This week, the Obama “pay czar”, Kenneth Feinberg announced that he would be cutting the cash salaries of TARP company executives by 90% and total compensation by 50%. My first reaction to this was utter elation. The part of me that is fed up with arrogant corporate CEO’s who are oblivious to the economic suffering of this country, and their contribution to it, raised his fist in a defiant “screw the fat cats!” It’s about damn time!
Then I paused a moment and thought, wow, I’m no expert on socialism but isn’t this the government controlling the detailed operations of what used to be free enterprise? Well, yes it is. So should we all be wringing our hands saying that Limbaugh, Beck and Malkin were all correct? Is it socialism today and communism tomorrow?
No, I don’t think so. What we’ve got here is an odd mix of socialism and capitalism tossed together and only for the time being. The government doesn’t own a huge stake in these TARP companies, we do! We, the taxpayers own a large chunk of these companies and we should be very pleased that the government, our proxy, is making these companies accountable for their behavior. Once these companies (AIG, Bank of America, Citigroup, GM, Chrysler and the two car company financing divisions) pay us back our money, then we will get out of their business. Until then, they should at least partially answer to us.
I call this socialist capitalism. It’s a free market system which when it breaks down based on abuses, stops being totally free and gets a good government slap on the wrist. It’s the answer to capitalism on steroids, which is what I believe got us into our current mess. As long as the government knows when to back off, I see no problem with this approach.
Let’s see what you think:
Republican Schism and the Palin Factor (or How Sarah Parted the Red Sea)
In a recent post, I warned of the imminent demise of the Republican party but I was wrong about how Sarah Palin could be instrumental in it. I’ve always seen Palin as pulling the party so far to the right that they fall off the edge of the Earth. What I didn’t count on was that our darling maverick would go completely rogue on the GOP and back a candidate opposing the Republican Party. But yes friends, that is indeed what has happened. In the 23rd congressional district House race in New York, Sarah Palin has endorsed Conservative Party candidate, Doug Hoffman over Republican Party candidate Deirde “Dede” Scozzafava. By helping to dilute the conservative vote, Sarah may hand the traditionally Republican district over to Democrat Bill Owens on a silver platter.
When the CEO of General Motors was essentially fired by the US government today, I must confess that it took me aback a bit. Is this the price of bailouts that our government now has the power to force leaders of industry into resignation? If we buy the premise that we all now own GM and that GM must be accountable to the tax payer, then I suppose Rick Wagoner’s ouster is completely legit. Still, I get a bit of unease in my stomach when I see the government intervening in the affairs of a corporation like this. I’m not ready to call it socialism but it sure feels strange.
Then again, when I was laid off by a Fortune 500 company back in 2007, I sure would have loved to call up the President of the United States and say, “hey could you fire the CEO of the dumb-ass company that let me go?” Who knows, there could be a number of former (or even current) employees of GM who are dancing the jig right about now.
America Don’t Need No Republicans! We need British Conservatives!
Last week, in another attempt to prove just how brain dead they are, the Republicans released their 19 page alternative budget. Here was Press Secretary Robert Gibbs’ assessment:
That this is the opposition party, should make American Conservatives despondent to the point of near suicide. They are being led by clowns. As he was exiting the announcement of this important Republican initiative, Representative John Boehner was asked if the alternative budget would have more bailouts. His response: “Uhhhh, we’ll see.”
The conservative cure my friends is to toss the entire Republican party and import the British Conservative party! As you watch this speech by European Parliament member Dan Hannan, think about doofus Boehner and contrast the two in your mind:
Now this fellow has bollocks, or balls as we would say. Direct, intellectual and incredibly articulate. Heck, maybe I’m just in love with the British accent? In any case, as I’ve been saying for some time now, the Republican party desperately needs an intellectual to take hold of the steering wheel. Watching Hannan only further drives home this point.
I ask my Republican friends, aren’t you tired of being led by Beavis and Butthead?
In this week’s address, the President-elect oddly ignores the elephant in the room. What is on most people’s minds right now is the recently defeated effort to rescue the Big 3 automakers. The sticking point appeared to be the UAW’s refusal to take immediate pay cuts in order to get the 14 billion bailout. The Republicans in the Senate have been accused of union busting. At first, I was disappointed that the UAW stuck to its guns on this until I was reminded that no where in the proposed bailout plan is an immediate requirement for executive pay cuts or even better, executive resignations.
As I have said before, no matter how this goes down, the blue collar worker is the one who will get shafted. If the GM and Chrysler (Ford finally said “we don’t need your money”) don’t get the money heads will roll. If they get the money and re-tool their business, heads will roll. It really does not matter. I still stick to the principle that in a capitalist society, companies that cannot succeed, deserve to fail.
Here is the solution that I have not heard from anyone. The Fed and the Governor of Michigan, Jennifer Granholm should sit down with Toyota, and Volkwagen, to name two good companies, and work out a plan where these companies would receive government subsidies to purchase and operate all of the GM and Chrysler plants. They would agree, at least for a period of time, to take over the brands made famous by GM and Chrysler (Cheverolet, etc.). Essentially, GM and Chrysler would sell themselves to these companies who are doing quite nicely, thank you, down in Alabama and other Southern states.
Many have said “America cannot afford to not have an auto industry.” Nonsense. America cannot afford to have millions unemployed. The notion of an American company is passe. We live in a global market and where a particular company’s headquarters resides has little relevance to international economic health. What we are talking about here is nationalistic pride and in this case, pride goeth before the fall. We need to save jobs not companies.
As for Barack Obama’s address, while he did not discuss our most pressing problem, he did discuss his plans for one of our other very distressing problems, namely the housing crisis. He announced today the appointment of the Secretary of Housing and Urban Development (HUD), Shaun Donovan, a former HUD employee from the Clinton administration who has most recently done outstanding work under Mike Bloomberg in New York City.
The other night I watched documentarian Michael Moore on MSNBC’s “Countdown with Keith Olbermann” discuss the potential government bailout of the Big 3 auto makers. I agree with Moore’s opposition to the bailout but I got taken in by another comment of his that I then had to back up and reevaluate. Moore touched on the notion that the auto bailout involves some sort of class warfare. He made similar remarks in the Huffington Post:
Two weeks ago, the CEOs of the Big 3 were tarred and feathered before a Congressional committee who sneered at them in a way far different than when the heads of the financial industry showed up two months earlier. At that time, the politicians tripped over each other in their swoon for Wall Street and its Ponzi schemers who had concocted Byzantine ways to bet other people’s money on unregulated credit default swaps, known in the common vernacular as unicorns and fairies.
But the Detroit boys were from the Midwest, the Rust (yuk!) Belt, where they made real things that consumers needed and could touch and buy, and that continually recycled money into the economy (shocking!), produced unions that created the middle class, and fixed my teeth for free when I was ten.
The other way it has been put is if you shower before you go to work you get a bailout. If you shower when you get home from work, you don’t.
I say baloney! The two bailout scenarios are in one way fundamentally different and in one way fundamentally identical in such a way as to make the class warfare cries absurd. First the TARP (Troubled Assets Relief Program) designed to bailout the financials was implemented to stop a cross-industry international disaster. The goal was to prevent a complete financial meltdown which would effect virtually every citizen. On the other hand, the bailout of the “auto industry” is an attempt to rescue three poorly run companies who deserve to suffer the same death as every unsuccessful company in a capitalist society. Will the failure of these companies cause ripples outside the auto industry? Of course, but the ripples will not go out nearly as far as the tsunami created by a complete financial meltdown. This fundamental difference means the solution to the two problems should not be identical. It’s not class warfare, it’s capitalism.
Second, there is a fundamental similarity to the two bailouts that makes the class warfare complaint a non-starter. There is this misconception that while the TARP bailed out rich fat-cats, the auto bailout gives relief to the blue collar working man. Sorry folks, the auto bailout will give relief to the white collar, multi-million dollar salaried executives who ran their companies into the ditch. Guess what each company plans to do after they get the government money? They plan to layoff thousands of workers. This bailout will save the CEO’s asses, none of whom have volunteered to resign if their companies get the money. The blue collar, salt-of-the-earth, shower-after-work guys are still going to get royally screwed.
Interestingly, for all his populist talk, I think Moore ultimately understands this. He knows the problem with the Big 3 is corporate mismanagement and that, not class-ism is the reason the government should not give them a red cent.
I Got Punk’d — NOT
Dead set on not being played a fool like Sarah Palin, Florida Representative Ileana Ros-Lehtinen hung up on President-elect Barack Obama not once but twice.
Obama called her cell phone to congratulate her on her recent election win despite the fact that she is a Republican who supported John McCain. Ros-Lehtinen was convinced that in no political reality that she had ever experienced could such a thing happen. So she assumed it was a prank call from a local radio disc jockey, much like the fake-Sarkozy call that Sarah Palin fell for over a month ago. As Obama introduced himself, Ileana interrupted him, told him she wasn’t going to fall for the prank and then hung up on him.
Obama’s choice for Chief of Staff, Rahm Emanuel then called her. With Emanuel and Obama both on the line, Ileana was not buying it and she hung up again. Finally, her colleague Howard Berman called her to clear up the matter and she made him answer a question that only he could answer before she even believed he was legit. This lady is hard core! Once Berman convinced her that she had indeed been called by Obama, she asked that the President-elect call her one more time. They had a good laugh and no permanent harm was done. Reportedly, Ros-Lehtinen told Obama,
“You are either very gracious to reach out in such a bipartisan manner or had run out of folks to call if you are truly calling me and Saturday Night Live could use a good Obama impersonator like you,”
For the past few days I have been waffling on the subject of whether our government should bail out the big three auto makers. On the one hand, this is a capitalist country and the way capitalism works is if you can’t compete, you lose. Period.
On the other hand, our economy is in the tank and the failure of our auto industry would send ripples through all sorts of directly and tangentially related businesses. As they said about AIG a few weeks ago, the Big 3 may be too big to fail.
I’m waffling no more and you know what tipped the scales for me? The CEO’s of Chrysler, GM and Ford, testified before Congress this week in an attempt to get a bailout loan. Guess how these guys got from Detroit to Washington D.C.? Using their private jets. Not even just one private jet. Three private jets at an estimated cost of $20,000 each. The arrogance on display here is beyond measure. These guys don’t get it and Congress did not turn a blind eye to it either. Representative Gary Ackerman put it nicely:
“There’s a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands,” Rep. Gary L. Ackerman (D-N.Y.) advised the pampered executives at a hearing yesterday. “It’s almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo. . . . I mean, couldn’t you all have downgraded to first class or jet-pooled or something to get here?”
So you know what I say to these arrogant, in-the-pocket-of-the-oil-company fat cats? File chapter 11 like every other business that can’t compete. You’ve had your head up your hind quarters for decades, resisting every suggestion to modernize the fleet and make your cars both competitive and future oriented (i.e. more electricity, less gasoline).
Now there are those who ask whether this hard line attitude is worth the damage that could be done. I have heard only one credible objection to the auto makers going bankrupt and that is that no one will buy a car if they can’t be sure the maker will be around to warranty the car down the line. So, I suggest that the government play a limited role here. How about a government subsidized warranty program for the auto makers until they get back on their feet? This way the money is specifically targeted towards helping the auto makers maintain sales while they retool their organizations.
Bottom line: the CEO’s joyride to Washington is proof positive that they are unfit to lead this industry into the future. Their companies need to go bankrupt, re-organize with a new business plan and clean up shop. One of the on air pundits suggested putting Steve Jobs in charge of the retooling. It’s a damn good idea. As my wife says, give Steve Jobs a year and we’d have the i-Car. It would sell like hotcakes and would address the environmental and economic concerns that the auto industry has ignored for the past 30 years.
Welcome to Socialist Capitalism and Palin Parts the Red Sea
Then I paused a moment and thought, wow, I’m no expert on socialism but isn’t this the government controlling the detailed operations of what used to be free enterprise? Well, yes it is. So should we all be wringing our hands saying that Limbaugh, Beck and Malkin were all correct? Is it socialism today and communism tomorrow?
No, I don’t think so. What we’ve got here is an odd mix of socialism and capitalism tossed together and only for the time being. The government doesn’t own a huge stake in these TARP companies, we do! We, the taxpayers own a large chunk of these companies and we should be very pleased that the government, our proxy, is making these companies accountable for their behavior. Once these companies (AIG, Bank of America, Citigroup, GM, Chrysler and the two car company financing divisions) pay us back our money, then we will get out of their business. Until then, they should at least partially answer to us.
I call this socialist capitalism. It’s a free market system which when it breaks down based on abuses, stops being totally free and gets a good government slap on the wrist. It’s the answer to capitalism on steroids, which is what I believe got us into our current mess. As long as the government knows when to back off, I see no problem with this approach.
Let’s see what you think:
Republican Schism and the Palin Factor (or How Sarah Parted the Red Sea)
In a recent post, I warned of the imminent demise of the Republican party but I was wrong about how Sarah Palin could be instrumental in it. I’ve always seen Palin as pulling the party so far to the right that they fall off the edge of the Earth. What I didn’t count on was that our darling maverick would go completely rogue on the GOP and back a candidate opposing the Republican Party. But yes friends, that is indeed what has happened. In the 23rd congressional district House race in New York, Sarah Palin has endorsed Conservative Party candidate, Doug Hoffman over Republican Party candidate Deirde “Dede” Scozzafava. By helping to dilute the conservative vote, Sarah may hand the traditionally Republican district over to Democrat Bill Owens on a silver platter.
Wonder how much the GOP loves Sarah now?
Respectfully,
Rutherford
WordPress.com Political Blogger Alliance
October 23, 2009 at 11:33 pm Rutherford 211 comments