One of the things we talked about on the podcast this week is how, in the broadest sense, socialism is a growing phenomenon in our country. As I mentioned, while government may not actually own the means of production, if its regulations are such that they dictate how a company must operate, then government exercises de facto ownership.
What is happening in the financial sector right now serves as a perfect example.
The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor pay, according to two government officials.
Others, which are being described as broad principles, would set standards that the government would like the entire financial industry to observe as they compensate their highest-paid executives, though it is not clear how regulators will enforce them.
So regulators will have the final say on compensation. That, of course, is an ownership function. The de facto owner then is who?
In a sign of how eager corporations are to escape government diktats on pay, nine of the nation’s biggest banks are likely to repay bailout money as quickly as by the end of this month. The administration is expected to grant its approval this week.
Goldman Sachs, JPMorgan Chase and a handful of others have worked to rid themselves of their ties to government in order to shed restrictions on pay that they say put them at a competitive disadvantage.
But under the administration’s new plans, even companies that repay the taxpayer money will not escape some form of oversight on their compensation structure.
The set of broad pay principles being drafted by the Treasury Department would authorize regulators to tell a bank to alter its compensation arrangements if they are found to encourage too much risk-taking. It is not clear how the government will define too much risk.
Part two – no matter whether you pay the money back in full with whatever interest is owed, the government retains the right to dictate your compensation structure based in some arbitrary metric of “too much risk”, to be determined only by them.
They will apply to a broad swath of financial companies, even the United States operations of foreign banks, as well as private companies like hedge funds and private equity firms.
“This is the government trying to tell the TARP banks not to worry, because everyone else’s compensation will be monitored too,” said Gustavo Dolfino, president of the WhiteRock Group, a financial recruiter, of the industrywide principles. “We’re in a world of TARP and non-TARP.”
Clear enough? For those that like to quibble about the meaning of socialism and parse words, I’m eager to hear your spin on this. But, in light of the plan above you’d better be damned good at deploying the rhetorical smoke and mirrors if you plan to call this anything but a manifestation of the “s” word.
The usual suspects have blamed the usual suspects in the GM bailout:
Austan Goolsbee, a senior economic adviser to President Obama, said the administration’s options were sharply limited by President Bush’s handling of the auto industry, and accused the prior administration of running out the clock.
“They shook up the can. They opened the can and handed [it] to us in our laps,” Goolsbee said on Fox News Sunday.
“When George Bush put money into General Motors, almost explicitly with the purpose — how many dollars do they need to stay alive until January 20th, 2009, there was no commitment to restructuring, to making these viable enterprises of any kind,” said Goolsbee, who serves as staff director and chief economist of the Obama’s Economic Recovery Advisory Board.
All of that is probably true, but the BS flag is thrown at the implication that the Bush administration left them with few options such that it had to funnel more and more bailout money into GM.
There was a clear second option – back off, tell GM that bankruptcy and restructuring are the best option and let the system take care of it. But they didn’t. They made the case that GM was “too big to fail” and that the “downstream impact” in terms of unemployment was unacceptable.
The continued bailout had two outcomes that the Obama administration wanted but won’t admit. One – they got a majority equity stake in the company. And they manipulated the bankruptcy proceedings to preserve that majority.
Secondly, it saved the jobs of a favored special interest group, the UAW, until such a time they too could be handed an equity stake in the “new” company through the manipulated process.
Without the Bush administration’s bailout, none of that would have been possible. And, of course, previous to taking office, Obama had lauded the handling of the GM problem.
So the Goolsbee blame shifting is more than nonsense, it’s nonsense on stilts.
UPDATE: Keith Hennesy, a member of the Bush administration who dealt directly with this subject and the incoming Obama administration throws a very detailed BS flag of his own. [HT: Rick Caird]
In this podcast, Bruce, Michael, and Dale discuss the Obama “Muslim” speech, and the socialization of the economy.
The direct link to the podcast can be found here.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
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There’s a bit of a kerfuffle rippling through the sphere today (which means, of course, that most of us are going to comment). Ed Whelan, who blogs over at NRO has outed Publius who blogs at Obsidian Wings.
There seem to be mixed feelings as to whether what Whelan did is “ethical” or not. In terms of ethics, we’re essentially talking about right and wrong. Is it right or wrong to reveal the name of an anonymous blogger?
And the answer?
Well, it depends. It depends on what action by the anonymous blogger might drive such a decision by another blogger. I’m sure if I thought long and hard enough I could come up with a few that I think would justify doing so. But one of them wouldn’t be because some blogger had been “biting at my ankles in recent months.”
I’m sorry but that comes with the territory of blogging.
Heat. Kitchen. Either grow a thick skin or quit blogging.
If you are going to write and post publicly, and if you have any prominence whatsoever, someone is going to bite at your ankles. But that certainly isn’t a good reason to out someone who, for whatever reason they may have, has chosen to remain anonymous by using a pseudonym.
Oh sure, you can flog him or her for not having the gonads to use their real name and come out from behind the screen and stand by what they say (and that has some validity as an argument), but you don’t just decide you have the right to violate that person’s privacy because you’re annoyed.
For years I was simply “McQ” on the net and the blog for various and sundry privacy reasons. Certainly there were those who knew who I was, but they too respected my decision to maintain my anonymity. And that included people I annoyed on a regular basis. The decision to use my real name was mine and mine alone. As it so happens, I decided that if I wanted to be taken more seriously I should be willing to sign my work with my real name.
I find Whelan’s outing of Publius to be very bad form -unethical- especially for the reason given. If I had a nickel for every anonymous ankle biter I’ve endured for years, I’d be retired. The trick in dealing with them is not to do something as juvenile and “ethics challenged” as violating their privacy, but instead by making tight and considered arguments which leave them little room for rational criticism. At that point they usually do one of two things – go irrational and begin the inevitable descent into ad hominum attacks or go away.
What Whelan just did instead was create a martyr and become the bad guy. And his poor judgment in this case ends up hurting his own credibility while adding at least sympathetic weight to his antagonists arguments.
Many people on the internet want anonymity for a variety of reasons. Certainly some abuse it. But the unspoken rule of netiquete is you don’t reveal another’s private information publicly over some silly disagreement – ever. Whelan did exactly that and for that act, deserves all the condemnation he’s now receiving.
A blogger may choose to blog under a pseudonym for any of various self-serving reasons, from the compelling (e.g., genuine concerns about personal safety) to the respectable to the base. But setting aside the extraordinary circumstances in which the reason to use a pseudonym would be compelling, I don’t see why anyone else has any obligation to respect the blogger’s self-serving decision. And I certainly don’t see why someone who has been smeared by the blogger and frequently had his positions and arguments misrepresented should be expected to do so.
Of course the desire for privacy is always “self-serving”. Why that is a justification for outing someone remains a mystery. Whelan, however, thinks he has the right to be the sole arbiter of what is or isn’t a “compelling” reason.
Few reasonable people are going to buy into that bit of illogic. If, as Whelan admits, a person can have a compelling reason for privacy, where does someone like Whelan derive the right to determine it isn’t compelling enough?
Yesterday evening I thought about what was occurring at the same time 65 years before in Europe. Young paratroopers of the 82nd and 101st Airborne Divisions as well as the British 6th Airborne Divison and 1st Canadian Parachute Battalion were headed in for night combat jumps with the mission of securing key bridges and road junctions and setting up blocking positions to prevent German reinforcements from reaching the beaches of Normandy. Of the 17,000 US airborne troops engaged in operation Overlord, 1,003 were KIA, 2,657 were WIA and 4,490 were declared MIA.
At the same time, off that coast, the largest amphibious assault fleet the world had ever seen, drawn from 8 allied navies (6,939 vessels: 1,213 warships, 4,126 transport vessels (landing ships and landing craft), and 736 ancillary craft and 864 merchant vessels), began gathering. 19 and 20 year old young men, who to that point had never seen a shot fired in anger nor fired one themselves, would get their baptism in war on Omaha, Gold, Utah, Swordand Juno beaches. In all 160,000 allied troops would land that day.
At Pointe du Hoc, the US 2nd Ranger Battalion assaulted the massive concrete gun emplacements that commanded the beach landing sites. They had to scale 100 foot cliffs under enemy automatic gunfire to reach them. When they did, the found out the guns had been moved further inland. They pressed their assault, found them and destroyed them and then defended the location for two days until relieved. The operation cost them 60% casualties. Of the 225 rangers who began the operation, only 90 were still able to fight at its end.
On Omaha beach, the US 1st and 29th Infantry Divisions landed opposite the veteran German 352nd Infantry Division. They had sited their defensive positions well and built concrete emplacements which were all but immune from bombardment. The initial assault waves of tanks, infantry and engineers took heavy casualties. Of the 16 tanks that landed upon the shores of Omaha Beach only 2 survived the landing. The official record stated that “within 10 minutes of the ramps being lowered, [the leading] company had become inert, leaderless and almost incapable of action. Every officer and sergeant had been killed or wounded […] It had become a struggle for survival and rescue”. Only a few gaps were blown in the beach obstacles, resulting in problems for subsequent landings.
Leaders considered abandoning Omaha, but the troops that had landed refused to stay trapped in a killing zone. In many cases, led by members of the 5th Ranger Battalion which had been mistakenly landed there, they formed ad hoc groups and infantrymen infiltrated the beach defenses and destroyed them, eventually opening the way for all. Of the 50,000 soldiers that landed, 5,000 became casualties of bloody Omaha.
Canadian forces landed at Juno. The first wave suffered 50% casualties in the ferocious fighting. The Canadians had to fight their way over a sea wall which they successfully did. The 6th Canadian Armoured Regiment (1st Hussars) and The Queen’s Own Rifles of Canada achieved their 6 June objectives, when they drove over 15 kilometres (9 mi) inland. In fact, they were the only group to reach their D-Day objectives.
By the end of D-Day, 15,000 Canadians had been successfully landed, and the 3rd Canadian Infantry Division had penetrated further into France than any other Allied force, despite having faced strong resistance at the water’s edge and later counterattacks on the beachhead by elements of the German 21st and 12th SS Hitlerjugend Panzer divisions on June 7 and June 8.
The Brits landed at Sword and Gold beaches. At Gold the 50th (Northumbrian) Infantry Division landed with heavy casualties, but overcame the obstacles and drove about 10 kilometers off the beach.
Led by amphibious tanks of the 13th and 18th Hussars, the landings on Sword went rather well with elements of the 8th Infantry Brigade driving 8 kilometers off the beach.
And the final beach, Utah, saw the 23,000 troops of the US 4th Infantry Division land. Through a navigation error they landed on the western most part of the beach. That happened to be the most lightly defended as well. Taking full advantage of the situation, the division fought their way off the beach and through the German defenses linking up with the 502nd and 506th Parachute Infantry Regiments of the 101st Airborne Division which had dropped in the night before and secured the inland side of the beach exits.
The liberation of Europe had begun. But it was costly. Of the total 10,000 casualties suffered that day on the beaches by the allies, the US had 6,603 of which 1,465 were killed in action. The Canadians suffered 1,074 casualties (359 KIA) and the British had 2,700.
Men who had never set foot on the continent of Europe before died trying to liberate it that day. Today most of them lie in quiet graveyards near where they fell, the only piece of land ever claimed, as Colin Powell said, was enough to lay them to rest. 65 years ago, as the guns boomed, the shells exploded and desperate and courageous men made life and death decisions on the bloody sands of Normandy beaches, the fate of the world literally hinged on their success.
I think it is important, on this day to remember that. It is also just as important to remember that had the rest of the world taken the threat posed by the evil of Nazi Germany seriously earlier than they did, the possibility exists that such a fateful landing would never have been necessary.
But it was. And to those who made it, liberated Europe and destroyed the evil that was Nazi Germany, they have my undying respect and deserve to have what they did -and why they did it – remembered by all for eternity.
Another indicator that those in charge haven’t a clue about what they’re doing and anything they say or claim should be taken with a large grain of salt.
So let’s see, given the “logic” which has driven the “solution” thus far, what this calls for is more stimulus money, right?
Some indicators are looking better, but others, not as good:
While the U.S. economy is showing signs of stabilizing from a recession that started in December 2007, it’s “way too early” to say the contraction is over, said the head of the group that officially makes the call.
Gross domestic product estimated on a monthly basis “had a trough earlier this year, but it is way too early to say that it is a true trough rather than a pause in a longer decline,” said Robert Hall, who heads the National Bureau of Economic Research’s Business Cycle Dating Committee.
So while you continue to hear the happy talk about economic recovery, the experts aren’t yet ready to say whether we’ve bottomed out or are just taking a breather in the midst of a longer decline.
Barack Obama recounted the contributions of Islam yesterday during his speech in Cairo. This may not have been what he was talking about:
German media outlets reported last week that a Saudi inventor’s application to patent a “killer chip,” as the Swiss tabloids put it, had been denied.
The basic model would consist of a tiny GPS transceiver placed in a capsule and inserted under a person’s skin, so that authorities could track him easily.
Model B would have an extra function — a dose of cyanide to remotely kill the wearer without muss or fuss if authorities deemed he’d become a public threat.
The inventor said the chip could be used to track terrorists, criminals, fugitives, illegal immigrants, political dissidents, domestic servants and foreigners overstaying their visas.
Another wonderful tool for the state. My guess is it will be beta tested in NoKo.
That’s what John McCain has said about the Obama tendency to appoint “czars” to oversee various issues. As McCain points out, these czars operate outside of any real oversight.
And apparently there’s going to be another new “czar” in town. A – are you ready for this? – “pay czar”.
The Obama administration plans to appoint a “Special Master for Compensation” to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.
The administration is expected to name Kenneth Feinberg, who oversaw the federal government’s compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.
A tendency toward fascism?
I’d have to say yes. There’s no question that this is a very deep intrusion into the management of a company which will have negative consequences on down the road (the companies still compete for talent in the same pool as companies not under these restrictions). But apparently their competitive health is less important than enforcing some arbitrary and political level of “fair” compensation.
Politics and special interests now run General Motors – a company which should be making business decisions based on what is best for the company and its future and not what is best for some politician:
Rep Barney Frank (D-Mass.) won a stay of execution on Thursday for a General Motors plant in his district that the automaker had announced it would close.
No other lawmaker has managed to halt the GM ax. As chairman of the House Financial Services Committee Frank oversees the government’s bailout program, known as TARP. Frank’s staff said the lawmaker spokes with GM CEO Fritz Henderson on Wednesday and convinced him to keep the Norton, Mass. plant open for at least 14 months.
Because what happens in about 14 months boys and girls?
The 2010 midterms. And who controls all the bailout programs? Why the guy who was able to change Government Motors mind on the plant in his district.
Of course had some backbench freshman congressman from a red state district made the same request, what do you suppose the answer would have been? It doesn’t get any more blatant than this — but who among our “leaders” has the stones to call him on it?
About the only thing you could hope for in this instance is a bankruptcy judge would say “no dice” and force GM to carry out its original plan, but as stagemanaged as this whole bankruptcy procedure is, I doubt something like that would happen.