Bankers Need to "Give Back"

Over the weekend, our teleprompter-in-chief made a big deal about the financial community, and in particular, institutions that were part of the big-government liberal bailouts*, needing to "give back" to America.

His point was that since the government bailed them out to the tune of several billions of dollars, they needed to loosen up credit so that individuals and businesses that are not now able to borrow money, may borrow money and put that money back into the economy.

Sounds good, doesn't it?

This is, of course, a prelude to more government regulation. Obama will complain that the financial community isn't doing what he wants them to do, proving that the Big Bad Evil Corporations need more regulation. That regulation will require them to be more "fair" about lending and will require them to lend money to more minorities and disadvantaged people and businesses that employ or might employ a lot of people, but don't have the financial stability to get a loan right now.

Once those regulations pass, these financial institutions, instead of doing business that is in their best interest, will be required to change their policies and procedures to suit the government's interests. In a few short years, when those borrowers are unable to pay back the loans, these financial institutions will become insolvent and require government funds to . . . .

. . . hey wait a minute. Isn't that how we got here in the first place?

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Turbo Tax Tim is at it Again

Financial institutions bailed out with TARP funds beginning last fall (under the previous administration*) have paid back $175 billion. What should we do with all this "available money" that we are now swimming in?

Well, Turbo Tax Tim Geithner has a suggestion. Let's use that money for jobs creation. That's the plan he laid out yesterday with the blessing of the Teleprompter in Chief.

Shall we address the fact that money appropriated by Congress for one purpose cannot be diverted and used for another purpose. Apparently, the administration thinks this money is theirs to use freely as they choose. Someone should explain about the legal consequences of funds misappropriation. Oh wait. Never mind. This is the administration that doesn't pay any taxes and doesn't have any consequences for that, either. So let's put that issue aside.

How about the fact that the money we loaned to all of these financial institutions to bail them out was BORROWED money to begin with. That money isn't "available." It's debt. We owe it.

Maybe we should do something completely novel and different.

Like .... uh ..... oh, I don't know. Maybe PAY IT BACK?

(* just a reminder, in case you had forgotten. Obama hasn't told us in two or three days about the whole mess he inherited from the previous administration.)

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Chrysler Going Down the Tubes: More Bailout Needed?

Rumors, credible rumors, are beginning to circulate in the car industry and the automotive press, that Chrysler may not make it another year primarily due to its falling sales and growing financial losses at partner Fiat.

Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.

Chrysler’s problems may only be beginning and, if so, Fiat, the ”managing partner” among Chrysler’s owners may not be able to keep the American company intact.

.... The daily management of Chrysler is controlled by Fiat which owns 20% of the U.S. company with options which could take that amount to 35%. Fiat has not put any money into Chrysler, so if the American firm becomes a significant operational or management burden there are very few reason for the Italian company, which has sales troubles of its own in Europe, to stay long term. Fiat lost $254 million in the second quarter, so its board may eventually believe that Chrysler is a distraction and one without a future.

.... At this point, the Chrysler product line is still dominated by mid-sized sedans, SUVs from Jeep, minivans, and pick-ups like the Dodge Ram. The company has no real product in the alterative (sic) energy/hybrid segment. Chrysler’s domestic market share in September 2008 was 11.1%, according to Edmunds. Based on sales figures released by the industry today, that share is now closer to 7.5%.

.... Chrysler sales are now running at the rate of 750,000 a year, which includes sales of cars, trucks and vans from all its divisions; Chrysler, Dodge and Jeep. (By contrast, Ford sold over 600,000 F-150 pickup trucks last year). It probably does not have the capital to wait through another year of low US car sales with a market share that is almost certainly to stay below 8%. It does not have models tailored to the current market tastes. Chrysler is going out of business. The company just hasn’t made it official.

Thank goodness, our federal government spent billions, so far, to bail them out, only to fail later on.

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The Cost of War

According to the Congressional Research Service (CRS), all of the major U.S. wars, including such events as the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, WW II, Korea, Vietnam, Iraq and Afghanistan (but not the invasion of Panama or the Kosovo War) cost a total of $7.2 trillion in inflation adjusted 2008 dollars.

That's a lot of money. 

Those on the left like to point out how much the military costs and how that affects the national debt and the U.S. economy. In fact, it has been a strong undertone during the past six to seven years that George W. Bush was undermining the U.S. economy with two wars that cost millions of dollars every month.

Fair enough.

Just F.Y.I, the total value of the bailouts undertaken by the federal government during our current economic cycle has exceeded the combined cost of every major war the United States has ever engaged in. According to a comparison of war costs calculated by the CRS and the value of the bailouts as calculated by Bloomberg News.  

In fact the cost of the bailouts before the Obama inauguration (totals for bailout funds during the year 2008 only)  exceeded the costs of all the major wars mentioned above. While the numbers have not yet been compiled, it would appear that the cost of bailouts for 2008 and 2009 combined may exceed the cost of all military actions (including minor ones) since before we were officially even a nation.

(Figures do not include cold war spending or the cost of maintaining the military not used in conflict.)

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Illegal Takeover? They Don't Report; You Decide

The Obama administration’s arguably unconstitutional and potentially illegal makeover/takeover of General Motors and Chrysler hit a legal road block on June 8, when Supreme Court justice Ruth Bader Ginsburg issued a stay preventing Team Obama’s plan to sell Chrysler to the Italian automaker Fiat. This speed bump was a great opportunity for the media to pay attention to objections to the White House’s reckless executive-branch manipulation of the auto business.

Or not.

President Bush and his team were regularly savaged by the media elite if they so much as sniffed a hint of evasion over the rule of law and the bounds of constitutional authority in fighting terrorism. So why is President Obama’s unprecedented intervention in the auto industry, including a TARP-fund bailout expressly ruled out by Congress, all but ignored?

Even with the Supreme Court order, the nightly news shows of CBS and NBC gave the decision just a few seconds of air time, the equivalent of a stifled yawn, and never went anywhere near describing the strange bankruptcy proceedings the Obama administration has cooked up to manipulate the industry to its liking.

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Why the General Motors Bailout/Bankruptcy Won't Work

The following thoughts are those of writer David Brooks of the New York Times.  This is not the complete article; it merely hits the highlights.  Read the whole article here:

Over the last five decades, General Motors has progressively lost touch with car buyers, especially the educated car buyers who flock to European and Japanese brands. Over five decades, this company has tolerated labor practices that seem insane to outsiders. Over these decades, it has tolerated bureaucratic structures that repel top talent. It has evaded the relentless quality focus that has helped companies like Toyota prosper.

As a result, G.M. has steadily lost U.S. market share, from 54 to 19 percent. Consumer Reports now recommends 70 percent of Ford’s vehicles, but only 19 percent of G.M.’s.

The problems have not gone unrecognized and heroic measures have been undertaken, but technocratic reforms from within have not changed the culture. Technocratic reforms from Washington won’t either. For the elemental facts about the Obama restructuring plan are these: Bureaucratically, the plan is smart. Financially, it is tough-minded. But when it comes to the corporate culture that is at the core of G.M.’s woes, the Obama approach is strangely oblivious. The Obama plan won’t revolutionize G.M.’s corporate culture. It could make things worse.

First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors. But the Obama plan rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure.

Second, the Obama plan entrenches the ancient régime. The old C.E.O. is gone, but he’s been replaced by a veteran insider and similar executive coterie. Meanwhile, the U.A.W. has been given a bigger leadership role. This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50. This is not an organization that represents fundamental cultural change.

Third, the Obama approach reduces the fear that impels change. The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.

Fourth, the Obama plan dilutes the company’s focus. Instead of thinking obsessively about profitability and quality, G.M. will also have to meet the administration’s environmental goals. There is no evidence G.M. is good at building the sort of small cars the administration demands. There is no evidence that there is a large American market for these cars. But G.M. now has to serve two masters, the market and the administration’s policy goals.

Fifth, G.M.’s executives and unions now have an incentive to see Washington as a prime revenue center. Already, the union has successfully lobbied to move production centers back from overseas. Already, the company has successfully sought to restrict the import of cars that might compete with G.M. brands. In the years ahead, G.M.’s management will have a strong incentive to spend time in Washington, urging the company’s owner, the federal government, to issue laws to help it against Ford and Honda.

Sixth, the new plan will create an ever-thickening set of relationships between G.M.’s new owners — in government, management and unions. These thickening bonds between public and private bureaucrats will fundamentally alter the corporate culture, and not for the better. Members of Congress are also getting more involved in the company they own, and will have their own quaint impact.

The end result is that G.M. will not become more like successful car companies. It will become less like them. The federal merger will not accelerate the company’s viability. It will impede it. We’ve seen this before, albeit in different context: An overconfident government throws itself into a dysfunctional culture it doesn’t really understand. The result is quagmire. The costs escalate. There is no exit strategy.

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Obama's Tax Policy Bails Out the Super Rich By Taxing the Middle Class

Obama and his public relations team have made it appear that his trillion dollars in higher taxes will fall only on "the rich." Obama stresses that his tax increase is only for the richest 5 percent of Americans, while the other 95 percent receive a tax cut.The fact of the matter is that the income differences within the top 5 percent are far wider than the differences between the lower tax brackets and the "rich" American in the 96th percentile.

For Obama, being "rich" begins with $250,000 in annual income, the bottom rung of the top 5 percent. Compare this "rich" income to that of, for example, Hank Paulson, President George W. Bush's treasury secretary when he was the head of Goldman Sachs.

In 2005, Paulson was paid $38.3 million in salary, stock and options. That is 153 times the annual income of the "rich" $250,000 person.

Despite his massive income, Paulson himself was not among the super rich of that year, when a dozen hedge fund operators made $1 billion. The hedge fund honchos incomes were 26 times greater than Paulson's and 4,000 times greater than the "rich" man's or family's $250,000.For most Americans, a $250,000 income would be a godsend, but envy can make us blind. A $250,000 income is not one that will support a rich lifestyle. Moreover, many people prefer lesser incomes to the years of education, long work hours and stress of personal liability that are associated with many $250,000 incomes. In truth, those with $250,000 gross incomes have more in common with those at the lower end of the income distribution than with the rich. A $250,000 income is 10 times greater than a $25,000 income, not hundreds or thousands of times greater. On an after-tax basis, the difference shrinks to about six times.

The American tax code taxes the $250,000 income at the same rate as it taxes a $100,000,000 or higher income. On an after-tax basis, after the federal government grabs 30 percent in income taxes and state government grabs 6 percent, the "rich" man or woman or family earning $250,000 has $160,000. In New York City, where there is a city income tax in addition to state and federal, this sum diminishes further. State sales taxes take another 6 or more percent of most consumption expenditures.

When all is said and done, the after-tax value of a $250,000 income in New York City is about $140,000.Is this rich? It might be in a small town in Alabama, but not in New York City. The "rich" person or family won't be purchasing a Manhattan apartment, much less a brownstone. They won't be driving a luxury car. Indeed, they won't be able to afford a parking garage for an economy car. If they fly anywhere, it won't be in a first-class seat.

For the most part, $250,000 incomes are located in large cities where the cost of living is high. For example, a husband and wife who are associates at major law firms, each of whom works 60-hour weeks and has no job security, earn $125,000 each. They might both have student loans to pay down. For the Obama administration to lump these people in with Hank Paulson or billionaire hedge fund operators is propagandistic.

What is the difference between the $250,000 "rich" income and the $245,000 "non-rich" income? After Obama's tax scheme goes into effect, the $245,000 income will benefit from a tax cut, and the $250,000 will have a tax increase. Will people in the 96th percentile ask for pay cuts that will drop them into the 95th percentile?In America, the truly rich are those in the top 0.5 percent of the income distribution. These are the people with yachts and private airplanes, and who are still rich after they lose half their wealth in a stock market collapse caused by government policy that accommodated financial gangsters.

"Oh, well, I was worth $600,000,000 last year and only $300,000,000 this year. Perhaps we should stop drinking $1,000 bottles of rare vintages and move down to $100-a-bottle wines. Probably shouldn't buy that new yacht or that villa in the south of France."

The upper middle class with $250,000 gross incomes are major losers of the financial collapse. Many of the people in this income class are leveraged to the hilt in order to maintain appearances and can be swept away as easily as the very poor. But those who were frugal and invested for their future have lost 50 percent of their savings. These wiped out people are the ones who will bear the brunt of Obama's tax increase.

If the tax rate on a multimillion dollar annual income goes up by 5 percentage points, the cutbacks won't really affect the lifestyle. But for the $250,000 gross income group, it means no prospect of private schools and Ivy League education for the children, who will be attending state colleges with the rest of the non-rich.

Obama is attacking the only income class that has any independence – the upper-middle-class professionals. The real rich are few in number and seldom present any opposition to government. Recently, the March 23, 2009, New York Times reported that the 400 richest Americans' "share of the nation's total wealth has nearly doubled to more than 22 percent." The average income of the 400 richest Americans is $263 million annually. That is 1,052 times the income of the "rich" $250,000 income.

What the Obama administration is really doing is taxing ordinary people in order to bail out the super-rich. The 95 percent of Americans who get the tax cut will find that it is offset many times by the depreciation in the dollar and the raging inflation that will result from monetizing the multitrillion-dollar budget deficits made necessary by the bailouts of the banksters.

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What's Another Two Billion Dollars

It's only money, right?

Apparently that's the attitude of Obama, his administration and his tele-prompter.  This week, we, the American taxpayer, loaned another 2 billion dollars to General Motors.

This, coming mere days after the administration told GM to prepare to file bankruptcy this summer.

The Treasury Department said today that it lent the additional money to the troubled automaker to provide working capital. The loan pushes the amount of GM's government aid to over 15 billion dollars.  

Furthermore, a government report revealed earlier this week that the Treasury was planning to provide GM another 5 billion dollars in bailout money.  In addition to all of this, the automaker's financial unit, GMAC, has received $5 billion in government (taxpayer) money, plus GM received a $1 billion loan to buy more equity in GMAC.

Does this make sense to anyone?

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GM Headed for Bankruptcy

The Treasury Department is directing General Motors to prepare for a bankruptcy filing by June 1, despite GM's assertion that it could still reorganize without such a filing, The New York Times reported unnamed sources as saying on Monday.

Members of President Obama's automotive task force are said to have been in discussion with GM officials and its advisers in Detroit and Washington last week and are expected to continue this week.

The White House-appointed autos task force has given GM 60 days to come up with a restructuring plan and it is trying to determine whether the automaker can be a viable company.

Quoting sources who had been briefed on the GM plans, the Times said the goal was to prepare for a fast "surgical" bankruptcy.

Most of the conservative blogs that I read have pushed for bankruptcy from the beginning.  Liberal blogs that I've watched have pushed for the bailout money.  I hate to say "I told you so," but ....

No big deal, I guess.  It's only 30 or 40 some billion dollars down the drain. It's taxpayer money, so the liberals don't really care.

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Remember When?

Remember when the Big 3 automakers were "too big to fail"?  Remember when they needed the bailouts, and the bailout mania that followed? 

Do you remember that the idea of bailing out anything "too big to fail" meant stepping away from the authority granted Congress for bankruptcy to other powers never granted to Congress or the federal government? 

Some of us (me included) insisted that companies that were "too big to fail" needed to fail and go through re-organization and get its act together.

Remember that?

Remember the politicians telling us that tens of billions, hundreds of billions and now trillions of dollars going to bailouts, handouts, bonuses and rewards to political brown-nosers and supports were necessary?

Remember the serial lies told about AIG, Fannie Mae, Freddie Mac and the faux outrage by politicians and regulators?  Remember Bawney Fwank chastising the Bush administration and McCain for suggesting we could be headed for a mortgage crisis.

Gee, I must be getting old.  

I remember all of that.

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Just a Thought

This weekend on one of the political talk programs, Turbo Tax Tim Geithner made the comment that the administration "...does not want to reward failure."

My question would be, then, why are we taking money away from successful businesses and punishing them, in order to give it to unsuccessful ones, allowing the unsuccessful ones to pay millions and millions of dollars out to their executives?

It's just a thought...

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Budget Deficit Will Be Higher than Obama Wants to Admit

President Obama's $3.55-trillion budget has stumbled into a series of economic and political pitfalls that threaten to undercut his grandest ambitions.

The chairman of the Senate Budget Committee on Thursday projected deficits far higher than the Obama administration had calculated, possibly as much as $1.6 trillion higher over the next 10 years. The nonpartisan Congressional Budget Office is expected to issue a similar assessment today.

That bad news, combined with other recent developments, portends a rocky road for the Obama budget, which was initially hailed by congressional Democrats for promoting such liberal priorities as expanded access to health insurance and curbs on global warming.

In the three weeks since the budget was unveiled, fiscally conservative Democrats have raised concerns about proposed spending increases. Leaders of the House and Senate tax-writing committees have criticized some of Obama's proposed tax increases on wealthier Americans. And influential Democrats are backing away from using a legislative shortcut that may be Obama's best hope for passing his far-reaching health and energy policies.

An additional multibillion-dollar bailout for banks and other financial institutions, which the administration will soon propose, is expected to add more pressure to the federal government's finances.

Into that tinderbox, a lit match has come from new deficit estimates.

Where Obama's budget foresees rolling up $7 trillion in cumulative deficits over the next 10 years, Sen. Kent Conrad (D-N.D.) on Thursday pegged the deficits at $1.6 trillion higher over that period.

Conrad, chairman of the Senate Budget Committee, said the figure was calculated by his panel's Democratic staff members.

The Congressional Budget Office report today is expected to reflect a worsening deficit outlook in part because economic conditions have deteriorated in the two months since the administration set its budget assumptions. The office is expected to project lower revenue and higher spending than what Obama's budget assumed.

Sen. Ben Nelson (D-Neb.), one of about 15 moderate Democrats concerned about Obama's spending levels, said the White House might have to reassess its priorities in light of the new estimates.

"That will influence what we might think is the appropriate level of spending -- what might be put off to another budget, what we can pursue incrementally," said Nelson, a member of the budget panel.

"I think this budget is in for some tough sledding," said Sen. Lindsey Graham (R-S.C.). "Some components of his budget are going over like a lead balloon."

But House Speaker Nancy Pelosi (D-San Francisco) won't let facts and projections get in the way of her liberal agenda.

"Our priorities are the same," Pelosi said. "You can't say we are going to do less because those numbers are pessimistic."

The White House also said the projections would not force a change in the socialization of America.

"It's not productive to constantly be chasing your tail and, as things change every day, revise your numbers," was the spin from Kenneth Baer of Obama's budget office.

In other words, "Bush spent too much money and had huge deficits.  This is all his fault.  In order to get us out of this mess, we're going to have to spend even more money and have even bigger deficits!"

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An epidemic of lying

Remember just a few months ago when George W. Bush was president?

One of the most common charges leveled at the Bush administration by liberal politicians, commentators, editors and bloggers was the "lies" told by President Bush.  They were especially angered (an anger which festered year after year) about the lack of WMDs in Iraq.  Of course, they fail to mention that bad information isn't really a lie.  All of our intelligence, the British intelligence, and all of the evidence that was in the possession of members of Congress suggested that Saddam still had WMDs, even if that couldn't be confirmed by UN investigators at the time.

The point is, that if you say something you believe to be true, it may be wrong, but it isn't a lie. A lie, by definition is saying something you know not to be true, or deception by word or deed.

Yesterday, we learned that Chris Dodd, D-Conn (or is it D-Con?) intentionally and knowingly lied to reporters about the AIG bonuses.  I don't care what anyone says about how "important" this lie might have been or might not have been. Dodd lied for political reasons to protect himself, and he lied about something he did that cost the American taxpayers millions and millions and millions and millions of dollars.

Today, we learn that the lies probably go deeper.  In fact, right into the heart of the Obama administration. In fact, this could have been predicted, based on past behavior.  The man who lied about owing taxes and blamed the complexities of Turbo Tax for his problems may have lied to us again.

Time magazine, that arch-conservative publication, is reporting that Timothy Geithner "misled" Congress in his testimony about the AIG bonuses yesterday.

From TIME:

Although Treasury Secretary Timothy Geithner told congressional leaders on Tuesday that he learned of AIG's impending $160 million bonus payments to members of its troubled financial-products unit on March 10, sources tell TIME that the New York Federal Reserve informed Treasury staff that the payments were imminent on Feb. 28. That is 10 days before Treasury staffers say they first learned "full details" of the bonus plan, and three days before the Administration launched a new $30 billion infusion of cash for AIG.

"Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus-payment] date was upcoming," a Federal Reserve source tells TIME. A Treasury Department source, speaking on background, confirmed the e-mail memo and its contents, saying, "Everybody knew that [AIG] had a retention issue."

Of course, there is already an innocent explanation.  You already know what it is:  They are pinning the blame on some low level staffer.  Blame rolls downhill in Washington.  The buck never stops at the top. Dodd blames the treasury, Geithner blames a low level staffer, and some low level staffer, who has probably given their whole career for a low paying government position will become a sacrificial lamb for the Democratic party.

Geithner should resign.  If he didn't know about the AIG bonuses earlier than he says, he's incompetent.  If he did, he is a liar and a deceiver (which has already been established).  The problem is, the Obama administration could (and probably will) stymie any investigation into this by claiming executive privilege protects Geithner's emails from being examined by congress.  It is those emails that would prove Turbo-Tax Tim's complicity in this scandal. 

The AIG scandal is getting bigger and bigger, but at this point the only thing that will likely cost Geithner his job would be the potential political fallout which might cost the administration votes down the road.

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The Treasury Department Made Me Do It...

From the "Congressmen acting like 3 year olds" department...

In a "dramatic reversal" (aka: I got caught in a lie) Wednesday, Sen. Chris Dodd, D-Conn., confessed to adding language to the stimulus bill last month that exempted all bonuses that bailed-out companies had promised to employees before Feb. 11, 2009. 

Dodd told FOX News that Treasury officials forced him to make the change.

"As many know, the administration was, among others, not happy with the language. They wanted some modifications to it," he said. "They came to us, our staff, and asked for changes, and the changes at the time did not seem that obnoxious or onerous."

But the provision has become a flash point for criticism amid the controversy over $165 million in bonuses given out by AIG after securing more than $170 billion in federal aid. The language in the stimulus bill wasn't specific to AIG, but some have expressed outrage that it appears to have created a loophole.

Dodd said the argument put forward by Treasury was that a "flood of lawsuits" would come forward if the change was not made.

Dodd said he was unaware of the AIG bonuses at the time the bill was being written back in early February. He also said he has no reason to believe Treasury officials making the argument knew about the AIG bonuses.

When asked how administration officials have this kind of leverage over members of Congress, Dodd said, "The administration has veto power. ... No one suggested a veto to me, I don't want to imply that to you. But certainly that's not an insignificant tool."

On Tuesday, Dodd told FOX News that he didn't add the exemption.

As long as we're acting like 3 year olds.... "Liar, Liar, Pants on Fire..."

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Time for a Change

Many Republicans are getting closer to asking for Treasury Secretary Geithner’s resignations. Geithner’s call to AIG Chairman Edward Liddy last Wednesday where he ’supposedly’ demanded that Liddy renegotiate AIG’s current bonus structure, is raising questions about Geithner’s credibility.

The burgeoning bonus controversy raged Tuesday as Sen. Richard Shelby, ranking Republican on the Banking Committee, charged that Geithner had known about the AIG bonus payments before they were made and failed to stop them.

“I don’t know what President Obama knew about it,” Shelby said. “I’d say he probably didn’t know about it.”

Shelby said that Geithner “either knew or should have known what was going on. We need to know, what are the details of this? When were the bonuses signed up? Who’s getting it?”

The Alabama senator stopped short of calling for Geithner’s resignation, saying “he’s under fire from all sides now.”

….”this is just another example of where he seems to be out of the loop. Treasury should have let the American people know about this.” Huffington Post:

To pretend Secretary Geithner didn’t know about AIG’s bonuses is naive. He was after all the architect of the original AIG bailout that needless to say has been a complete disaster.

The whole AIG situation raises some serious questions, not only about Geithner’s credibility, but also about his clarity at time when markets desperately need transparency and certainty. Up until couple of days ago the Treasury Secretary had been quietly working against the release of AIG’s “counterparty” bailout beneficiaries list. Coincidentally, Goldman Sachs (GS) was at the top of that list as the largest counterparty recipient. That confirmed rumors that had been circulating for the past few months alluding to reports that in September 2008, Geithner, with then Treasury Secretary Henry Paulson - engineered an AIG bailout in which Paulson’s own firm, Goldman Sachs, (by the way Geithner is a Goldman guy through-n-through, and a protege of uber-Goldman guy Robert Rubin) secretly and without taxpayer’s knowledge received $12.9 billion.

Geithner has so far proven to be nothing more than just another glorified bank lobbyist like his predecessor, Paulson, who is in way over his head. He has yet to produce a coherent plan to fix the banking system andhas convinced no one with his actions, uninspiring oratory and non-existent personal charisma, that he’s the right man to lead the nation out of the crisis.

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AIG Beneficiaries

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Strings Attached...

Banks that took bailout money are now finding out that the money came with "strings attached."  Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners.  They must let shareholders vote on executive pay packages.  They must slash dividends, cancel employee training exercises, and withdraw job offers to foreign citizens.  

One of the biggest concerns of the banks is that the program lets Congress and the administration pile on new conditions at any time.

The demands to modify mortgages or forestall evictions are especially onerous because they could prompt some institutions to take steps that could lead to greater losses. 

Financial institutions are now being told to engage in politically motivated policies instead of policies that are designed to return them to sound financial footing. 

This approach, of course, is what brought about the Fannie Mae/Freddie Mac situation in the first place. The banks have dual objectives: trying to generate a profit and at the same time follow policies dictated by a liberal socialist administration with an agenda to micromanage the economy into socialism.

Japan went through something similar.  They propped up bad banks for years and their economy was sluggish during those years.  Things turned around when they realized the bad banks couldn't be propped up indefinitely and faced the pain of restructuring their entire banking industry. 

Looks like we're going to do the same thing.

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Greg Knox Letter to GM

"Gun totin' Right Winger" posted the following on his blog.  I thought it worth passing along...

Greg Knox Letter to General Motors

I would call this guy an American hero. Greg Knox is the president of Knox Machinery, a manufacturer of precision machine tools which supplies "The Big Three" automakers. He received a letter from Troy Clarke, the President of General Motors requesting support for the auto bailout. Here's the abridged version of the letter:

Dear Employee,

Next week, Congress and the current Administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation’s history.

Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis… As an employee, you have a lot at stake and continue to be one of our most effective and passionate voices.

I know GM can count on you to have your voice heard. Thank you for your urgent action and ongoing support.

Troy Clarke President General Motors North America

His response is what has made him a hero in my book. And alot of people feel the same way, because this letter has made it's way around the web for a few months now. His letter to Troy Clarke: 

In response to your request to call legislators and ask for a bailout for the United States automakers please consider the following, and please also pass this onto Troy Clark, the president of General Motors North America for me.

You are both infected with the same entitlement mentality that has bred like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping the nation, awaiting our new "messiah" to wave his magical wand and make all our problems go away, while at the same time allowing our once great nation to keep "living the dream"?

The dream is over!

The dream that we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded "laborers" without paying the price for these atrocities and that still the masses will line up to buy our products

Don't tell me I'm wrong. Don't accuse me of not knowing of what I speak. I have called on Ford, GM ,Chrysler, TRW, Delphi ,Kelsey Hayes, American Axle and countless other automotive OEM's and Tier ones for 3 decades now throughout the Midwest and what I've seen over the years in these union shops can only be described as disgusting.

Mr Clark, the president of General Motors, states:

There is widespread sentiment in this country, our government and especially in the media that the current crisis is completely the result of bad management. It is not.

You're right. It's not JUST management. How about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass, so they can come in on the weekend and make double and triple time for a job they easily could have done within their normal 40 hour week ?

How about the line workers who threaten newbies with all kinds of scare tactics for putting out too many parts on a shift, and for being too productive (mustn't expose the lazy bums who have been getting overpaid for decades for their horrific underproduction, must we?!?!? Do you really not know about this stuff?!?

How about this great sentiment abridged from Mr. Clarke's sad plea:

Over the last few years, we have closed the quality and efficiency gaps with our competitors.

What the hell has Detroit been doing for the last 40 years?!?

Did we really JUST wake up to the gaps in quality and efficiency between us and them?

The K car vs. the Accord?

The Pinto vs. the Civic?!?

Do I need to go on?

We are living through the inevitable outcome of the actions of the United States auto industry for decades.

Time to pay for your sins, Detroit .

I attended an economic summit last week where a brilliant economist, Alan Beaulieu surprised the crowd when he said he would not have given the banks a penny of "bailout money". Yes, he said, this would cause short term problems, but despite what people like George Bush and Troy Clark would have us believe, the sun would, in fact, rise the next day And something else would happen where there had been greedy and sloppy banks new efficient ones would pop up. That is how a free market system works- it does work if we would let it work.

But for some reason we are now deciding that the rest of the world is right and that capitalism doesn't work - that we need the government to step in and "save us". Save us, hell ! We're nationalizing; and unfortunately *too many of this once fine nations citizens don't even have a clue that this is what's really happening. But they sure can tell you the stats on their favorite sports teams - yeah ? THAT'S important? * Does it occur to ANYONE that the "competition" has been producing vehicles, EXTREMELY PROFITABLY, for decades now in this country?...

How can that be???

Let's see?

Fuel efficient ?

Listening to customers?

Investing in the proper tooling and automation for the long haul?

Not being too complacent or arrogant to listen to Dr W Edwards Deming 4 decades ago

Ever increased productivity through quality, lean and six sigma plans?

Treating vendors like strategic partners, rather than like "the enemy"?

Efficient front and back offices?

Non union 'DejaVu Sans Mono'"?

Again, I could go on and on, but I really wouldn't be telling anyone anything they really don't already know in their hearts.

I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into. My children do this on a weekly, if not daily basis, as I did at their age. I do for them what my parents did for me (one of their greatest gifts, by the way). I make them stand on their own two feet and accept the consequences of their actions and work them through.

Radical concept, huh?

Am I there for them in the wings? Of course. But only until such time as they need to be fully on their own as adults.

I don't want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and
government.

Detroit and the United States need to pay for their sins.

Bad news people. !!! It's coming whether we like it or not.

The newly elected Messiah really doesn't have a magic wand big enough to "make it all go away". I laughed as I heard Obama "reeling it back in" almost immediately after the vote count was tallied. "We might not do it in a year." Where was that kind of talk when he was RUNNING for office?

Stop trying to put off the inevitable.

That house in Florida really isn't worth $750,000.

People who jump across a border really don't deserve free health care benefits.

That job driving that forklift for the big 3 really isn't worth $85,000 a year.

That couple whose combined income is less than $50,000 really shouldn't be living in that $485,000 home.

Let the market correct itself people. it will. Yes it will be painful, but it's gonna be painful either way, and the bright side of my proposal is that on the other side of it is a nation that appreciates what is has, and doesn't live beyond its means and gets back to basics and redevelops the work ethic that made it the greatest nation in the history of the world - and probably turns back to God.

Sorry - don't cut my head off, I'm just the messenger sharing with you the "bad news".


Gregory J Knox
President
Knox Machinery, Inc.
Franklin , Ohio 45005

I'm glad there are still some people out there who aren't afraid to tell it like it is.

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