I‘m still in rather stunned disbelief about the White House ousting GM’s CEO.
It’s not about how good a CEO he was or whether I agreed with his plan, his leadership style or his results. It’s about the White House going so far as to ask him to step aside. And, according to Obama’s own statement today, his “team” will “working closely with GM to produce a better business plan”.
Why, that sounds like something we’ve seen pass this way before and firmly rejected:
Italian Fascism often involved corporatism, a political system in which economy is collectively managed by employers, workers and state officials by formal mechanisms at national level.
Now I’m sure there are those out there who will argue that this is hardly a “formal mechanism”. But of course that’s simply not true. It is formal enough that a CEO is gone. Someone believes it is a mechanism of some formality for that to happen. And, if you think about it, it is just one more mechanism among many that have been put forward lately. Timothy Geithner’s plan to have the government take over financial institutions and hedge funds if the government deems them a threat to the economy’s well-being, for instance.
After all the caterwauling by the left about “unprecedented executive branch power expansion” during the Bush years, they’re rather quiet about these. The market, however, has cast it’s vote. Down about 300 at 4pm.
And this is all based in a false premise – something I’ve noticed that Obama uses quite effectively:
“We cannot, we must not, and we will not let our auto industry simply vanish,” President Obama said at the White House.
Anyone – who would expect the domestic auto industry to ‘simply vanish’ if the companies were left to go the traditional route of bankruptcy?
Since when does bankruptcy equal “vanish”? Delta airlines seems to have survived it quite well, thank you very much. Their bankruptcy or the bankruptcy of other domestic airlines hasn’t seen the domestic airline industry “vanish”. Why would anyone believe it would happen if GM or Chrysler went bankrupt?
And that said, what did he suggest in his speech today?
The administration says a “surgical” structured bankruptcy may be the only way forward for GM and Chrysler, and President Obama held out that prospect Monday.
“I know that when people even hear the word ‘bankruptcy,’ it can be a bit unsettling, so let me explain what I mean,” he said. “What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so they can get back on their feet and onto a path to success; a tool that we can use, even as workers are staying on the job building cars that are being sold.”
Seems like that is precisely what all of us were telling them to do before they started throwing bucketfuls of imaginary dollars at the two companies, wasn’t it? And you can call it “surgical”, “structured” or whatever you want in an attempt to spin this as something other than fairly ordinary bankruptcy procedures, but that’s what they’re talking about.
One of the primary reasons they’ve attempted to keep these companies out of bankruptcy court can be described in three letters: UAW.
Their problem isn’t just “old debts” which need to be cleared away. Instead it is what is euphemistically called “legacy costs” which would go as well. And those “legacy costs” include the gold plated benefits the UAW now enjoys and doesn’t want to give up.
Administration officials on Sunday made it clear that an expedited and heavily supervised bankruptcy reorganization was still very much a possibility for both companies. One official, speaking of GM, compared such a proceeding with a “quick rinse” that could rid the company of much of its debt and contractual obligations.
The thing to watch out for is whether or not this “quick rinse” in a “heavily supervised bankruptcy reorganization” included “contractual obligations” to unions. If not, it will be a “quick rinse” of taxpayer’s wallets.
Among challenges the administration faced leading up to this weekend’s decision, foremost were the efforts to draw steep concessions from the United Auto Workers union and from the bondholders.
Attempts to solidify deals with the UAW and bondholders were slowed by disagreements by both parties over how exactly the other party needed to budge. The UAW, for instance, insists it already made health-care concessions in 2005 and 2007, and argues that the bondholders have never been asked to concede anything.
“I don’t see how the UAW will do anything until they see what the bondholders will give up,” one person involved in the negotiations on behalf of the UAW said Sunday.
Progress? Apparently both GM and Chrysler have been negotiating with both the bondholders and the UAW. But there’s not much to report there:
Both GM and Chrysler are negotiating with the UAW to accept a range of cost-cutting measures, including greatly reduced work forces, lower wages and a revamped health-care fund for retirees.
GM and representatives for its bondholders remained in talks over the weekend about a deal that would force these investors to turn in at least two-thirds of the value of the debt they hold in exchange for equity and new debt.
This arrangement would force GM to issue significantly more stock than what is currently being traded in the market. In addition, the government is being asked to guarantee the new debt with federal default insurance in order to entice bondholders who otherwise wouldn’t be interested in participating in the swap.
If GM can’t eventually forge a deal with the ad hoc committee representing the bondholders, the company may be forced to issue a debt-for-equity swap without the blessing of some of its biggest and most influential unsecured investors. This would heighten the possibility of the company eventually needing to file for Chapter 11 bankruptcy protection.
Or said another way, they’ll end up doing what we said they should have done in December, less umpteen billions of taxpayer money poured down a rathole. Of course, had they reorganized under Chapter 11 as we all said they should, the Obama administration wouldn’t have been able to make this unprecedented power grab, would it?
Jason Pye and I have – unbeknownst to the other, which we each found hilarious – applied for and become “Examiners” for the Atlanta Examiner. What that essentially means is we write for an online publication (Examiner.com) and actually get paid to do so.
However, and this is the part I actually love – it really brings the libertarian out in me – we get paid for the number of page views we generate. So our pay is based on how many eyes we bring to the articles we write.
As you might imagine, they’re more locally focused and pertain to topics we may or may not cover here at QandO. However, being the “Atlanta Libertarian Examiner” and Jason being the “Georgia Libertarian Examiner” we pretty much have the freedom to write about what we want to. What I’m trying to do, as is Jason, is keep it pertinent to the location but still spread the libertarian message.
Your support is requested. If you will take a short moment and click in. Check out the articles. Jason and I will be embedding links in various posts as we put new articles up on Examiner.com. Your feedback and comments are solicited and welcome. But remember, clicking in helps pay the writer and I can promise you both writers would very much appreciate those clicks.
Thanks for your indulgence and support. Both are appreciated. Thus ends the commercial.
I thought I’d quickly steal that title from one of our commenters (Brown). It pretty much encapsulates the latest and rather significant change as apparently the CEO of General Motors stepped down at the behest of the White House. Apparently Obama is now in the car business.
The two following paragraphs are significant:
“We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement,” the company said.
The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.
The folks who run the post office and Amtrack are now stepping in to run the auto industry. That’s not to say the auto industry has done so well itself, but there’s a market result for poor leadership, and it isn’t to prop up the industry and let government run it.
I’m sorry but this pain avoidance scheme which is costing us trillions of dollars we don’t have has now spun off into the absurd. If you think the auto industry is ailing now, just wait until the “Administration” engages in “restructuring the US auto industry”.
I‘m headed to a rather somber ocassion, where the family of a young paratrooper who served with the 173rd Airborne Brigade Combat Team will be presented his posthumous award of the Silver Star. It will be awarded in the high school auditorium from which he graduated.
I did aSomeone You Should Know segement about the fight in Wanat, Afghanistan where 9 soldiers lost their life. But they gave much better than they got, killing well over 100 Taliban and al Qaeda.
The young man being honored today is Cpl. Joseph Ayers. This from the script of the SYSK delivered on WRKO 680am, Boston on Pundit Review Radio:
At another spot on the observation post, Cpl. Jonathan Ayers laid down continuous fire from an M-240 machine gun, despite drawing huge volumes of small-arms and RPG fire from the enemy.
The enemy put everything they had into knocking out that machine gun. At least 5 or 6 RPGs exploded all around him and he never even flinched. Those that saw what he did said, “He just kept rocking on that 240.”
The survivors said it was the most heroic thing they’d ever seen. Like a movie. They feel he saved their lives. He kept the enemy from getting anywhere near COP. And Ayers kept firing until he was shot and killed.
I’ll have more on this later.
UPDATE: Well that was one heck of a great ceremony. The auditorium was packed. The Patriot Guard lined the room. Old members of the 173rd Airborne Brigade (from my era) were on hand. So were Cpl Ayer’s comrades. His mother had decreed (in a motherly way) that this ceremony not be a memorial service but, instead, a celebration of his life. And that’s precisely what it was. Speaker after speaker talked about Jonathan, his life prior to the Army, the fact that he was the commander of the JROTC unit at Shiloh High School and that the military seemed always to be in his future.
His former company commander, who will receive the Silver Star in a ceremony at Ft. Benning tomorrow, talked about the fact that had it not been for Jon Ayers, he wouldn’t have the honor of standing on that stage addressing Ayer’s family. His mother, Susan, talked about the son she’d lost but was so proud of the man he’d become. And his father brought the house down with a poignant yet humorous remembrance of his son. After the presentation of the Silver Star to the family, the family was the first to leave and then other relatives. When the soldiers who had served with Jon rose to walk out, the entire auditorium stood and applauded them. 16 Sky Soldiers from Chosen Company of the 1st of the 503 Airborne Infantry battalion lost their lives during their tour in Afghanistan. Over 60 of them were awarded Purple Hearts. 14 Silver Stars. One Distinguished Service Cross was awarded to a member of the company and one is pending. And one soldier from the company has been nominated for the Medal of Honor.
It was an inspiring afternoon – one remembering a young man who gave his all for a unit, in which his mother said, he was so proud to serve he found it difficult to express the full depth of his pride. Today they honored him.
Oh, good – another meaningless, feel-good effort in which to participate (or not):
EARTH HOUR is about to sweep around the world in what the United Nations is calling “the largest demonstration of public concern about climate change ever attempted”.
The event, which started in Sydney two years ago, will see well over 3000 cities and towns in more than 90 countries switch off their lights for an hour this year. Hundreds of millions of people are expected to take part.
From the international dateline, Earth Hour starts in New Zealand’s Chatham Islands this afternoon and will conclude in Honolulu tomorrow night (Sydney time).
In between, tens of millions of houses and public buildings will dim their lights to call for an effective global deal to cut greenhouse gas emissions. More than 10,000 street parties are planned. Sydney’s turn comes at 8.30 tonight.
Sounds like a lot of fun – partying in the dark I mean.
Frankly I like James Taranto’s idea from yesterday better:
Reader, if you are against global-warming hysteria, high taxes, socialized medicine and a weak foreign policy, Sunday is your day. Show how you feel about the issues by turning on your lights in the evening and leaving them on until you go to bed. If you go out for a drive after dark, make sure you turn your headlights on too.
Granted, the EarthHour people have a head start on us. They started planning this months ago, whereas we’re giving you all of 48 hours notice. Yet we think the outlook is bright for this effort. Tell your friends, tell them to tell their friends, and so on, and we’ll bet millions of people across the country will turn their lights on Sunday night.
If no one will listen to the silent majority, let’s at least make sure they see us.
I continue to be amazed that seemingly smart people are just suddenly figuring this out. “Blinders” doesn’t begin to describe what it must have taken to ignore Obama’s lack of experience and to hope the fact that he’d never displayed a scintilla of leadership in anything he’d ever done would somehow rectify itself prior to his assumption of office.
The latest to drop the blinders is the Economist, which heartily endorsed Obama’s election:
His performance has been weaker than those who endorsed his candidacy, including this newspaper, had hoped. Many of his strongest supporters—liberal columnists, prominent donors, Democratic Party stalwarts—have started to question him. As for those not so beholden, polls show that independent voters again prefer Republicans to Democrats, a startling reversal of fortune in just a few weeks. Mr Obama’s once-celestial approval ratings are about where George Bush’s were at this stage in his awful presidency. Despite his resounding electoral victory, his solid majorities in both chambers of Congress and the obvious goodwill of the bulk of the electorate, Mr Obama has seemed curiously feeble.
You can still read read the disbelief in that paragraph. Question for the Economist – what leadership position of any importance has the man ever held that would indicate he had what it took to lead as President?
And why didn’t you explore that question, its answer and ramifications before you jumped on the Hope and Change bandwagon?
UPDATE: Ed Morrisey at Hot Air has thoughts on the article as well.
From Jim Harper of CATO speaking of the Obama on-line “Townhall meeting” yesterday:
President Obama promised to make his administration the most open and transparent in history, and taking questions from the public kind of looks like that. But it also kind of looks like gimmicky, a canned publicity stunt, rather than true openness in government.
Real transparency would include fulfilling his campaign promise to post bills online for five days before signing them. The President has now signed ten bills into law and not subjected any of them to that five-day public review.
Ten bills. That’s zero for ten in the transparancy department.
Yup, we’re just in too much of a hurry to really be transparent, apparently. And the press is doing such a great job of keeping Mr. Transparancy’s feet to the fire, isn’t it?
That is, why it isn’t the solution it is touted to be. Jeffrey Sachs of the Financial Times:
The Geithner-Summers plan, officially called the public/private investment programme, is a thinly veiled attempt to transfer up to hundreds of billions of dollars of US taxpayer funds to the commercial banks, by buying toxic assets from the banks at far above their market value. It is dressed up as a market transaction but that is a fig-leaf, since the government will put in 90 per cent or more of the funds and the “price discovery” process is not genuine. It is no surprise that stock market capitalisation of the banks has risen about 50 per cent from the lows of two weeks ago. Taxpayers are the losers, even as they stand on the sidelines cheering the rise of the stock market. It is their money fuelling the rally, yet the banks are the beneficiaries.
If you’ve been wondering why the stock market had a short rally upon its announcement, there’s your explanation. You need to read the whole thing as Sachs uses a simple example to explain his point. He concludes with:
Tim Geithner, Treasury secretary, and Lawrence Summers, director of the White House national economic council, suspect that they cannot go back to Congress to fund their plan and so are raiding the Federal Reserve, the Federal Deposit Insurance Corporation and the remaining Tarp funds, hoping that there will be little public understanding and little or no congressional scrutiny. This is an inappropriate institutional use of the Fed, the FDIC and the Tarp. Mr Geithner and Mr Summers should at the very least explain the true risks of large losses by the government under their plan. Then, a properly informed Congress and public could decide whether to adopt this plan or some better alternative.
But, of course, we’re just in too big of a hurry and the situation is too dire to actually discuss and debate the situation or do it properly through Congressional action. Instead we’ve been sold a bill of goods which, disguised as a way out, is simply a rip off of the taxpayer – again. As Jennifer Rubin notes:
So to avoid the overwhelming popular objection to perpetual bailouts and expenditures, the Obama administration will do this all “off budget” and with no hearings, Congressional debates, or votes. Not very transparent and quite imperious, when you get right down to it.
Yeah, not very “hopey changey” is it?
I’m warming more and more to my suggestion that government officials be compensated the same way they think CEOs should be compensated. If this ends up being a big loss to the taxpayer, Geithner and Summers should receive zero compensation for the outcome. And that would also go for anyone else in the administration or Congress who had a hand in implementing this plan.
Doug Heye points out something of which I’m sure few people are aware:
The Democratic Senatorial Campaign Committee (DSCC) has apparently decided to keep $100K in contributions from Bernie Madoff, who faces up to 150 years in prison for swindling billions from the likes of Steven Spielberg, Elie Wiesel, Kevin Bacon and Kyra Sedgwick in a massive Ponzi scheme.
In campaigns, one side often calls on the other to return money for one reason or another. Sometimes it’s valid, sometimes not. Regardless, it’s Campaign 101. But when the contributor in question is the single biggest financial criminal in history, there can be no question that those illicit funds should not remain in campaign coffers.
Given the economic uncertainty our nation faces and that Madoff not only fleeced the rich and famous but major corporations such as HSBC — in other words, Madoff swindled all of us — the DSCC’s decision is shockingly tone-deaf.
No kidding. People all over have been fleeced by this guy, they’re looking all over for assets with which to recover some of the funds and pay back the investors and the DSCC is keeping the funds he sent them. Shocking.
What isn’t shocking, however, is what Heye notes next:
However, what’s almost equally surprising is the virtual silence from the media. During the Enron scandal, returning campaign money was a daily drumbeat, as were the news stories discussing Enron’s purported ties to President Bush. Now, when the Democratic Senate campaign vehicle makes the conscious decision to keep $100K in Madoff money, stolen just as if it came from a bank holdup, there’s little to no outrage.
Heye seems surprised and asks “why” this is receiving no coverage.
Most of the rest of us are just shaking our heads knowingly and are not at all surprised by that fact.
UPDATE: Commenter Linda Morgan provides a link from the Washington Times, apparently the only MSM outlet which carried the story, with some positive results:
One day after The Washington Times reported that a key Democratic fundraising group was holding onto $100,000 from disgraced financier Bernard Madoff, the Democratic Senatorial Campaign Committee decided to donate the money to his victims.
“We’re reviewing this internally, and decided to give the money to the trustee for distribution to the victims,” DSCC spokesman Eric Schultz told Roll Call on Thursday.
Given the fact the Madoff scandal is old enough that he’s been to trial, plead guilty and is awaiting sentencing, you have to wonder why it has taken this long for the DSCC to “review this internally”.
And yes, it’s another Republican:
Sen. Orrin Hatch, R-Utah, may be a skinny guy with a high voice. But he’s angrily setting out to tackle the biggest powers in college football, vowing to pound them until they reform the Bowl Championship Series.
He called them out Wednesday, as he and Sen. Herb Kohl, D-Wisc. — respectively the top Republican and Democrat on a Judiciary subcommittee on antitrust — released a list of topics that panel plans to consider this year.
A bit buried on Page 4 of an eight-page list, amid somewhat sleep-inducing reading on oil and railroad antitrust, is a nifty paragraph about the BCS.
“The BCS system leaves nearly half of all the teams in college football at a competitive disadvantage when it comes to qualifying for the millions of dollars paid out every year,” their joint statement says.
Then it drops its first unexpected bomb: “The subcommittee will hold hearings to investigate these issues.”
That is followed by a second: “Sen. Hatch will introduce legislation to rectify this situation.”
Hatch’s office did not comment about exactly what may be in the yet-to-be-written bill — including whether it might attempt to mandate a playoff system similar to that in college basketball, or simply mandate that all colleges be given a fair shot to play their way into a national championship.
no one is particularly happy with the BCS and how they rank colleges or the method of “playoff” they’ve come up with. However let me be very clear here. This is none of Congress’s business. None. Nada. Zip. Zero.
Sorry if BSU was 13-0 and wasn’t crowned national champs. But that’s life and the system that’s in place. Get over it and worry about the things which are important – like shrinking government instead of making it more intrusive.
I’m coming to the conclusion we should hold Congress to the same standard as concerns their pay as we held AIG about the bonuses.
If we did that, most of these yahoos would be flat broke or owning the Treasury money at the end of the year. That’s certainly one way to cut spending.
[HT: Liberty Papers]