How GM Became Uncle Sam’s Bitch
As soon as the news broke about Waggoner’s resignation, I put up a quick post, writing:
“I am no fan of Wagoners, but I have to ask the geniuses behind the bank bailouts: When are you going to ask the TARP and bailout recipients to step down? Ken Lewis being asked to step aside after many years of running BofA ? How about Blankfein? Pandit? And the rest of the TARP recipients?”
That generated the following comment:
I think this is kinda scary that the government can now force the CEO of a private enterprise to step down. I know they received money and they want more but the fact is that they should not have received it in the first place. And GM isn’t owned by the govt. like AIG. I’m not saying Wagoner was a good CEO. Only the principle is scary.
Private enterprise? How do you figure? Once they asked for and got $30 billion from the government, they gave up all pretenses of being a private firm. The “G” in GM now stands for government, as in Government Motors.
As soon as you become dependent upon the biggest guy in the cell block for protection, you become his bitch.
>
Previously:
Why Are Banks So Different From Autos? (December 9th, 2008)
http://www.ritholtz.com/blog/2008/12/why-are-banks-so-different-from-autos/
Why Bankruptcy For Autos But Not Banks? (February 23rd, 2009)
http://www.ritholtz.com/blog/2009/02/why-bankruptcy-for-autos-not-banks/
March 30th, 2009 at 10:55 am
But on the flip side, Uncle Sam is STILL Wall Street’s bitch, even after continually bailing them out for far more money. Pretty big disconnect there. I can’t imagine this will make Main Street any happier about things, for the most part.
Also, I can’t imagine that the unions are very happy with O these days (not that I care). I thought that O was beholden to them? Sort of blows a whole in that trusty right wing argument. They’re so clueless though, they’ll probably still try to use it.
March 30th, 2009 at 10:59 am
Ah! So that explains all the influence that Treasury now has over the Fed member banks and former IBs-turned depository institutions. Got it.
It’s pretty clear who the favored children are, isn’t it?
How’s Cerberus holding up under all this? I’m really concerned about them.
March 30th, 2009 at 11:02 am
I still don’t understand why the banks — who made this mess in the first place — are favored children . . .
March 30th, 2009 at 11:02 am
I thought GM stood for Gimme Money!
March 30th, 2009 at 11:03 am
Of course AIG, Citi, et al have received much more than GM and they don’t seem to be using Soap on a Rope. Maybe they just are better bluffers “Don’t come near me or I go bankrupt!” Maybe they just have hired muscle (Congressmen) top protect them.
Right now it looks like GM is going to die for the sins of AIG. Of course once the CDS pay out and the repercussions make their way through the economy it might be more like Jonestown 1978 than Jerusalem 30 A.D.
March 30th, 2009 at 11:04 am
Because banks and money are the wellsprings of commerce. Without them nothing gets done.
As for automakers, go take a bus. It’s where those greenies want us anyway!
March 30th, 2009 at 11:10 am
If the Geithner Plan does not work, lets see if O has the cajones to apply the same moral hazard to the Dead Banks Walking (and other financial institutions), time will tell and risk takers (lol) can invest in such banks.
March 30th, 2009 at 11:12 am
@BR: I think it’s because they literally have a bomb strapped to their chest and are saying they’ll pull the cord on our markets if the feds don’t play ball. I really think that’s it. We’ve already seen the caterwauling from clowns like DeSantis at AIG. What will happen if O forces the heads of our banking mafia to step down and take this harsh medicine like the autos? They will merely mobilize their elite, powerful enablers and sycophants (e.g. the media, corporate america) to come to their rescue with a propaganda campaign to try to save them every time. Have we seen the same kind of defense for the autos in the media overall? I think not. O needs to show real leadership and stand up to the heads of the banking mafia. It may be wishful thinking but I keep hoping it’s coming.
March 30th, 2009 at 11:13 am
i would have liked the market to weaken more gradually. the momentum to the downside warrants caution to those placing shorts. i wouldn’t be surprised to see another attempt at a higher high by the end of the week.
March 30th, 2009 at 11:16 am
maybe tangential, though, I found this to be informative:
http://www.financialsense.com/fsu/editorials/andros/2009/0327.html
the charts, alone, are a +
March 30th, 2009 at 11:17 am
What’s the banks’ CDS exposure and does anyone really know? This is the crux of the problem IMO. You can only act on what you know in this situation, therefore it looks like one hell of a mess for a number of years.
March 30th, 2009 at 11:17 am
I think that the big difference is that Steve Ratner is the auto czar and he is unbeholden to Detroit. Also, in some ways, auto manufacturing is much easier to understand than stuff that the business of CDS’s and CDOs. Geithner is too compromised to make the right decision. However, I wonder if there really are that many people who have the ability and patience to learn about the finance industry and then evaluate the options.
Lastly, note how far this country has come, if we are so willing to potentially compromise an important and vital economic ecosystem like the auto industry, but we won’t do the same for the banks.
March 30th, 2009 at 11:24 am
Barry Ritholtz Said:
March 30th, 2009 at 11:02 am
I still don’t understand why the banks — who made this mess in the first place — are favored children . . .
Possible explanation:
——————————
They’re favored because they’re “’special children”. To compare with GM, the CEO and some of the board were fired because there is enough management talent specialized in manufacturing to create a new and probably better management team. Bankers aren’t that smart. Look at all the stupid financial moves the top of the top have made over the past several years. They personify the concept of Stupid.
Who would you replace them with?
If you take one functional moron and replace him with a different functional moron, you still have a bank managed by a moron. How are you better off? The government has no realistic choice but to step in and clean up the house. Then fix it so morons of their stature can never be allowed into banking again and fix banking so morons like these can never do it again.
March 30th, 2009 at 11:30 am
“As soon as you become dependent upon the biggest guy in the cell block for protection, you become his bitch.”
Excellent. The day will come for the bankers, too. The understanding is spreading about the
’special’ treatment and, in time, Obama will be forced to choose between public support and the bankers. That’s when Timmy will go and the next day the bankers will go.
The writing is now on the wall.
March 30th, 2009 at 11:33 am
“Also, in some ways, auto manufacturing is much easier to understand than stuff that the business of CDS’s and CDOs.”
this is, yet, another hoary cannard.
“Detriot” buys, utilizes, and deploys more Computing power than any ‘trading desk’, or groups thereof, on Wall St.
http://autoelectronics.com/ as intro..
take it easy on the Laser Toner, snort some exhaust fumes, for a Change..
March 30th, 2009 at 11:34 am
I got a feeling it’s going to be a long, hot, cranky (and potentially a tad unruly) summer in many parts of the U.S.
March 30th, 2009 at 11:36 am
I apologise in advance,
Recipe for Failure or
How To Start At The Top and Work Your Way Down (HTSATTAWYWD)
Take 1 staid, old manufacturing company.
Rinse and shake well to remove the stodgy old bastards that built it.
Add at least 1, preferably more, freshly minted MBA’s
Insert in pre-heated 350 degree oven and roast til old rule book is thoroughly toasted.
Now spice with CDO’s, CDS’s, and add derivatives to taste.
Cover tightly and store in cool damp place. (Between Ann Coulter’s thighs, for example)
Let stew for years while skimming the fat quarterly.
How To Serve
Get the general public and the gov to buy 2 pieces of white bread, at retail, of course.
Charge entry to eatery and rent the plates.
Serve this shit, that has been stewing for years liberally onto EVERY plate, whether they want the shit or not.
Make them come back for seconds and thirds.
Now you too can be a wall street exec.
March 30th, 2009 at 11:36 am
@Manwich 11:12 — Oh, I think you nailed it. Further, sometimes I get the feeling that those same folks have the power to manipulate the market to reward and punish the administration for their actions. If the administation proposes fooling around with “mark to market” in a way favorable to the banks – the market rallies and makes them look great. If they don’t take actions they like, it falls, the market is so disappointed and they are idiots.
Against that power, it’s hard for “O” to show leadership I suppose because if entities really can move the market up and down to some degree at their whim, they can cause popular anger against certain policies when the market starts falling.
March 30th, 2009 at 11:39 am
@Mannwich:
>I think it’s because they literally have a bomb strapped to their chest and are saying they’ll pull the cord on our markets if the feds don’t play ball.
Who says the United States does not negotiate with terrorists? If the bomb is big enough, we’ll negotiate with anyone…
HCF
March 30th, 2009 at 11:42 am
To clarify, I’m not saying that the financial firms are terrorists… Just trying to make a point =)
March 30th, 2009 at 11:44 am
The banksters have political power through their connections and have to be brought down delicately. Besides I still think the feeling in Washington is that it somehow wasn’t really their fault, that they are the victims of the economic crisis instead of its cause. I think this will change over time as the political insiders realize public opinion is that the banksters must go.
March 30th, 2009 at 11:44 am
@HCF: One could argue the banks have done far more collateral damage to our country than actual terrorists have done to date, or could realistically do (until now). Somewhere, Mr. Bin Laden (if alive) is laughing his ass off at the absurdity of our actions.
March 30th, 2009 at 11:45 am
wally Says:
“Obama will be forced to choose between public support and the bankers. That’s when Timmy will go and the next day the bankers will go.”
hope you’re right wally
March 30th, 2009 at 11:48 am
Mish is also wondering what happens to over $1 Trillion in GM Credit Default Swaps. Not a bad question I would say.
http://globaleconomicanalysis.blogspot.com/2009/03/obama-denies-funding-to-automakers-what.html
March 30th, 2009 at 11:49 am
Been sayin’ this since Summer 2008 – Uncle Sam is going to step in when Ford finally caves and force a merger among the last two (big) US carmakers, with bailout $$ as leverage. Call it GF or “General Ford” if you like. I predict this half-capitalist half-socialized offspring of a forced merger will be the lone survivor of the former US big three.
March 30th, 2009 at 11:51 am
The shareholders should rid the banks of the toxic management in the ‘C’ suite and the BOD zombies.
Any new regulatory apparatus must have a goal of limiting the damage the banking morons can perpetrate. Who is really left to whack at the banks? Lewis? I bet his hands are dirty from the Merrill mess and Cuomo should take care of him. Pandit? I think O views him as a caretaker at this point. With Rubin out of Citi the deck is clear to clean out the rest of the board.
GM reminds me of what happened to IBM in the early 90’s.
They were given up for dead when sweet Lou came in and turned them around.
As far as Chrysler goes well … looks like Snow and Quayle have run out of luck. That life line was cut in November. Fuck Cerberus..
Someone please tell Kudlow to STFU.
March 30th, 2009 at 11:52 am
Here is an item of some interest apropos of this problem with automakers and power struggles:
http://www.boston.com/news/nation/washington/articles/2009/03/30/pension_insurer_shifted_to_stocks/?page=full
“WASHINGTON – Just months before the start of last year’s stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.”
Until we start contending with the enormity of the crime(s) committed, no fix or action will be of much value.
The bankers wield so much power because the State gave it to them. I am not certain that the Obama administration can contend with their opponents calling the shots on the other side. Tactically, the Bank holds a huge advantage.
March 30th, 2009 at 11:54 am
Brown Ram says:
“I think that the big difference is that Steve Ratner is the auto czar and he is unbeholden to Detroit.”
I think that the big difference is that Barack Obama’s favored constituency here is the UAW, rather than investors and senior management. Note how the UAW, of all the parties involved in the auto industry mess, aren’t being hit very hard. Note how they (and the dealers) would be the hardest-hit if the companies simply went through a conventional bankruptcy reorganization.
March 30th, 2009 at 11:57 am
@John Rosevear: Please educate me, but I fail to see how the unions benefit from O’s auto plans. It seems to me that nobody in the autos truly “benefits”.
March 30th, 2009 at 11:59 am
They benefit by not being busted right out of existence, by not having their contracts ripped up, as would likely happen during a bankruptcy process. Avoiding THAT, IMO, is what this is all about.
March 30th, 2009 at 12:01 pm
@John Rosevear: So you don’t think they’ll be taking a big haircut on their contract before it’s done? I think you’re dead wrong, sir. The pain is coming for them too.
March 30th, 2009 at 12:09 pm
But if they hadn’t become Uncle’s Bitch, there was no other place to turn…they would have been BK earlier…(which would have been the right thing to do)..
I mean the stock is valued at something like – 160 bucks a share….
Even Barry couldn’t bail them out..
March 30th, 2009 at 12:12 pm
There is a simple and compelling reason to favor the banks: They are the Audi Murphy’s of finance, sacrificing themselves so that we could bask in the blessings of pretend wealth a decade beyond reality.
Trillions is not enough. Congress should bestow the Medal of Honor.
March 30th, 2009 at 12:12 pm
O is NOBODY’S bitch. The Chicago Master miraculously emerged from the primordial ooze of Chicago’s political scene, seemingly free of the original sin of “corruption.” Impossible? I think so, but who am I?
Look at who he’s giving these trillions of dollars to, then check back in a few years from now and look at his list of campaign contributors. Anything that Bush I, Clinton, or even Bush II did will absolutely pale in comparison to this electoral larceny on the grandest of scales.
But don’t hate the playa; hate (or change) the game. It ain’t his fault that he just thinks bigger than anyone before him.
March 30th, 2009 at 12:18 pm
Here’s what you’ve got: The government is giving trillions of our money to the bankers. This effort is being led BY one group of incompetents who got us into this mess (Summers, Bernanke, Geithner, etc) TO the another group of incompetents who got us into this mess (Lewis, Pandit, Blankfein, etc).
Incompetents (Geithner, etc) -> your money -> incompetents (Lewis, etc). No oversight, no transparency, no debate. Trillions of dollars.
When did this country turn into a two-bit banana republic?
Wha, and I’m supposed to buy this rally? Right!
March 30th, 2009 at 12:20 pm
WASHINGTON (AFP) — The US government Monday said it is guaranteeing the warranties of new vehicles bought from General Motors and Chrysler in a bid to boost consumer confidence and auto sales.
March 30th, 2009 at 12:29 pm
@Mannwich: Maybe so — and it’s definitely possible that the administration will eventually decide to cut GM off, in which case there will be lots and lots of pain to go around. But so far this looks to me like Ron G is the one with the administration’s ear, and that the efforts they’re making are on the UAW’s behalf more than anyone else’s.
March 30th, 2009 at 12:43 pm
@John Rosevear–Isn’t it possible that UAW will get its own once the automakers decide that they can’t afford to keep all of their plants open and that they need to shut down lines. I don’t see anything (but I haven’t looked very hard) indicating that the government will want the Big Three to keep producing the same volume of cars in the US? Politically, it seems much more palatable and wise to give GM and Chrysler money and then get them to do shiv (since we’re talking about prison bitches) the UAW.
@Mark Hoffer–I’m not saying that the auto industry isn’t complex. What I’m noting is that at the end of the day, even though auto manufacturers are making a very complex product, the business of automaking is straight-forward. You have designers who design the car; engineers who put it together for the first time; autoworkers who mass produce it; and a retail network of dealers to sell it. Buyers don’t care that much about the complexity of the product, but do appreciate the features. (And thanks to regulation, they don’t have to worry about buying a potential bomb). A guy with an extensive PE background could wrap his arms around the business problems facing the auto industry and have a good shot at solving them (assuming sufficient latitude). (I’m also not factoring in the extensive finance arms of the automakers).
In contrast, the financial products that the financial institutions own are equally, if not more, complex, but no one can figure out how to sell them at a “reasonable” price. As alluded to above, it would be like if GM, Ford and Chrysler were all sitting on a gigantic inventory (far greater than the value of their share capital) of cars, some of which might have bombs, others of which are lemons of the ordinary sort, and a few of which are actually good cars. Trying to fix the car companies in that case would be far more complex.
March 30th, 2009 at 12:55 pm
Brown,
you viewpoint is still warped..
Wall St. ‘can’t price’ those broken ‘assets’ b/c it would advertise, more incessantly than any automaker, just how flippin’ broken their, Wall St.’s, balance sheets really are..the ‘Banks’ are Insolvent.
there’s no ‘mystery’ to it, pricing those ‘assets’, that gambit is merely a subterfuge..
btw, if it wasn’t for ‘Detriot’ funding a huge piece of the devel-costs, through early-adoption, of “Workstations/Supercomputers” it’s arguable that Wall St. would still be doing their ‘rocket science’ on HP-12Cs
or don’t you remember GM “E” & GM “H”? entities that, actually, post-date my referenced time frame..
March 30th, 2009 at 1:00 pm
The UAW made concessions before the last bailout, yet some people despise them just because. If the auto industry paid decent wages, the unions wouldn’t have a raison d’être.
I know some of y’all love French, too.
March 30th, 2009 at 1:04 pm
Brown,
you may care for:
The New Industrial State
by John Kenneth Galbraith
About this title: With searing wit and incisive commentary, John Kenneth Galbraith redefined America’s perception of itself in “The New Industrial State, one of his landmark works. The United States is no longer a free-enterprise society, Galbraith argues, but a structured state controlled by the largest companies. Advertising is the means by which these companies manage demand and create consumer “need” where none previously existed. Multinational corporations are the continuation of this power system on an international level.
http://www.alibris.com/booksearch?qwork=4647499&matches=423&author=Galbraith%2C+John+Kenneth&browse=1&cm_sp=works*listing*title
and a survey of the “Conglomeratization”-era of US CorpoFinance, all w/ DOJ blessing, mind you..
March 30th, 2009 at 1:07 pm
“As soon as you become dependent upon the biggest guy in the cell block for protection, you become his bitch.”
Classic.
That about sums it up as far as bailout money. DeSantos and Liddy found that out last week.
Now if only we can get at the banksters at PIMPCO and Golden Slacks to take a hair cut on bonds we would be getting somewhere.
March 30th, 2009 at 1:09 pm
If the auto industry paid decent wages, the unions wouldn’t have a raison d’être.
This has always been my take on it.
Somebody from the management group took a pen in their hand and applied ink to paper.
Legal document.
OTOH, why do so many average people have a problem with another average person making a wage he can live on.
As is playing out before our eyes, without those stoopid, worthless, overpaid WORKERS, the shit they make is sitting in warehouses. On car lots. On boat docks.
Us peons need to wise up and stop clubbing each other upside the noggin.
March 30th, 2009 at 1:23 pm
Barry,
A good point was brought up by Don Coxe on last weeks call. He couldn’t figure out why the Regulators hadn’t gone after the financial firms judicious use of off balance sheet transactions (SIV’s-read ENRON) and entities. Recall those former execs are dead or doing serious time for the same transgressions the banks engaged in. BTW agree w/your points on the automakers, they have clearly made their bed and have no say in their ‘partners’ decisions.
March 30th, 2009 at 1:31 pm
If it takes government intervention to replace the assholes who responsible for Hummer and tax credits on Suburbans… then so be it.
If the replacements prove to be incompetent.. well .. just keep trying until you find someone that works.
March 30th, 2009 at 2:06 pm
@John Rosevear, isn’t it the UAW best interest to see GM survive as a vibrant cash flow positive company? This also seems to sync up with the US Government’s interests…
March 30th, 2009 at 2:06 pm
How does Barry justify this post against his blather about nationalization?
March 30th, 2009 at 2:17 pm
Barry Ritholtz @ 11:02
“the banks …favored children”.
A growing economy during the period 2011-2012 is a “must have” for Obama… no matter what the long term cost may be.
March 30th, 2009 at 2:19 pm
“Us peons need to wise up and stop clubbing each other upside the noggin.
@Foghorn: That distract, divide and conquer strategy has worked so well for the elites in this country. You’re right. It’s incumbent on the masses to not allow it, but I fear our idiocracy reigns supreme.
March 30th, 2009 at 2:21 pm
And don’t worry about Wagoner. Looks like he’s slated to get $20MM+ in pension $$. No severance though. What a noble man. Not sure how he’s going to live off of such a small pension (and no severance).
March 30th, 2009 at 2:28 pm
@Mark E Hoffer,
Re: Galbraith’s work, yes, the U.S. is a structured state controlled by the largest companies, but it always has been (whether those controlling entities were large plantation owners who wrote our original rules, or robber barons, or the modern corporate aristocracy).
Also, I would say that we have always been and still are a free enterprise society, as there are no prohibitive laws against it, nor is there an oppressive regime in place to stifle such activity. It’s just that it’s not ONLY free enterprise-based, since once a certain critical mass is attained through merit and luck, entry into the real halls of power is sought and eventually granted (see Google).
March 30th, 2009 at 2:46 pm
I think this post should be titled how America became China’s bitch.
March 30th, 2009 at 2:51 pm
We better start makin’ more babies, and pronto.
Ladies, Transor Z’s stud service is now open… for… business.
March 30th, 2009 at 2:54 pm
@Mark Hoffer,
Thanks for the reference to Galbraith. I hope to someday read it. Anyway, my point (and I apologize for not getting to it more directly) is that I think that Detroit’s problems are much more fixable than those of the banks and insurance companies. If you wiped out most of the equity holders in the car makers and converted a large portion of the debt to equity, then you’d have a pretty good company. It’s been done before (though not in the scale of a GM). There will always be demand for cars.
Perhaps this is where we disagree–I don’t think that you can go through a normal bankrupty process with the banks because of the complexity of the international banking system (which would likely entail global negotiations), because a lot of banking depends on trust (which would likely be harmed), and most importantly, and because of all the leverage these banks employ (which means that any traditional bankruptcy process will hurt a lot more (and which I guess is why you tend to see banks liquidated and not go through chapter 11?)). Also, there might not be the same level of demand for future bank products, which also complicates matters because the value of the business enterprise has shrunk dramatically.
I agree with the general premise that many of the “banks” are likely to be insolvent. However, I don’t think that it’s a simple exercise of writing down and selling assets. Because if that’s all that was necessary, AIG could have been liquidated a while ago, right? I had the impression that a lot of trades (particularly swap contracts) take time to unwind, and even then the unwinding could cost a lot of money. (I really hope that a lot of the assets held by the banks are hedged–but we’ll see).
As for pricing the assets–I disagree. Accurately pricing pools of mortgages is terribly complex, especially if you have to take into account the likely amount fraud that was taking place, have no idea what direction home prices are going to go, have no idea what inflation will be like in the future, have no idea what mortgage repayment rates will be like given these ahistoric times, etc. We can make the process more transparent, but at the end of the day, you just have a model. You can take a very good, educated guess (which I guess is what pricing is), but that’s about it.
March 30th, 2009 at 3:21 pm
Todays reality check, folks.
These are real people, with real purchasing power;
St. Lukes Lutheran Care Center -14
Auto Supplier Medina Blanking Inc. -83
Misc. Layoffs From TN Companies -59
Q-1 Layoff Summary By CNN
GM -1
Balzout Nitro -7
Genvec -22
Touch and Go Records -23
Another Law Firm -41
JP Morgan/Wash Mutual -8,500
Sun Micro -5,000?
UBS -8,000
Mythic Entertainment -60
Elkhart Brass -15
Skadden Law Firm -5%
GE Solar -86
San Francisco Chronicle -300
150,000 Stores Expected To Fail in ‘09
City of Flagstaff -40
More Layoffs For Hamilton County
Barton Group -15
American Eagle Pilots -75
Tulare County -18
Jaguar Boss Threatens Layoffs -15,000
City of Youngstown -34
source=
http://www.layoffdaily.com/
March 30th, 2009 at 3:59 pm
The optimist in me likes to think that the “inconsistency” in O’s handling of banks vs automakers is really just a sign that he’s learning and maturing. There is, after all, temporal separation between the last review of bank bailouts and the current review of automaker bailouts. Perhaps the next time the bankers are up for inspection we’ll actually see their feet put to the fire, maybe even some heads roll. Let’s hope.
My view is that the government’s role is to prevent the *uncontrolled* collapse of these institutions. Not necessarily to save them, but to avoid panic and chaos. Seems to me that their time may have come.
March 30th, 2009 at 4:36 pm
BR,
Why is the Gov’t making the bond holders take a haircut? I’m not even arguing a haircut proportional to the union memebership, just a haircut in general. All the other bailout participant’s bondholders aren’t taking haircuts. To me this is dangerous economically and legally. Bondholders are being denied their ownership rights, due to management’s acceptance of this government money. It seems so clear to me, I must be wrong.
TG
March 30th, 2009 at 6:39 pm
“As soon as you become dependent upon the biggest guy in the cell block for protection, you become his bitch.”
Brilliant, this is now my Facebook quote (with attribution and link)
March 30th, 2009 at 7:57 pm
Beware of Obama and Pelosi’s new UAW and AFL-CIO push for all of US workforce control.
Does anyone really want some union asshole telling them they’d better join, “…if ‘n you’s want yer pretty daughter to have a pleasant education..”
Does anyone realize that the union has legal authority to use violence in a democntration and against their emplyers or those whom they perceive a threat to their employment??? This si serious folks…
UNIONS must be stopped.
March 30th, 2009 at 8:29 pm
I think banks have relied too much upon information asymmetry. The inter net has made information far more democratic and allows anyone interested to participate in the discussion. The curtain can not help but be drawn back on what ever and who ever is to be found. Any institution relying on cognitave capture of all involved parties will ultimately fail and possibly much sooner than they though possible.
March 30th, 2009 at 9:16 pm
Brown,
I hear the points you are laying out. They All apply to the Auto-Industry.
As I said before, and, really, no offence meant, your POV is warped, probaly by deign of location of your seat.
‘Banking’, much to the dismay of ‘Bankers’ is no different than MCD–both have a product to sell.
the whole ‘internation’-tangle, ‘trust’, ‘can’t value for not able to predict the future’ line of BS, is not, only, applicable to ‘banks’..
They need to get over themselves, and we need to get over them–we are, writ large, suffering from Battered-Wife Syndrome..
Simon,
good point, it’s a big reason ‘Net Neutrality’, ‘Secure Computing’, and ‘Internet2′ are already cooked up, waiting to be served..
March 30th, 2009 at 9:31 pm
@ Brown Ram – that’s an awful lot of words to say, “they have a bomb strapped to their chest.”
March 30th, 2009 at 10:56 pm
Mark E.H:
I admire your tenacity on a point that is crucial and, I suspect as with the Kubler-Ross Grief Cycle – reveals much about those who cling to some variant of “Global Banking Is Too Hard To Understand” or worse, “Our ‘Best’ & ‘Brightest” were in banking …” blah blah.
There was no choke-hold on the mythical ‘best & brightest’ by the banking sector, certainly not measured by long-term performance. Concocting a Bitch’s…oops, a Witch’s Brew of failed failed failed instruments does not ipso facto mean that “it’s too hard to understand”. I can toss together a bunch of enzymes and chemicals in a beaker that fail to do anything beyond generate smoke and odors; would one complain that my ‘life-in-a-test tube’ was ‘too hard to understand’ or would one dismiss it since it never ‘lived’ anyway but rather produced only smoke and nauseous odors? I think the typical response would be dismissal.
All we need to ‘understand’ is that whatever the so-called ‘best’ & brightest concocted failed.
And the longer we put up with allowing Team Obama to keep these overpaid cauldron-sniffers in place in our failed banks, the more we play Russian Roulette with our nation.
The banking system can be regressed to its former state, pre uber-regulation, and distilled into a boring plain vanilla sector like it was from 1945 til de-reg started. As Krugman noted, there was not a financial institution in the Dow30 until 1982 (or was 84?).
Shrinking banking also shrinks the possibility of serial bubble-blowing and hyper-wealth segmentation.
And that is the ‘Ah-Hah!’ moment:
A plain vanilla banking system cuts off at the knees the possibility of intense wealth concentration; that is the likely reason such a move is consciously resisted by Team Obama & Congress, MSM, and the GOP. And ‘unconsciously’ resisted by peddlers of the ‘banking is too complex to fix’ myths.
Add FT’s brilliant Gillian Tett to the chorus that slyly champions plain vanilla banking:
Banking Success Amid The Baked Beans
By Gillian Tett Financial Times March 30
March 30th, 2009 at 11:09 pm
@johnweaslemeister: Get a grip, the unions, omfg you are complaining about the unions? this is not a political blog, Nor is it a back to the future blog, if you have a problem with the unions, go take it back to the 70’s or so, and talk to Jimmy Hoffa about it. The cold hard facts of the matter is the unions accepted some ungodly consession these last few years, while conversely the financials tooks some major bonuses.
The auto makers kept making cars when their customer base was uncertain, but the banks stopped lending when their customer base was in need.
March 31st, 2009 at 12:38 am
Goldman Sachs, MS, and Chase chose GM for Sam. Guess who we got?
March 31st, 2009 at 8:26 am
Really surprised to see that Americans people still don’t get it. O is the same, infact worse. See the disconnect between his rhetoric and actions. See the appointments he has made since taking office. It is full of bankers, publicists for bankers – Goldman et al, tax evaders, people who brought about the crisis. How will he do anything different? He belongs to the same group. It is not as if he is being forced to rescue banks and leave GM. He is doing it out of his own choice. I dread to imagine what the situation in America would be in by the time he is done. It is not as if I have any sympathy for GM or Wagner. They got what they deserved. But this contradictory treatment confirms my fears.
America is becoming more and more like developing countries, in some cases even worse – only difference is Americans, despite all their education are dumber. Don’t get me wrong, it is a matter of experience. We, in the emerging markets and developing world have been fooled by corrupt politicians and their rhetoric so many times that at least the well-read people who can think on their own, can easily get it. How did you people even hope for a a one man miracle. It doesn’t happen in the real world. People around him have to become better before some positive change can occur.
Remember the way he was laughing at people’s problems in a recent interview.
March 31st, 2009 at 9:44 am
“As soon as you become dependent upon the biggest guy in the cell block for protection, you become his bitch.”
OK Barry! I get that and it makes perfect sense.
However, since the gubmint (Treasury) keeps on paying “protection” on what looks, smells and walks like an extortion racket, must we conclude that the US is the Banks’s bitch?
March 31st, 2009 at 12:16 pm
The banks are big mean heavy needy bitches. GM was a scrawny pushover bitch. With GM’s issues, the public reaction is just not buy GM vehicles (where they might have before the bitch got in trouble). But with the big mean heavy needy bank bitches, if the public gets the idea that their money is not safe, the reaction will be bank runs on a scale that we have not seen before in history. Credit Anstalt will look like a wee tiny little bitch. The government is walking on much thinner ice with these big heavy bank bitches than with the comparatively scrawny GM bitch. So if the government is planning to discipline the bank bitches, it has to spring a huge complicated confidence building plan on all of them in a comprehensive coordinated way. Takes time to plan that and get all your bank CEOs, boards, bondholders and shareholders lined up in a row for the mass guillotining. You need to look to Machiavelli and/or Sun Tzu for what they would do when faced with so many powerful enemies. No sense telegraphing your intentions to your enemies before you (figuratively) kill all of them in a planned, coordinated orgy of violence.
March 31st, 2009 at 12:32 pm
Nice talk about bitches and all that. I think the old saying that fits best goes something like this:
HE who has the gold makes the rules
Whether it be US making the rules for GM, China making the rules for the US or the US making the rules for the last century or so. It always has been so, so be it.