By Jack E. Lohman
The Big Three want a bailout even after running their companies into the ground. After all of the political posturing, they’ll get it even though they shouldn’t.
The special interests have paid their dues, and it’s payback time. That’s the way the game is played.
Clearly, Congress is a whiz with money but a dud with math. The $34 billion loan to the Big Three is about twice the market cap of all three companies combined. The taxpayers could buy them all, twice, then combine them, dump the unprofitable models they never should have wasted money on in the first place, and sell the new company back to private investors!
If congress does nothing, that’s what they themselves will likely do. We shouldn’t be giving them a bridge loan to bankruptcy, we should let them consolidate, where the “industry” doesn’t go belly up but the waste does, and suppliers deal with one company rather than three.
If there is not a consolidation of the three, there will be three bankruptcies. Though if GM drowns first, and sells off its profitable lines, perhaps Ford can survive. A bailout of all three will ensure their ultimate demise.
The CEOs are not worried anyway; they received their life’s requirements during their first year on the job. And then some.
Ironically, $50 million salaries and golden parachutes meant that their business decisions needed to be maximized for the short haul, not for long term profits or viability. They didn’t have to make intelligent decisions, so they didn’t. Gas guzzlers for the short term rather than electrics and hybrids for the long term. Wow.
It’s called “get your money and run!” and the CEOs played it well. Yet in the process they inspired unions to ask for higher worker wages, which the CEOs fought with a vengeance even while taking theirs. The redistribution of wealth is good, only if in an upward direction.
Short term and generous CEO salaries have had a perverse effect on their long term leadership. Try as we might, the windfall giveaways cannot be justified, especially when CEOs trash the company.
Heretofore we’ve allowed the CEOs to select their own directors, and they’ve picked their friends. Instead, the shareholders — the owners of the company — must be given clear power to elect their own board and approve the wages of executives. Even a maximum wage, if they want, like capping executive income at 25 times the average worker’s wage!
That’s what you call free market!
Bottom line is that none of this crash would have happened under an honest political system, where politicians were not paid to turn a blind eye to industry malfeasance. They are bought and paid for by everybody but their constituents, and that must change. Can you imagine a member of a corporate board being on the competitor’s payroll?
Unions can no longer protect the demand side from the supply side, because the supply side is de-unionizing us via outsourcing to non-union countries. Part of that is because unions pushed too hard and got what they wanted — high salaries — and the CEOs wanted those for themselves.
Call it a depression, if you will, but I see it as the very messy end of capitalism as we know it. We don’t want communism but we do need some degree of socialism. I like nationalizing the banks and domestic oil market, and at least the auto industry until we can turn it around and sell it back to private industry. I also favor tariffs to divert the work back home.
But a big blocking of any rational movement is taking place via campaign cash flowing from the special interests who like things just as they are, to the politicians who should be working for us instead of them. Only public funding of campaigns will reverse that trend.
$1.69 per gallon? Sounds like the speculators backed off to let it cool down a bit. A congress with guts would outlaw speculating!
Job losses? The most important will occur on January 20th.