of massive recalls to fix problems other vehicles don't have. All told, Toyota has recalled about 4.5 million vehicles in the United States since last fall—and nearly twice that number worldwide—for at least three distinct problems involving gas pedals and braking systems. The recalls affect top models like the Camry, Corolla, RAV4, and Prius, and there's no guarantee that the worst is over.
[See 15 cars fueling the auto recovery.]
But there's plenty of room for Toyota to recover. Sales have tanked and its reputation has suffered, but Toyota remains filled with engineering and management talent. Plus, it's not broke the way General Motors and Chrysler were before declaring bankruptcy last year. And most of its customers still like their cars. "Toyota is in a very difficult position right now," says Jack Nerad of Kelley Blue Book, "but it also has a big bank of goodwill and an excellent reputation with American consumers." Regaining their trust, however, depends on what the company does next. Here's how Toyota can get its mojo back:
-
8 Sneaky Ways to Raise Taxes
Continue reading… 11 CommentsIf you're hoping that tax hikes on the rich will solve America's debt crisis, you're overestimating the power of the wealthy.
President Obama's budget proposal would raise taxes on upper-income earners by $969 billion over the next 10 years, yet the federal debt would continue to explode. To boost government revenues further, he'd raise an additional $122 billion from multinational firms, $90 billion from banks, $37 billion from oil companies, and $24 billion from hedge funds and private-equity firms. All told, that's nearly $1.2 trillion. And it would barely make a dent. We'd still have huge deficits, and the national debt would keep growing.
[See 21 things we're learning to live without.]
Taxing the rich will be one of the hot political stories this year. It will also divert attention from a much bigger story: Sooner or later, almost everybody in America is going to pay more in taxes. One reason is that spending on Social Security, Medicare, and Medicaid—which equals 56 percent of all federal outflows—continues to skyrocket, and cutting those programs, just as baby boomers begin to retire, would be politically perilous. Few politicians in Washington want to cut defense, which leaves little else on the chopping block.
-
Toyota Shows How Giants Stumble
Continue reading… 15 CommentsAt General Motors, they used to call their surging competitor "Mr. T," as if intimidated by a muscular rival who seemed able to seize market share at will. But Toyota suddenly looks pretty meek, thanks to a mystifying safety problem that has led to a huge recall, an unprecedented production shutdown, and an ugly dent in a once sterling reputation.
This corporate nightmare has mushroomed since last fall, when Toyota recalled about 4 million vehicles because of floor mats with a propensity to slip down into the driver's side foot well, potentially interfering with the pedals and causing sudden acceleration. Now Toyota has recalled an additional 2.3 million vehicles for a problem that sounds similar, but the company says it's different: faulty gas pedals that can stick if they become worn, causing—once again—sudden acceleration.
-
What an Obama Do-Over Would Look Like
Continue reading… 13 CommentsMany Barack Obama supporters felt a messiah had arrived when he assumed the presidency in 2009. But when it comes to predicting the future, Obama has proved he's a mere mortal.
A year ago, the unemployment rate was 7.7 percent, and mainstream forecasts predicted it might hit 9 percent or so before leveling off. The financial system, meanwhile, was a shambles, with banks barely lending. Stocks were still plummeting, huge companies like General Motors and Chrysler were on the brink of insolvency, and investors were worried that a full-blown depression might unfold.
-
Hey Bernanke: Just Apologize!
Continue reading… 4 CommentsIt worked for Bill Clinton, Mel Gibson, David Letterman and even dog-abuser Michael Vick. Millions of embattled husbands have done it, finding much relief. Even Tiger Woods is likely to do it sooner or later.
Just say you’re sorry.
-
Why Shopping May Never Be the Same Again
Continue reading… 19 CommentsHey, you. Yes, you—the one shoving your wallet back into your pocket. Are you aware that you've been making retailers very uncomfortable?
A façade of calm may be returning to the consumer landscape as a thrashing recession finally subsides. But behind the cheerful window displays are deeply worried retail executives who fear that shopping may never be the same again. Procter & Gamble, for instance, has begun a limited rollout of Tide Basic, a discounted version of its marquee laundry detergent. The move violates a core principle of traditional marketing: Never undercut your own products. But P&G fears it may lose customers altogether if it doesn't offer cheaper alternatives. That reflects a compression of the entire retail taxonomy, as upscale merchants like Saks and Nordstrom slash prices and offer cheaper goods, mainstream stores like Macy's and JCPenney lose customers to discounters, and millions of consumers seek used goods instead of new ones—or simply go without. The one unambiguous bright spot: dollar stores.
-
Why Class Warfare Will Dominate Obama's Presidency
Continue reading… 26 CommentsThere are always haves and have-nots in America, and the poor always envy the rich. That means there's an ambient level of class warfare, even when times are good.
The hostility intensifies when times are tough, which is obviously the case now. And we should probably get used to it, because Americans have good reason to get more angry, not less.
[See 21 things we're learning to live without.]
The outrage makes sense. Since World War II, living standards have mostly risen, with each generation better off than the one that came before. The rising tide has continually lifted the middle class, and a lot of people felt satisfied as long as they felt they were getting ahead.
-
Why It’s Good News When Obama Sinks the Market
Continue reading… 23 CommentsWhat a buzz kill. After a booming start in 2010, stocks have reversed course, thanks largely to President Obama’s draconian new plans for taxing and regulating banks.
We should be thrilled.
-
21 Things We're Learning to Live Without
Continue reading… 255 CommentsWhat do you really need?
It's become a national question. With jobs and money scarce, consumers are taking inventory and tossing lots of stuff once deemed important into a humongous discard pile. To safeguard the essentials—a safe home and supportive community, the kids' education, Internet connectivity, sustenance for a pet—Americans are giving up lots of other things. Some sacrifices are painful; others bring surprise benefits.
To gauge America's changing priorities, I synthesized market research, business trends, economic data, and reports from hundreds of consumers into a list of things that many people seem to be significantly cutting back on, or living without completely. Here are 21 of them:
-
New Rules for a Darwinian Economy
Continue reading… 8 CommentsScott Cohen spent 28 profitable years in the mortgage business, eventually starting his own firm just as the Southern California housing bubble was beginning to inflate in 2001. By 2007, the small company employed 15 people and provided enough income for Cohen, his wife, Merced, and their two kids to enjoy an affluent life in a tony Los Angeles suburb. But when the housing bubble burst, Cohen sold his business at a fire-sale price and watched in panic as the only industry he had ever worked in collapsed. His wife worked at the firm, too, and her job disappeared. As the family income plummeted, the Cohens traded in their two cars for cheaper ones, cut all the expenses they could, and ran up their credit cards. Finally, they had no choice but to sell their home for a loss. For the first time in 19 years, the former real estate executive became a renter.
Many of Cohen's former colleagues took jobs at banks or retail outlets, went into teaching, or just dropped out of sight. Cohen spent a few months researching new fields and decided to start a financial-services firm focusing on seniors needing help paying for assisted living. For 18 months, he built contacts at hospitals and nursing homes, took courses, studied state regulations, and prospected for clients. Income was scarce. Clients often got cold feet after weeks of meetings. During one low moment, the 50-year-old businessman started looking for a conventional sales job—hitting nothing but dead ends. Finally, his new firm, Senior Advisory Services, began to build a roster of clients and produce enough income to stabilize the family's finances. "For a while, my optimism was challenged," Cohen says. "But I think it was good for us. It shook us up and helped us go in a different direction."
