Archive for the Bailout/Bribe Category

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Bankrupt Auto Companies? (December 8, 2008)

Posted in Automobile Bailout, Automobiles/Automobile Industry, Bailout/Bribe, Bankruptcy on December 8, 2008 by e-commentary.org

Congress recently rejected the request by the “Big 3” (GM, Chrysler and Ford) auto companies who came in with their palms out and instead asked them to go out and come back with a plan in hand.  Congress already passed a Plan.  The Plan is part of Chapter 11 of Title 11, the reorganization chapter of the Bankruptcy Code.  The Code, in particular Section 365, provides the debtor with the power to avoid contracts and leases when necessary.  This provision is discussed in previous “e-ssays.”

Roam an auto show.  Kick the tires.  Open the doors.  Sit on the seats.  Turn the buttons.  Toggle the switches.  Slam the doors.  Look under the hood.  Peek in the trunk.  Check the workmanship.  Read the specs.  Scrutinize the consumer reviews.  Check recall notices.  Repeat.

Georgetown, Princeton and Cambridge make better cars.  In Kentucky, Indiana and Ontario (Canada), three of the Toyota plants in North America.  The management in Detroit has designed and manufactured lousy and energy-inefficient vehicles for decades and made Detroit irrelevant.  The trio from Detroit did not propose real compensation concessions to match the pay packages of their far more successful counterparts in Tokyo and Munich and elsewhere.

Southern Republican senators smell an opportunity to bust a union, the United Autoworkers of America (UAW), and support the non-union plants in their states.  However, the employees in the non-union states only receive the wages they receive because they can point to the higher wages possible if they were to unionize like their brethren in the North.  Cripple the UAW and undermine wages.  The Civil War, the War Between the States, the War between the Red States and the Blue States, the War between the North and the South continues unabated.

The Bankruptcy Code still provides the most promising legal mechanism to reorganize (organize?) the automobile companies.  The logic of Chapter 11 is that a going concern has additional value that should be preserved.  The problem seems to be that Chapter 11 may be inadequate under the circumstances.  The amount of the proposed bailout is squandered by the U.S. in a few days in Iraq.

The Trillion Dollar Bailout/Bribe of Wall Street was and is a travesty.  Is a bailout of the Big 3 necessary or appropriate?

Bumper sticker of the week:

See the USA owning Chevrolet?

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A Bleak Day: The Trillion Dollar Tragedy (October 6, 2008)

Posted in Bailout/Bribe, Bush, Debt/Deficits, Economics, Federal Reserve, Greenspan, USA PATRIOT Act on October 6, 2008 by e-commentary.org

Congress failed.  Again.  The Bailout Bill will accelerate the Meltdown by misallocating funds and burning day light needed to address the underlying problems.

A three page travesty delivered by Bush became a 451 page travesty cum pork adopted by Congress.  These votes may rank with the Gulf of Tonkin Resolution, the Iraq war resolution, and the USA PATRIOT Act vote.

The public saw a 1.1 Trillion dollar drop in the value of their investments/401(k) IRAs last Monday and seemed to believe that a 700+ Billion bribe was worth the gamble.  The Bailout Bill will cost at least 1 Trillion to administer directly and will cause Trillions more in losses and damage.  Bribing the big players not to pull the plug until after the election is over is almost criminal if not treasonous.

Few note that the current crisis will be made worse by this bailout/bribe.  Beyond concerns about “moral hazard” and “bailouts for billionaires,” the problem is that the bailout is creating an even great credit crunch for the country.  There is way too much money in the economic system in the wrong hands.  The new money is being funneled into the wrong vessel, into a bowl not a colander.  The money will be hoarded.  The money is being not made available to the public.

Raising the deposit amount insured by the FDIC from $100,000 to $250,000 appears to offer something to the public, yet it also discourages the individual investor from monitoring his or her financial institution.  Individuals are deluded into believing that everything is ducky.  Individuals not just the government must act as regulators.  Banks that will soon be taken over by the FDIC are offering much higher interest rates to gobble up as much money as possible before the collapse.

Consumer confidence has never been higher.  Consumers are confident that the entire economic and political system is broken.

Business confidence has never been higher.  Businesspersons know that they are lying and, of greater import, that all other businesspersons are lying.  Reading between the lines of the economic reports is a challenge.  Reading between the lies is vexing.

So many fought to declare and establish independence for this country.  Last Friday, Congress voted to establish and fund a czar/dictator/central planner.  Two hundred thirty-two years later, we have a King of Finance.  Emperor Paulson.  One of the individuals who created the problem has been crowned to deepen it.

Fear once again triumphed over hope and reason.

Bumper stickers of the week:

Those who repeat history are doomed to repeat history.

If you think 401(k) is your mother-in-law’s bra size, then you might be a redneck.

—–Jeff Foxworthy

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Futile Efforts (September 29, 2008)

Posted in Bailout/Bribe, Congress, Economics on September 29, 2008 by e-commentary.org

HSB

Washington, D.C. 20510

Senator _________:

Enough.  This bailout/handout is obscene.

Risk is the handmaiden of reward.  Success and failure are American.  Privatizing success and socializing failure are unwise if not criminal.  And no way to run a Republic.

Why are we as a country creating a dictator/czar who is not subject to congressional oversight or judicial review to decide how he will run the country?  Paulson was previously the Chairman and CEO of Goldman Sachs.  The wolf is in charge of the hen house.  He has done nothing for years.

This problem has been with us for many years.  Why get excited now?  We as a country got all excited and passed the PATRIOT Act, went to war with Iraq, etc.  Now is the time to reflect.

Reflect on the three articles in today’s NYT:  Kristol, Krugman and Cohen.  Cohen’s article addresses the international dimension.  The rest of the world does not care about the developments in the USA and is not going to do anything to help.  Let’s not be so concerned about the rest of the world on this issue at this time.

If we as a country are going to nationalize the industries, why not nationalize the industries rather than just the losses?

If we reject the bailout, there will be some inconveniences and costs, yet life will go on.  We will get up in the morning, put on our socks and go on with life.

If the legislation is passed, there is no rescinding it according to its term.  The long-term negative consequences of a bailout/handout to the taxpayer and the country are incomprehensible.

It is time to say No! to this travesty.

This legislation is unwise and imprudent.

Over the last few days, I have been surprised at how united _______ are on this issue.  Across the political spectrum, there is disgust and outrage.

It is time to reflect.

Sincerely,

_______________

****************************************************************************************************

RHOB

Washington, D.C. 20515

Dear Congressperson ______:

The politicians must quit digging.  “When you are in a hole, quit digging.”  Now is the time to reflect and think clearly about this “Economic 9/11” that has been foisted on the Republic by Wall Street with the involvement of far too many equally greedy American citizens.

The bailout bill is a travesty that will create more intermediate-term problems without solving any current ones.  The only way to fund the bailout will be to print money or borrow it from the Chinese and other countries.  Either source of funds is fraught with even worse economic consequences in the next six months.

If ma and pa store owner in [local towns] cannot get credit, then establish a program to allow direct short-term emergency loans from the government, perhaps the SBA, to meet their credit needs.  If someone cannot get a loan to purchase a vehicle, establish a program to provide a loan and take a security interest in the vehicle.  The New York banks have all the money in the world and still refuse to loan it.  Why reward that behavior by giving them more money?  Why push on a string?

The Senate is often described as the more deliberative body.  It is a wholly-owned subsidiary of the banking industry, lock, stock and sinker.

Bernanke showed tremendous promise, but he has failed.  Paulson is part of the problem and should not be vested with the powers of a czar/dictator/central planner so that he can benefit his friends and former colleagues.

The economic and business press is behind this bill in part because, with a few notable exceptions, they have so miserably misunderstood and misrepresented the problem for years.

This is a time for courage.  Vote against this version and make a public statement that the “leadership” must make another effort to provide a sound bill or the negative economic consequences will be their responsibility.  Let the House shine.

Regards,

________________________

Bumper sticker of the week:

Otter:  “I think this situation absolutely requires a really futile and stupid gesture be done on somebody’s part.”

Bluto:  “We’re just the guys to do it.”

“Animal House” movie (1978).

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