The question really shouldn’t be “Do you support the government bailout?” Instead, the public should be asked “Do you think Barack Obama, Nancy Pelosi, Harry Reid, Barney Frank and the rest of our gang on Capitol Hill are qualified to run the U.S. auto industry, banking industry, insurance industry and other sectors of the American economy?”
If you think big business is best managed and overseen by politicians with no business experience, then the bailout, particularly the bailout of the auto industry, must seem like a pretty good idea. If however you haven’t lost your mind, then throwing $25 billion (on top of the already approved $25 billion for plant retooling) at a business model that is broken might seem, lemme’ see, insane.
Before we go further, I should point out that I have nothing against Detroit, am saddened at the thought of the potential job losses and disheartened at the demise of the once iconic U.S. auto industry. But none of that changes the overriding concern that the only thing $25 billion would do is postpone by a factor of months the inevitable Chapter 11 of one, two or all three of the big three auto companies.
Lest you think that I’m singling out the auto industry while tacitly approving the $700 billion approved for God knows what and the $100 billion plus handed over to AIG, I’m not. Having lived and worked overseas for years and having been exposed to systems ranging from communist to socialist to dictatorial, I feel pretty comfortable saying that massive government involvement in private business eventually results in a big steaming pile of crap. Now that might not be as eloquent as some of the business theories you’ve read, but hopefully the meaning is clear.
While the PWB staff is light on sophisticated economists, it does seem that using a band-aid, even one that costs $25 billion clams, on a sucking chest wound isn’t going to save the patient. Perhaps the leaders of the big three, along with their newest best friend forever Ron Gettelfinger (head of the United Auto Workers union) think they can convince the Congress that if they just had $25 billion they could save the day by restructuring their costs, business model and product line. As opposed to watching the $25 billion go down the drain over the next few months as they continue to pay enormous legacy costs, suffer declining sales and deal with the continued credit crunch. Apparently Nancy Pelosi, using her extensive business management experience, thinks that sounds about right.
In normal political times we might get a good old fashioned difference of opinion on the Hill over an issue as important as the proposed auto industry bailout. But these aren’t normal times. During this blessed honeymoon period as we await the change in administrations, anyone voicing concern over the bailout is viewed as an obstructionist … someone who doesn’t have the best interests of the nation at heart. What a load of crap.
A few Republicans have stood up and suggested that throwing good money (should I point out, our money) at the wheezing GM and inevitably Ford and Chrysler amounts to buying a few more months on life support. The auto chieftains and BFF Gettelfinger (not related to Goldfinger) have marched on Washington to explain that failing to prop them up will result in millions of job losses, the collapse of the free world and the end of the industry that makes those pine tree shaped air fresheners that hang from our rear view mirrors.
This is the same tactic used by AIG and the financial industry. I know we have collective attention deficit disorder as a nation, but does anyone remember Hank Paulson running around the Hill with his hair on fire claiming a huge comet will hit the earth if he didn’t get $700 billion? That was a trick question. Hank is bald; a hair fire is out of the question.
But Hank did get his $700 billion, which as far as I can tell is being dispensed with all the transparency of a Russian off shore company. Some of that $700 billion was mine… some of it was yours … don’t you want to know where the hell it’s going? It’s like handing money over to my teenage daughter … not only do I not know where it’s going, but the next day she’s standing in front of me asking for more.
And AIG? Remember them? Apparently, much like people are saying about the auto companies, AIG was just too big to fail. At last count they’ve received two massive infusions of cash. We’ve all heard about their crazy getaway trips to resorts for spa treatments and super boozeups. But does anybody think they could’ve possibly spent the entire $150 billion (give or take a few billion, who can freakin’ keep track) on facials and Cold Duck, or whatever insurance folks throw back on vacation? Even if they spent 10 percent of the bailout money on special executive massages (15 percent with happy ending), that still leaves $135 billion to account for.
And there in lies the rub. Or in AIG’s case, the rubdown. With Hank handing out briefcases full of dosh like Howie Mandel (minus the attractive briefcase ladies), AIG already $150 billion into the trough and the auto companies snuffling around looking for their feedbag, you and me have next to no idea what the hell is happening to our money, our children’s money and, frankly, our grandkid’s money. Once again, if you owned a pitchfork and/or one of those old fashioned torches, now would be a good time to pull them out of the shed and go demand that the monster be killed.
What’s that you say? If we don’t bailout the auto companies millions will lose their jobs and the economy will be wrecked? That’s one scenario and I agree, along with everyone that it’s a frightening scenario. And it’s that fear that the auto industry and Mr. “Read my lips, no concessions” Gettelfinger are preying on in the hope that Congress and the White House will pull out the billfold.
What we do know is that, without a bailout, GM will in all likelihood head in to Chapter 11. As with many other large companies before them, that entails restructuring and an actual hardnosed effort to return the company to profitability by making hard choices and changes. Easy? Painless? Absolutely not and no one should underestimate that.
But I’ll bet Bobo the talking intern’s pay for the next six months that a government bailout of $25 billion or more will in all likelihood result in GM eventually heading in to Chapter 11. Which would you rather do? Deal with the problem now, or throw $25 billion on the fire and deal with the problem later?
If the Republicans hold the line I’ll be amazed. The Obamatrons have marched on Capitol Hill and the pressure to display your commitment to blind bipartisanship is building.
Politicians, I hear, aren’t necessarily known for hanging their butts out in the wind and taking a stand. While they may believe it’s the right thing to do, the pressure to go along and, more germane, to not be viewed as responsible for job losses and the pain that will follow a move into bankruptcy, will likely prove too great.
Agreeing to an unsound (political speak for stupid) idea in the name of bipartisanship makes you not only weak but unprincipled as well. I think it’s time we show some fiscal responsibility and save the $25 billion. Frankly, we’ve got to think to the future. We’re going to need the extra cash when AIG heads off for their next out of town conference.
To bail or not to bail? Let me know what you think. As always, we look forward to your comments, thoughts and insight. Send your emails to firstname.lastname@example.org
'Til next week, stay safe.
Mike Baker served for more than 15 years as a covert field operations officer for the Central Intelligence Agency, specializing in counterterrorism, counternarcotics and counterinsurgency operations around the globe. Since leaving government service, he has been a principal in building and running several companies in the private intelligence, security and risk management sector, including most recently Prescience LLC, a global intelligence and strategy firm. He appears frequently in the media as an expert on such issues. Baker is also a partner in Classified Trash, a film and television production company. Baker serves as a script consultant, writer and technical adviser within the entertainment industry, lending his expertise to such programs as the BBC's popular spy series "Spooks," as well as major motion pictures.