Transparency in Congress

Jim Cramer is the host of the hot (what to do with your money) show called "Mad Money" on CNBC. He has taken interest in the ever popular Sirius/XM merger that has been held up in Congress for over a year now. He is baffled at the attention this merger is getting. So baffled, he started to do his own investigating as to why this merger is being shot down in Congress. Click here for the article. Congress claims that the merger would violate anti-trust issues and would create a monopoly. How can satellite radio be a monopoly, when the competition (terrestrial radio) is free? This doesn't even take into account the other competitors... Ipods and CD's. I pay $12.95 a month for a subscription to SSR, but still listen to terrestrial radio.

Jim Cramer does not own stock in either of these companies. In fact, he doesn't own any stock... for obvious reasons. He sees what is going on in Congress and is name dropping. Cramer is a true financial hero. He mentions many Congressmen that have their pockets filled with terrestrial radios money. He then reveals how the average person can find this information out for themselves. Using sights like opensecrets.org and opencongress.org , one can find out all contributors to Congress, bills being introduced and who voted for what.

The transparency of our government is shining through. Cramer suggests that the only person being hurt by the merger of Sirius and XM Radio is Terrestrial Radio. But, how much will this actually hurt them? TR is free! Congress states that the merger will eventually lead to the rise of prices for the service. But, SR has to keep their prices down because the competitor is free. So this is a non-issue.

If Congress is so worried about rising prices, why did they let the two most profitable oil companies merge in the late 90's?... Exxon/Mobile ... If Congress cares so much about the consumer, why did they let the two most profitable Washer and Dryer Companies merge in 2006?... Maytag/Whirlpool. Does congress think that these mergers are creating monopolies?

Cramer claims that this attention being focused on Sirius and XM is deliberate and is for the sole reason to bleed these companies dry. The ultimate goal is to have these two companies fight the issue until one folds. Congress can no longer hide in these situations. There will always be situations like this in the future. 20 years ago, this would go unnoticed to the public. Not today. Our world is increasingly getting more and more transparent. I love it. Until next blog...

Prices will always be too high!

I was sitting around last night with one of my good buddies. We began chiming in on different types of businesses and how they become profitable. We came to the conclusion that industries have to raise their prices according to how many people have their hands on the profit. In other words, the more middle-men, the more the price increase. It's the old drug dealer phenomenom. Drugs are illegal, so they have to be secretly passed through many hands down the line. Each person ups the price and usually sacrifices the impurity of the product. The more hands touch the product, the more it costs: this is the idea behind all big business.

I began discussing how my former landscaping business would cut out the middle men in order to undercut other landscape companies with the bids on jobs. Most landscaping businesses, big or small, buy their materials (retaining wall block, pavers) from stores in which sell it. These stores buy the product from local distributors in which buy it from regional distributors in which buy it from the manufacturer of the material. You can see where the problem is. By the time the landscape company saw the product, it had been through 4 companies, all of which made a profit off the product.

What we did:
We called as many manufacturers as we could until we found one that would be willing to ship to us directly. This was not my idea. All the credit goes to my former business partner for having the money saving idea. This idea completely cut out 3 links in a chain that was too long anyway. We saved money, we were able to undercut other landscape companies, and the customer saved money. This worked out for everyone.

The bottom line:
We were able to buck the system. Not every business can do this. The problem lies when business becomes TOO BIG. The further the business is spread across the state, nation, or globe, the more middle men have their hands on the product. It has to be that way. Why would the huge billion dollar lighting product company want to deal directly with a customer that wants to order 500 lighting fixtures. They are used to dealing with distibutors in which buy 500,000 lighting fixtures. The more distributors, the more the product costs. When you see a box truck with a distribution company name on the side: just think "middleman".

How many middle men are in these industries?

-real estate
-automotive
-oil

I don't know the answer to this question, but I guarantee that the price of everything involved in theses industries have at least doubled because of middlemen that don't need to be there.
Just a thought!!!