How does a bailout work?
Picture a guy with a bucket, dipping the water out of a sinking boat; but in
this case the boat is in your living room. This analogy may sound silly, but so
is the idea that the give-away called bailout is free. First it was the
mega-banks, stock brokers and insurers, the latest being Citibank, and now our
biggest three auto makers and financiers of oversize gas-hogs.
We are being bailed in to
pay for the Big 3’s mistakes. Who will dip the water out of my boat… take
over my Hummer $550 per month payments, payable to GM Credit?
As the water dumped over the side
of the sinking boat has to go somewhere, so also does the money poured into the
leaky boat cost someone. Why can everyone but Congress understand this?
Perhaps auto and oil lobbies tell them it does not matter! Worse
yet, President-Elect Obama seems to be waffling on a very important position.
Last week his “Transition Team” wanted the Big 3 to be reorganized under
bankruptcy laws before they get any consumer’s dollars. I agree.
But Nancy Pelosi and
Harry Reid on the same day publicly stated that “bankruptcy is not
an option” for the Big 3. They want a “plan” to make them feel good, then
they will approve bailout. Mr. President-to-be Obama is now
strangely backing down to agree with Pelosi and Reid. He seems to have
abandoned his call for bankruptcy reorganization and settled for an
improved “plan,” as AP reported this:
“At a news conference,
Obama was critical of the Big Three automakers, saying he was surprised they did
not have a better-thought-out plan for their future before asking Congress to
approve $25 billion in emergency loans…He said once he sees a plan, he expects
‘we’re going to be able to shape a rescue.'” (AP Nov 25)
No Mr. Obama, you were right the first time. We did not send you to
Washington to back down to the power brokers, even before you arrive! A
Bankruptcy court is the only venue that can reorganize three giant
companies. Congress will not understand it and has no way to police the
promises, made to be broken. The Petosi, Reid Bailouts can not work because the
handout leaves the same people running things.
Obama’s transition staff seems to recognize this and has said
so. Led by bankruptcy law professors, they want a streamlined and
customized procedure so reorganization is not delayed for years in court.
Obama’s advisers are right, bankruptcy is a plan approved by a court with
teeth. The managements of the big three are already discredited,
and the public does not trust them. Let a court examine their
dilemma and unwind it.
Nancy Pelosi and Harry Reid have
had two years to prove themselves incompetent to understand business. They are
better equipped to coach the Washington Redskins than they are to judge a
business plan submitted by the Big 3. I say, “Don’t Bail Me In!”
The Democrat led Congress was
swept into office two years ago in the wake of President Bush’s unprecedented
distrust, and it promptly blew every chance to head off the disaster.
The auto bailout is only the latest of Pelosi and Reid’s blunders.
The ethanol boondoggle early this year continues to pay agribusiness forty-six
cents a gallon right out of the consumer’s pocket to produce “moonshine” and
elevate the price of everything we eat.
It seems Nancy Pelosi is not
capable of recognizing what she does not know, nor it seems is Reid, or they
would never suggest they can judge a business plan for GM, Ford and
Chrysler. They obviously did not take counsel with Obama, but have
now openly contradicted him. Obama needs to stick with his own agenda and never
flip-flop for a lobby. He also needs to replace both congressional leaders and
go back to his original plan for the Big 3 auto reorganization.
It is noteworthy that Wall Street
and the mainline media seem to be supporting the Pelosi plan, and ignoring the
Obama bankruptcy plan.
The Banks love bailout. They go
on deciding their own bonuses and perks and doing business with each
other. They love to make deal with toothless Congress as a creditor, and
they will campaign for the Big 3 Bailout because they are customers of the
bankers.
The Big 3 Bailout is such an
outrageous idea the European trading partners are already hinting that it may
start a trade war. Americans ‘Hypocrisy’ in Auto
Rescue Spurs Me-Too Trading Ire, by Jennifer M. Freedman.
She quotes economist, David Littman of the
Pelosi/Reid bailout:
“hypocrisy at the economic
level and the political level… We tell others to open up their markets and
reduce barriers, and we are doing the opposite.”
The $25 billion the Big 3 beg for
is a hors d’oeuvre for the main course, a bottomless pit that will will destroy
what is left of the dollar.
There is no reason to fear a Big
3 bankruptcy; companies do not stop doing business during bankruptcy, but the
Judge may stop them from paying Wall Street banks and executive bonuses!
Bankruptcy is for the purpose of protecting the ongoing part of business
from creditors, while it disposes of the bad part of the apple, or at least it
attempts to do this. Unsecured creditors and stockholders are usually
wiped out.
A Big 3 bankruptcy
is the best idea around. Yes, Congress should watch the court and
trustees.. It should not try to be the court. Bloomberg
News has made notice of this conflict.
(https://whtt.org/index.php?news=2&id=2701)
We Hold These Truths is
holding to our faith-based tradition in raising this issue. This
economic/political issue is vital to each of us, and is a question of right and
wrong, theft and deception unprecedented in all of recorded history. The FED
is has now announced it expects to created some $7 trillion dollars to
distribute into the banking system for more bailouts, at its sole discretion,
and on top of the $3 trillion already doled out. We have written that
Obama needs to nationalize the FED so he can control its printing and spending. He has appointed its New York President, Timothy F. Geithner to be his Secretary of Treasury
to replace Henry Paulson, so who could better know how to do it?
It is frightening to see Obama back down on a clearly right course.
We want him to declare his independence from the power
structure that tweaks and manipulates Pelosi, Reid and most of the Congress.
If Mr. Obama yields to the will of the Federal Reserve System and the
Washington lobby for international banking, the Big 3, and big energy, he will
lead us into a swamp so wide many of us will not live to see the shore.
Mr. Obama must demand bankruptcy and reorganization for the Big 3, or
anyone else before any consumer’s dollars are spent…a pattern for the future
and a departure from the Bush years.
Obama
Should Ask House Leader Pelosi, Senate Leader Reid To
Resign
https://whtt.org/index.php?id=PhariseeWatch&cat=2#2705
Salvage The
Pieces Of The Big Three, Don’t Try To Patch The Broken Egg
https://whtt.org/index.php?news=2&id=2702
