BAE, EADS And Britain In The 21st Century


The proposed merger between BAE, the British defense conglomerate, and EADS, the multi-country European aerospace and defense giant is more than a merger of two companies.  It could quite literally help dictate whether Britain remains a proud, independent nation in the world or becomes ever more stuck in the quick sand that Europe and the EU have become.  You might ask yourself how could the merger of two companies could determine the fate of not only nations but perhaps even an entire continent?  The answer is simple, if BAE merges with EADS it will destroy what is left of the British owned industrial base in Britain.  Britain will still have a manufacturing sector within its borders but less and less of it will actually be owned by Britain.  Most of the major car manufacturers are owned by foreign companies, Jaguar by Tata, Mini by BMW, etc.  In fact the defense  industry in Britain led by BAE has been one of the few bright spots for British owned manufacturing in the country and the merger with EADS raises serious questions about whether or not there will be any major British owned industrial companies left if it goes through.  Ceding one of your last strong domestic manufacturing industries to the French is not sound policy.

This is because the merger will accomplish two things, first the company will no longer be British, second the new company will stand to lose access to the all important US defense market.  The fact that the company will no longer be headquartered in Britain might not sound like a big deal at first but then you play out a few scenarios in your head like how do companies achieve synergies when they merge.  Well first off they would eliminate redundancies within the new company.  So that means since BAE is the junior partner in this deal then you could expect much of the white-collar jobs in Britain will quickly be eliminated in order to achieve maximum cost savings.  Hundreds, probably thousands of top paying jobs all eliminated.  Second, the current British government has already done its best to destroy its own armed forces by enacting drastic cuts that happen to be one of the reasons BAE is even contemplating this.  Since they are already dismantling their defense industrial base right now does anybody in Britain really think they will have any incentive to carry out big defense projects like the proposed new British nuclear submarines.  One of the few current incentives about doing this is that it will help maintain the defense industry jobs but if the merger goes through will that still be the case since at least some if not a large amount of the work will be done outside Britain.  I think not.

Secondly, roughly 40% of BAE’s profits come from doing work in the gigantic US defense industry.  They are one of the few foreign companies allowed to do this.  Other companies like EADS do business with the pentagon but are not allowed access to advanced technologies to safe guard intellectual property.  This is not the case with BAE because they have special agreements with the US government allowing them to share in this defense work.  The reason for this is simple, they are British.  Because the obvious special relationship they get access that others like the French and Germans don’t and never will.  This alone should give both BAE and EADS pause about the merger.

Finally, if the deal goes through Britain will be drawn closer to Europe at a time when the Continent is in steep decline.  Losing access to the US market will force the new company to look even more to Europe for work.  This in turn will force the UK to get deeper involved with the EU at a time when many in the country want less to do with it.  And if your forced to look more towards Europe they will no longer be able to be that close to the US.  If I were British I would advocate less severe defense cuts both to maintain capabilities but also to maintain an important part of their economy.  I would also focus even more on joint work in the US defense industry because one, it is bigger and two, you don’t have to surrender more of your sovereignty to the failing EU.

Minefields await for EADS-BAE deal

http://www.rusi.org/analysis/commentary/ref:C50534A0EA81CF/

http://www.thisismoney.co.uk/money/markets/article-2202939/BAE-Systems-merger-EADS-faces-flak-sides.html

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The Problem For Republicans


 

As much as I may hate to admit it Obama, barring any unforseen calamity, will more than likely win a 2nd term this November.  I obviously don’t like that scenario but since I have long suspected that would be the outcome it is a little easier to accept.  What I find most disheartening about this election is how the GOP’s prospects for taking control of the senate have recently begun to fall apart.  With Maine Senator Oympia Snowe set to retire and Rep. Clay Akin’s collapse in the race for the Missouri Senate now held by Claire McCaskill the chances for a GOP takeover are on life support.  What a horrible outcome for not only republicans but really the country also because if this does happen then we are probably going to get even more of the same gridlock of government we have witnessed since 2010.  With the nation facing dire financial decisions beginning at the first of the new year the thought of having to endure even more of what we have already witnessed for the last two years can’t really appeal to either democrats or republicans.  The real question is can the nation afford another 2 years of gridlock, unfortunately I am sure the answer is no.

Doubtful forecast for GOP takeover

http://oxfordswfproject.com/2011/07/

Obama’s Economic Report Card


The Economist, a British magazine dealing with economics, has put out a report card for President Obama’s first term.  I would like to give my thoughts on each grade and would hope if anybody actually reads this that they could offer up their own report card for all the categories.

The Economist/Me

Crisis response          A-/C          I lowered the grade to a C because although the auto bailout was necessary in my opinion they should have done more to reign in the UAW because much of the reason the companies were no longer competitive was due to labor costs.

Stimulus                     B+/C-         I gave him a C-  here because it did not deliver anything near what the president had said it would.  Also so much of it was wasted on green energy pipe dreams that will never work without government funding.

Housing                      C+/C          An enormous problem that will take years more to work through to see the housing market fully recover.

Labour                        C+/F           I’m not sure what the guy writing this article was thinking but boosting college funding is not near a good enough reason to merit a passing grade when the nation is still at record high unemployment levels 4 years removed from the crisis.

Trade                           B-/B-         I left the grade unchanged because I do feel the Obama administration has tried to help American companies export more goods.  However, since the Obama administration has not fundamentally addressed the nation’s most critical economic failure, our trade policy, I could not give him an even higher grade as I originally wanted.

Industrial Policy        F/F            The Economist laid out the obvious reasons for the grade already.

Regulation                  D/F            To me there is no question this has been of the administration’s most glaring failures.  The fear that companies have of what Obamacare might mean in terms of new costly regulations is enough for most to give him an F here.

Debt            Incomplete/F            I thought hard here about giving the president a D because republicans have not been realistic about accepting at least some meagre tax hikes in exchange for entitlement reform, which will have to happen to solve the deficit problem.  Unfortunately I couldn’t do that because of the president’s record-breaking trillion-dollar plus deficits for each year he has been in office.  The bottom line is that the size of these yearly deficits and the accumulated debt overall has done more to endanger our country than anything in the history of this nation since World War II.

In the final analysis the Obama administration faced problems not seen since the Great Depression and should be graded with that in mind.  Some of the things that many conservatives blast him for the most were needed like the auto bailouts and the stimulus, even though they were poorly executed, because the country was ready to plunge into the abyss.  Unfortunately record high unemployment, out of control deficits, and the burden of Obamacare mean that this president does not deserve a passing grade in my opinion.

Barack Obama’s economic record: End-of-term report