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Realogy, Tribune and the Big Three – Bailout Nation

The Tribune is a massive company with legacy costs, systems and infrastructure that is struggling to sustain itself in the face of a severe economic downturn as well as competition that is more nimble, agile and able to withstand the recession (so far). The Big Three are massive companies with legacy costs, systems and infrastructure that are struggling to sustain themselves in the face of a severe economic downturn as well as competition that is more nimble, agile and able to withstand the recession (so far) – but they (excepting Ford) are failing, and failing fast.



Entrepreneurs are risk takers, willing to roll the dice with their money or reputation on the line in support of an idea or enterprise. They willingly assume responsibility for the success or failure of a venture and are answerable for all its facets.” -Victor Kiam

Failure isn’t an option

We are an entrepreneurial country, and our shared profession is one of the most entrepreneurial sectors in this country. Yet we’re being taught on an almost daily basis that failure is not an option.

Who’s next to be bailed out?

How about “none of the above“?

Without failure, how does one define success?

Take for example this from a recent WSJ letter to the editor

GM CEO Rick Wagoner should heed Frank Borman, the president of Eastern Airlines before it went bankrupt, who stated: “Capitalism without bankruptcy is like Christianity without Hell.”

Note that when Eastern Airlines went down, the world did not end. People still fly and airplanes are still produced.

Must we be allowed to fail?

Is this a scorched philosophy? No, it’s a recognition that we must be allowed to fail.

Realogy is a massive company with legacy costs, systems and infrastructure that is struggling to sustain itself in the face of a severe economic downturn as well as competition that is more nimble, agile and able to withstand the recession (so far).

The Tribune is a massive company with legacy costs, systems and infrastructure that is struggling to sustain itself in the face of a severe economic downturn as well as competition that is more nimble, agile and able to withstand the recession (so far).

The Big Three are massive companies with legacy costs, systems and infrastructure that are struggling to sustain themselves in the face of a severe economic downturn as well as competition that is more nimble, agile and able to withstand the recession (so far) – but they (excepting Ford) are failing, and failing fast. (Update: read the first line of this story)

Take the argument down a level or a thousand –

If I fail – I can’t sell homes because buyers aren’t buying – am I deserving of a bailout? No. If “forces outside of my control” have forced me out of business, am I too big to fail? My family sure thinks so, but I don’t expect the government to prop me up whilst I keep trying the same old things or cobble together a half-baked plan to change my business strategies.

We need to rediscover our desire to succeed – and fail

The greatest danger in the current economic crisis is that the United States will lose its historic appetite for risk. The mood now is that risk-taking got us into this mess. Risk, though, is the quintessential American trait that built the nation — from the Battle of Bunker Hill to the rise of the microchip. If we let risk give way to a new ethos of commercial reserve and regulatory restriction, the upward arc of the U.S. ascendancy will flatten. Maybe it already has.

The current crisis is the result of a world gone madly long on real estate. Daniel Boone, the famed American frontiersman, went belly-up speculating on Kentucky land. He moved on in 1788 and paid his debts. So should we, without losing sight of the American frontier, where we discovered the rewards of risk.

A culture of dependency propagated by the government is not a recipe for success.


Dad, Husband, Charlottesville Realtor, real estate Blogger, occasional speaker - Inman Connects, NAR Conferences - based in Charlottesville, Virginia. A native Virginian, I graduated from VMI in 1998, am a third generation Realtor (since 2001) and have been "publishing" as a real estate blogger since January 2005. I've chosen to get involved in Realtor Associations on the local, state & national levels, having served on the NAR's RPR & MLS groups. Find me in Charlottesville, Crozet and Twitter.

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  1. Michael Rahmn

    December 9, 2008 at 6:45 pm


    I would add that Realogy, the Tribune and one of the big 3 (Chrysler) are the products of recent *highly* leveraged buyouts by private equity firms.

    These were speculative, debt-laden bets. That they are now finding it difficult to service their debt in a deflationary economy does not justify a bail-out. They need to be allowed to recapitalize the old fashioned way.

  2. Bob

    December 9, 2008 at 8:21 pm

    “Qu’ils mangent de la brioche”

  3. Matthew Rathbun

    December 10, 2008 at 9:04 am

    I know this sounds petty, but look at the basics of what children are being taught… When kids were failing, we turned to the SOL or no child left behind. So now we have started applying that same mentality to business…

    I simply can’t believe that we can learn if we don’t fail at some level. Most of the most successful individuals I know or have studied only succeeded after the need to restructure and learn from their mistakes existed.

  4. Danilo Bogdanovic

    December 10, 2008 at 9:50 am

    Goes back to the old saying, “No pain, no gain”. Nothing comes easy in life and the biggest potential of huge pay offs comes with the biggest risks.

    At the same time though, it seems that many companies and individuals forgot to actually look at the risks involved. And they thought the “pouring rain” of money would never stop falling. That’s just bad business and greed.

  5. Mark Storolis

    December 10, 2008 at 9:59 am

    Well Jim, it looks like you have missed the boat on this idea. The goal of the bailout is to save jobs – over 3 million of them. I want to see a millionaire CEO get an egg in his face. I want to see reckless money lending result in firings. But punishment based on capitalistic grounds creates enormous collateral damage at this magnitude.

    Self-employed entrepreneurs do not deserve bailouts because there is minimal collateral damage – 1 family starves. Uneducated and blue-collar workers do deserve bailouts because the Big Three are our nations largest employers – 3 million families starve.

  6. Jim Duncan

    December 10, 2008 at 10:55 am

    Mark –

    Thanks for dissenting.

    Self-employed entrepreneurs do not deserve bailouts because there is minimal collateral damage – 1 family starves

    Sure we do. Just like everyone else, no?

    But now there are likely hundreds of thousands of entrepreneurs (agents) who are suffering; they’re likely finding new/second/third jobs to support themselves.

    Whether you want to see a “millionaire CEO” get shamed is irrelevant to the fundamentals of the respective companies (although I’d tend to agree with you on that point).

    I’m not going to address why the workers’ education level matters – the demand for autos is not going away; there’s a good chance that Toyota, Honda, Subaru, etc (who make an awful lot of cars here in the States) will hire these displaced workers – the demand will remain, and they will have to hire to meet the demand.

    The Big 3 have proven that they are incapable of profitably producing and selling such cars. Their competitors are better at making and selling cars; the only shame is that “we” insist on propping up ineffective and unprofitable companies.

    Failure is necessary – it’s how we learn to succeed.

    Did you look at the link I updated the post with? If those numbers are accurate, that Congress is even debating a bailout for these companies is shameful.

    It was a dead heat. General Motors sold 9.37 million vehicles worldwide in 2007 and lost $38.7 billion. Toyota sold 9.37 million vehicles in 2007 and made $17.1 billion.

    That was the second best sales total in GM’s 100-year history and the biggest loss ever for any automaker in the world.

    For Toyota, that was roughly $1,800 in profit for every vehicle sold. For GM, it was an average loss of $4,100 for every vehicle sold.

    If I lost money on every single house I sold I wouldn’t sell houses any more. No sane company would.

    Definition of insanity?

  7. Bob

    December 10, 2008 at 12:00 pm

    “It is on our failures that we base a new and different and better success.”

    Havelock Ellis

    “There is nothing so useless as doing efficiently that which should not be done at all.”

    Peter Drucker

    “Failure is not a single, cataclysmic event. You don’t fail overnight. Instead, failure is a few errors in judgment, repeated every day.”

    Jim Rohn

    “Remember the two benefits of failure. First, if you do fail, you learn what doesn’t work; and second, the failure gives you the opportunity to try a new approach.”

    Roger Von Oech

    BK is not going to kill the Big 3, but give them an opportunity to retool their broken business model.

  8. Todd Tarson

    December 10, 2008 at 12:40 pm

    “Failure… is success… if we learn from it.”

    I think Malcom Forbes is the correct person to attribute this to.

    It just seems to me that the ‘learning’ part is being way too sheltered these days.

  9. Mark Storolis

    December 10, 2008 at 5:29 pm

    Ok Jim, let’s consider the facts:

    1. The government will profit from the bailout. [Profit? Yes, in 1979 Chrysler faced bankruptcy and the government bailed them out at the sum of $1.5B, Chrysler repaid the Government loan 7 years ahead of schedule and with a return of about $350M interest. see: “Lemon Aid,” Reason, March 1983]

    2. The numbers shown “loss of $38.7B” is a personal loss that GM accepts, i.e. shareholders, employees of GM. This isn’t $38.7B of taxpayer money. What is not mentioned is tax revenue that the US government gained from GM and GM employee income taxes, and the roughly 6% sales tax on every vehicle sold. I assure you, America (you and I) make money from GM.

    3. Teaching a lesson through negative reinforcement is slower and less effective than positive reinforcement. Psych 101

    4. GM turned a profit on every vehicle that was sold. The losses incurred by GM relate to business expenses (vehicle research, tech development – especially regarding fuel efficiency, manufacturing plant construction, salary raises). To let this new technology and new plants just crumble.

    You are making the case that America will be better off if one of these giants fall. Teach our kids a good hard lesson about the truths of business, right? Well, I believe in capitalism just as much as you do. So let’s teach the kids a lesson – let one of the Big 3 fall and let unemployment wreak havoc. Survival of the fittest, and to the victor go the spoils.

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Economic News

How small businesses can keep up with the changing workforce

(ECONOMIC) Trade schools are booming as career outlook grows. College enrollment is down. The workforce is changing. How can small business keep up?



Trade employees in the workforce

College enrollment has dropped off by three million in the last decade, with a drop-off of one million due in the last several years as a direct side effect of the Covid-19 pandemic. This phenomenon clearly does not bode well for the future of the United States’ economy and workforce, with students who attend low-income schools and come from low-income families being the most affected. These changes are disproportionately affecting students from low-income schools and families, the very people who need higher education the most, and are erasing much of the work done in the last decade to help close the income and race gap between students, colleges, and socioeconomic backgrounds.

Enrollment in trade schools is skyrocketing.

Recently, trade schools have seen a 40% bump in enrollment across the board. Many students are enticed by the fact that trade schools are affordable and offer a quick turnaround, with students paying $16,000 or less for their program, and their training taking a year or less to complete. Beyond that, those who complete trade school is all but guaranteed a job on graduation day. Their earning potential is often two or even three times higher than the initial cost of attending the program. As many have found, the same cannot always be said about those who pursue a college education.

While the average cost of college at an in-state and public institution hovers at around $28,775 per year (according to Forbes) and takes an average of four years to complete means that trade students have a cheaper educational cost, (between $16,000 to $33,000 for the entire program, or about equal to just one year of a public college tuition) can get work in their field more quickly, and can usually make more than their educational costs in their first year on the job. Tradespeople make an average of $54,000 fresh out of trade school, which rivals the role average college student’s first salary of $55,000. It’s no wonder so many people are choosing to forgo a formal education for trade school!

The almost insurmountable cost of college combined with ever-growing inflation and a lengthy list of requirements just to get a post-college job, all for a low salary and with students having hefty loans to pay back, also play a key role in the downturn in the popularity of college.

The implication of fewer college-educated people, however, means that over time, the United States as a whole could face an economic downturn, as it gives rise to many more blue-collar workers. This can irrevocably alter the makeup of the workforce. Despite current unemployment rates being among the lowest they’ve ever been, the American people are already starting to see a shift in the labor market.

Already, we see a strain in the labor market when 25% of skilled workers in the U.S. exited the workforce following the Covid-19 pandemic. The economy has become so highly specialized that if the U.S. were to keep up the trend of losing college-educated workers, there could irreversible damage to the United States’ economy, deepening the ever-growing divide between the middle class and the working class, further reducing the ability to affect the global economy, knocking the United States out of the classification of a “global superpower.” To make matters worse, much of the United States labor pool is outsourced, and we are seeing the rise of artificial intelligence and robotics taking over many jobs, especially minimum wage jobs. While none of these factors alone vastly affect the U.S. labor market, this is only the tip of the iceberg.

So what can employers do when the makeup of the workforce starts to shift?

Employers could shift the focus on the years of experience rather than the type of education the potential employees have, as well as offering more extensive on-the-job training, which is already commonplace in some industries. Even for those with a college education, the requirements for entry-level jobs seldom match the salary, with many employers requiring a four-year degree, two or more years of experience, and fluency in different programs which vary from company to company. Employers, if possible, need to offer higher salaries with fewer requirements, as many young people are finding the pursuit of college, plus the various other requirements just to be considered for a barely above minimum wage job, while they’re drowning in student debt fruitless, so they forgo college altogether.

A post-pandemic society looks vastly different, and employers must adapt to keep up.

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Economic News

Boomers retirement may be the true reason behind the labor shortage

(ECONOMY) Millennials and Gen Z were quick to be blamed for the labor shortage, citing lazy work ethic- the cause could actually be Boomers retirement.



Older man pictured in cafe with laptop nearby representing boomers retirement discrimination.

In July, we reported on the Great Resignation. With record numbers of resignations, there’s a huge labor shortage in the United States. Although there were many speculations about the reasons why, from “lazy” millennials to the number of deaths from Covid. Just recently, CNN reported that in November another 3.6 million Americans left the labor force. It’s been suggested that the younger generations don’t want to work but retiring Boomers might be the bigger culprit.

Why Boomers are leaving the labor force

CNN Business reports that 90% of the Americans who left the workplace were over 55 years old. It’s now being suggested that many of the people who have left the labor force since the beginning of the pandemic were older Americans, not Millennials or Gen Z, as we originally thought. Here are the reasons why:

  • Boomers are more concerned about catching COVID-19 than their younger counterparts, so they aren’t returning to work. Boomers are less willing to risk their health.
  • The robust real estate market has benefitted Boomers, who have more equity in their homes. Boomers have more options on the table than just returning to work.
  • Employers aren’t creating or posting jobs that lure people out of retirement or those near retirement age.

As Boomers retire, how does this impact the overall labor economy?

According to CNN Business, there are signs that the labor shortage is abating. Employers are starting to see record number of applicants to most posted jobs. FedEx, for example, just got 111,000 applications in one week, the highest it has ever recorded. The U.S. Bureau of Labor Statistics projects that the pandemic-induced increase in retirement is only temporary. People who retired due to the risk of the pandemic will return to work as new strategies emerge to reduce the risk to their health. With new varients popping up, we will have to keep an eye on how the trend ultimately plays out.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<


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