A very slippery slope…

I like to cut through the bullshit and separate the issues.  Since I’m not making millions of dollars, nor do I need to bow to advertiser interests, I have a lot more wiggle room than the papers and the news networks.  Especially television news or news-entertainment programs like to have compelling stories that will pull the viewer in and make them watch for 25 minutes until they finally show the hook. 

The headlines and lead stories are about how the bailed-out banks are spending their money.  AIG has used it for retention bonuses to some of the very people who nearly collapsed the global economy.  And Citibank needs $10 million for new executive offices.   The general public is outraged.  They’re about to come marching down Wall Street with their pitchforks and torches ablazing. 

Here’s the problem.  AIG had employment contracts that awarded bonuses that were not merit-based.  So no matter how good or bad a job these people did, the checks were going to be cut.  Not bad work if you can get it.  And I’m not saying all these people were saints, but like the old saying goes, a few bad apples spoils the bunch. 

So the federal government sends an ungodly amount of money to the banks in order to keep the world from coming to an end.  Citigroup gets $45 billion in bailouts, and the spend a paltry $10 million in executive office renovations.  It doesn’t look good that the top honchos are getting new mahogany desks, gold-plated carpets, and diamond-encrusted chandeliers for where they have to go to work while the ham-and-eggers are sitting in 20-year-old cubicles.  It makes for a PR nightmare.  But I highly doubt that Citigroup got the call that the feds were sending the trucks full of money, and somebody got on the phone and started calling interior decorators and architects.  If this were any other year, they would have spent this money anyways!

But here’s the rub.  Last year the Bush administration doled out stimulus checks to just about everybody in the country in an effort to give the economy a kick in the pants.  The idea was that we’d just go out and buy new televisions, laptops, and cars with them.  And while a few did, a good number did what they would do given the circumstances…they paid off credit card debt, paid utility or other outstanding bills, or just threw it in the bank.  Now how would we as the general public like it if we were told that after we spent those checks, that we were bad people for paying off credit cards and not buying more consumable goods?  You wake up in the morning and see your name in the paper…can you believe how much he sent to MBNA?  And then you hear an angry mob coming down your street.  It’s the UAW!  And they want to know why you didn’t buy a Dodge Durango!  It doesn’t matter that you weren’t in the market for a new car.  Because if more people spent their stimulus checks on Durangos, Chrysler wouldn’t be shutting down the assembly plant in Newark, DE.  Do you see how ridiculous this is?

The problem is that some people say that the government shout not interfere with big business, and let the market shake things out.  Sometimes you have to bend the rules a little to keep some companies that are too big to fail from failing, because the ripple effect would be much much worse.  Once the government starts tries to run the businesses through specialized regulations, we’re entering very dangerous territory.  They want to tax the AIG bonuses at 90% in an attempt to get some of the bailout money back.  Allowing this kind of legislation to go through sets an awful precedence.  What’s next?  Taxing profits for oil companies whose initials are E.M.?  Or government subcontractors whose name rhymes with Richard Burton?  Perhaps if the government had actually regulated the banking industry instead of letting the equivalent of children running with scissors, we wouldn’t be in the mess after all.

Some things I guess I’ll never understand…

So unless you’ve been living under a rock, you know the economy is in the shitter right now.  So unlike the previous administration, President Obama actually wants to take action.  But with things going to hell in a hand basket so quickly, there’s been a pressing need to get something passed sooner rather than later.  When your kitchen is on fire, the firemen pull up and use a large hose to get the job done ASAP before the whole house burns down.  You deal with the water damage in your other rooms later.  I can deal with that.

But what I disagree with is somebody having the balls to tack on an earmark onto any of the recovery/funding bills.  The whole practice is reprehensible, since everybody knew President Obama was not going to pick that battle at this time. It’s like firemen take their axes to all the walls in the bedrooms “just to make sure the fire didn’t spread”.  It’s completely irresponsible. 

I understand that you need to prop up the banking and insurance industry or the whole thing implodes, but for a fraction of the coin that’s being thrown around, they can’t prop up the auto industry?  Now I know that there’s a cascading effect that it’s not just the manufacturers, but their suppliers, too, and it affects millions of people.  And in the current economy, we really don’t need more people out on the street, losing jobs, losing their homes.  I get it.  However, the pensions and health care benefit obligations really are the anchor around the industry’s neck.

But I still have a gripe with the Big Three.  They have NOT been responsive to the market.  Can they build a truck?  Absolutely…they’re among the best in the world.  But they still haven’t figured out how to build a small or medium sized car.  And time and time again, they still fall short compared to what the Japanese manufacturers are cranking out.  So the question is do you bother to bail out the auto manufacturers or let them die?  Somebody else will fill the demand left in the marketplace.  There’s plenty of other auto manufacturers in the world, many of whom already have a manufacturing presence in this country.  Chapter 11 isn’t the end of the world, and it may just be the slap in the face they need to wake up and smell the coffee.  There really needs to be a shift in the way they do business.  And remember that we bailed out the airlines in 2002, the legacy carriers went through the bankruptcy process, and they’re still in business today.  

For all the people that say the auto industry is too critical to fail in this country, I have one question for you: how, as a country, have we managed to survive without the Pennsylvania Railroad???