On my last blog “Where Should the Government Draw the Line?” I got some spirited responses about how much is too much and where we draw the line. Frankly, with good reason! In yesterday’s New York Times, Andrew Sorkin wrote an excellent article entitled “A Bridge Loan? U.S. Should Guide A Helpful Chapter 11.” The premise of the article was to have the U.S. government do what is called a Government Structured Bailout or as he calls it a G.S.B, whereby General Motors is forced to file for Chapter 11 and then subsequently given the blessing to merge with Chrysler. In the process, the two companies would have to cut car lines, plants, jobs and create greater efficiencies which by its very nature would force change and massive cost savings. The concept is brilliant and here is why:
If we did what Sorkin suggests, we, the taxpayer, would step in after the company filed for Chapter 11, which, in English, means a restructuring. We would be the facilitator of any debt payments to suppliers or existing liens and then, as the ultimate backstop, we would guarantee the warranties on their cars so that consumers would still want to purchase vehicles from a company that is perceived to be bankrupt but not really bankrupt. Let’s be perfectly clear about this, if you or I think that General Motors or any one of the other automakers that is seeking these funds won’t burn through the funds in months, we are kidding ourselves. If they are burning through $7 billion in a quarter and $2 billion a month, what makes us believe them when they say $10 or $7 billion is enough? What will $25 billion dollars really get them? This conversation is frightening.
The last thing we want to do in this country is lose more jobs, but I have a hard time listening to CEO of General Motors Rick Wagoner tell me that the failure of a U.S. auto manufacturer would lead to a “catastrophic collapse” for the U.S. economy. In the same hearing, he was the one who said to Senator Shelby that General Motors could resume profitability in an environment where 12 million vehicles are sold next year, 13 the following year and 14 the year after. Is it me? Was that scary? Does anyone actually believe in their right mind given what has happened to this industry, to credit, to the global economy, that there will be demand for 12 million vehicles next year? We must be living in two different countries.
I give credit to everyone seated at that table for at least giving us a progress report on the changes that they have made. In some cases, I was pleasantly surprised. In other cases, I was seriously disturbed. For a long time I was convinced that the government would give them the money they requested. I am now starting to wonder if they will. Peter Morici, the fifth man at the table, and a good friend to my morning show, testified yesterday. He is a professor at the University of Maryland and a very well-known and respected economist. He did a brilliant job stating the obvious facts about the sea change in the industry. As he rightly pointed out, most of what is happening to this industry is a legacy issue. They are built to make too many cars. They do not have the right contracts with their labor force. How could they compete even with the renegotiated labor contracts? No matter what they tell us, they will be forced to take charges every quarter to sever contracts and employees. Cars are better made, people don’t shop for a new car every three years, and people want fuel efficiency, people care about CAFÉ standards. They became the dinosaur in the room when energy prices hit an all-time high. SUV’s defined our success in this country.
The other day I ran into T. Boone Pickens in the building. We talked about the hearings and he gave me a progress report on the Pickens Plan. He now has over 50 members of Congress signed up. He is not stopping and will continue to wage this war against foreign oil. Some of the statistics that he threw out to me were mind boggling. The number of vehicles that use natural gas in this country is about 143,000 yet there are approximately 8.7 million NGVs (natural gas vehicles) worldwide. Ford, Honda and General Motors make these vehicles but they sell them overseas. Just look at Boone’s website. One out of every three barrels of imported oil goes into the manufacture of diesel fuel for tractor-trailers to move goods around the country. If, as he says, over the next decade, trucking company’s diesel vehicles switch to Compressed or Liquified Natural Gas, we would meet our goal of cutting oil imports by 30%. We could kill two birds with one stone. Why not?
Bottom line, we need answers. But more importantly, we need solutions. Thus far, all I hear are requests for handouts without any recourse. We should be asking the tough questions. If you don’t ask them now, like we did with the TARP fund, we will find ourselves in a much more difficult situation three months from now. I am angry about what is happening. I am angry because I expect more. When I watched Treasury Secretary Paulson, Fed Chairman Bernanke and FDIC Chair Sheila Bair in front of the House yesterday justifying the use of the TARP funds, it became crystal clear to me. Paulson changed the game in the middle of the ball game because he didn’t know what to do. He is defending his position because this financial tsunami was much bigger than even he would admit. Has he made mistakes? Absolutely. Is he the one who said housing is the route of this mess and done virtually nothing to address it? Yes. Don’t tell me Hope Now and the Fannie and Freddie programs are working. They’re useless. Is he right to say no to the automakers? Of course. He has to. Insurance companies are now buying savings and loan companies to get access to TARP funds. This thing was mishandled from the start. Thank God we are saving the other $350 billion for the next administration. The only thing that I heard in that room about solutions that will work came from FDIC Chair Sheila Bair. Once again she comes to the rescue and Paulson, while applauding her, negates her plan. Guess what? President-elect Obama will adopt her foreclosure prevention plan. She is the only one who sounds like she knows what she is doing. When she asks for $25 billion of TARP funds to address the 4 to 5 million homes that will be foreclosed in the next two years and has the only model that is working, perhaps we should listen.
Bailing out the big three auto makers would be a classic case of throwing good money after bad. If we want to bolster the auto industry in the USA why not give the $25 billion to the winners rather than the losers? An investment in Honda, Toyota, and Nissan, with the stipulation that they invest in USA production, would be a much more effective use of our money.
Has anyone in Washington even thought of that?
December 2, 2008 at 11:28 am
John H. McCammon
More left wing drivel from this journalist(?). Why is she still working for a supposedly reputable organization? It doesn't matter what administration is handing out the cash in these already failed bailout schemes. Does she really think that SUV's ever really defined success in this country for the majority of Americans? How shallow can a person be?
November 19, 2008 at 5:36 pm
Don
No, you are not crazy. There is only one solution. As Andrew stated, any more money from here goes in AFTER restructuring; or AFTER banks have written down mortgages and the homeowner's payments to 38% of income (hopefully they have some income; if not forclose). Any negative amortization gets paid back to the bank before homeowner has a gain in the future. Take the hits now all at once, don't dribble write offs over time. We need to find the bottom, so we can rise again with responsible management that takes only prudent risks with other people' money. By the way, why is the CRA Act of 1977 still on the books? That Act and lack of discipline to regulate the massive growth of FNMA and FHLMC are the cause of this bubble, SO REPEAL THAT ACT.
November 19, 2008 at 5:01 pm
Jack Frayer
Your right about Sheila Bair. She's the only one that has presented and tested a plan to actually reduce foreclosures. I am not a big fan of her,though, because of her hard-handed approach with WAMU. Her plan will only help the overall problem; but, it won't fix it.
At least one US auto company needs to survive. Where are we going to make our tanks and military vehicles if we need to ramp-up production? It's a real national security issue. I agree with Pickens that we should force them to manufacture cars that reduces oil consumption. There should be big financial incentives for the consumer to make this an economic reality. Unfortunately, the US auto makers are slow to change and some won't have such a car available until 2010. Ultimately, some money will be needed for them to survive today; and for those that are ready, credits for oil consumption reduction vehicles will be necessary next year so that they can sell their products. Maybe they can even gain market share if they execute well.
The CEO's just asking for $25B to continue their plan without talking of future support is crazy. They are all overpaid even with a %50 reduction. They want the same blanket check the financial institutions got because they recognize that fear is a great motivator.
The real economic problems seem to be the pensions and medical benefits of past union workers. This old model needs to be eliminated like was already done in most of the US. The expense will ultimately be passed into the US system. But, it just makes the retirement line a little longer. Mandating by agreement would be a little easier on the economy than filing for bankruptcy.
Where is our leader here? I have heard of nothing from the President other than it is up to Congress. For someone so concerned with national security, it greatly disturbs me that he doesn't take action. A leader makes things happen.
November 19, 2008 at 4:32 pm
Chris Davids
Alexis,
This is getting so sad...our Politicians and just about everyone else are pointing fingers, running, hiding and asking for More More More!!!!
There is ONE and ONLY ONE simple solution to getting the Economy BACK.
A Trillion and One Half Dollars MUST be injected into the economy and they MUST "LOAN" these Car Companies and the other Nuts the Money with VERY STRICT GUIDELINES!!!!!!!!!
The Unions need to start waking up.....A guy putting a wheel on a Car will simply not be able to make $70/Hour in USA anymore.
While they pick their noses on Capital Hill, us small Business owners are failing!
Banks must either Loan or give the Money BACK NOW! Or the Government MUST appoint Lending Groups to Lend the Government Money DIRECT.
PAYROLLS MUST BE MADE!
These people are NUTS and like to talk all day about what to do.
They should be kicked out of Office.
ALL of them.
Thank You!
November 19, 2008 at 1:41 pm
Bob Hoppe
Not crazy but you forget we are dealing with Washington. For almost forty years now we have been given the slogan oil independence and we have gone from 20-30% imported to 70% imported; only in Washington is that a start at reduction. Just like the budget which is said to be cut when in reallity it increases each year but they claim it didn't go up as much as the agencies wanted, so therefor its a cut. So why expect them to actually do anything they say. Except for when it comes to raising taxes which somehow they manage to do. As for deflation, when you take out the decrease in the cost of fuel it is only one tenth of one percent which is hardly a major move.
November 19, 2008 at 11:55 am
john
no bailout for anyone, and definitely no stimulus package. Quit spending my money(taxpayer).
I was not for the $700billion, but now that it is there and law, help the homeowners and not the fat cats.
Any fat cat that gets a bonus should have the funds withdrawn by the government.
I fear that come January the big give aways will begin.
All those who voted for the fat cat union loving demos will get what they want, which will be doom for the free market.
November 19, 2008 at 11:15 am
Larry
A couple things:
The unions just make the cars that management/marketing think will sell. From the above, the big 3 are already making LNG/NG vehicles. Why aren't they marketing them in the USA? The assembly lines are already there and so is the demand. Congressional help to develop the infrastructure for LNG/NG would be infinitely better than giving $25 B to the automakers. It would help with long term marketing strategy.
Giving the automakers $25 B will do nothing to change the current management thinking. Sen. Shelby is correct in that they (the investors) need to fire the CEOs for running the businesses into the ground. [That is not the union's fault.] The new bankruptcy laws will prevent the CEO from pocketing taxpayer bailout money in the form of bonuses (remember financial group that blew $400K at a spa after the bailout???!!!).
The CEOs are motivated (read bonuses) by short term (Q to Q) results and not long term as well as the institutional investors who just want a return on their money. The workers are there for the long term hence the retirement and healthcare in their contracts. Those goals work in opposite directions. Until the management starts looking long term there will continue to be failure in the auto industry.
November 19, 2008 at 10:47 am
Kevin B
You're not crazy. Americans can recreate its auto industry for the good. The big 3
wont do it until its forced to. Throwing good money toward an oversized disfunctional
auto industry is bad. Seems America may be getting a new ballclub, via the big 3 its
new name? the Detroit Pirates.
November 19, 2008 at 10:09 am
Burnsie
No, Alexis, you are not crazy. This whole episode is causing thinking people to approach issues, questions and therefore, solutions in a new way, it just feels crazy. It is sad when companies will adjust their charter to line up for gov't/our funds in this "bail out". I hope some good learning and some good ol' fashion shame and some solid indictments comes out of this. Our country will survive but in what state? I wish our country felt some strength and operated from a position of it and not out of fear or crisis mindset. Decisions made in haste rarely workout with the original intent.
What's pleasing to the eye
In the delusion of my sight
Is not what I find when I reach into the light
I have lost my mind
I'm walking through time
Deluded as the next guy
Pretending and hoping to find
That distant peace of mind
- Beastie Boys
November 19, 2008 at 9:46 am
Shawn
I watched most of the hearings that were on tv. What I see is collusion fron the auto industry to inject fear. Basically what they are doing is extortion. They refuse to even think about a chapter 11 and threaten a chapter 7. If we need an auto maker in the US and they refuse to file chapter 11 then let them merge into one company and go it on their own. What they really want is for us to foot the high bills of their failures.
November 19, 2008 at 9:36 am
Joe Sellitto
Alexis,
I could not agree with you more. I think filing Chapter 11 and restructuring, with government backing on warranties, would be the best solution. Detroit has completely misread the U.S. auto marketplace and we all know they have mismanaged their businesess for years. I certainly didn't like what I heard from the CEO's at the House hearings yesterday. Didn't it seem like they were just flat out lying when asked how they planned to pay the money back? One of them said they would be able to do so because they would increase the qulaity of the cars and thus become more profitable. Hello! Why didn't you make better cars all along?...you wouldn't be in this position if you had. Why would anyone want to give them any money when they've proven that they can't manage their businesess properly? If the government gives them a "bridge loan" it will just buy them a few months of operating capital. Eventually, they'll come right back looking for more. What Detroit has to do is basically start over. If they file Chapter 11, they can get creditors off of their backs, break out of the ridiculously expensive labor agreements they have, and bring in some new management who can position the companies well for the future. We can't let them fail outright, because the impact on unemployment and the chain of suppliers down the "production line" would be too immediate and too overwhelming. But handing them free money just doesn't make any sense to me when Chapter 11 is available.
Joe
November 19, 2008 at 9:31 am
Monty
Alexis, Great blog. I have had the opportunity for the last several weeks to watch our congress in action and quite frankly, it scares me. I listen to Paulson stammer each time he is asked a question like a school kid making up the answers on the spot. I was impressed with Sheila Bair and the answers she put forth. The difference between these two and their ability to answer was astounding. Something that concerns me though was the gentleman from Ohio asking Paulson about the bank from Ohio that basically was in good financial shape and yet was never offered the opportunity to participate in the TARP plan. It looks like the same thing that happened to Washington Mutual. I am astounded that Fox has not reported anything on these items and focuses so much on Yahoo. Yahoo made their bed and are now having to lay in it. These banks (and now I wonder how many more) were not allowed to participate under the same rules that the big boys were. Who is making this decision on who participates? By limiting the participation are they allowing some banks (who were doing well) to be consumed by the big boys for pennies on the dollar? I just don't understand as I'm sure many Americans don't even know this is happening. Very news worthy I would think. I watched the big 3 automakers plead their case. From my point of view, Ford is already making changes for success, GM is in a horrible bind and Chrysler will do anything congress demands just to get some money. I am not sure America even knows what cafe standards are for the most part. I find it ironic that the general consensus for the auto makers is that the unions have tied their hands and are preventing a competitive opportunity against the foreign companies who are paying less in wages. At the same time our new President, Congress and Senate are going to push more unions at us. Doesn't sound right to me but what do I know. I am just an American, proud of my country, and watching with much dismay as our leaders erode what our forefathers created. Good job on this article Alexis. Keep shining the light on truth.
November 19, 2008 at 8:21 am
Scotty
One out of every three barrels of imported oil goes into the manufacture of diesel fuel for tractor-trailers to move goods around the country. If, as he says, over the next decade, trucking company’s diesel vehicles switch to Compressed or Liquified Natural Gas, we would meet our goal of cutting oil imports by 30%. We could kill two birds with one stone. Why not?"
Because everyone keeps investing in oil companies, guys like Eric Bolling feed this dependency.
You know TARP is about taking care of your buddies. I don't know if it will create a "catastrophic collapse," but there will be massive tax revenue loses.
Let's play you make the call:
(Assume you are powerless to stop TARP, I believe it's a realistic assumption)
One choice
1. Give money to Paulson's cronies in a back room with no stipulations or guidance for any performance measure. Tax benefits realized probably approach zero because of tax evasion tactics.
2. Loan money to a poorly managed American auto industry that injects billions of dollars of tax revenue into the local, state and federal governments and economy. Yes, poor performance, but as a tax investor through TARP, I believe if these companies trim down and get lean we could actually make money on this deal.
You know maybe the problem has always been an over taxed society across the board. All the money these companies have generated for the US government in tax revenue and they have to beg for help. The US government pulls this on an individual level as well. You know maybe GM, FORD, Chrysler, wouldn't be as burdened by employees of the past if they weren't taxed ridiculously.
Industry is not the villain it's the government's aggressive tax structure. I haven't taken my eye off that principle, even though Dodd and others create this circus of deception.
Hilarious to hear guys like Dodd criticize the labor benefits of autoworkers. What about your lobby money and inflated retirement package that we paid for. I'll at least feel somewhat relieved giving money to a line worker who puts in a full year of work. Hey take another vacation on us Mr. Dodd. Yea those dirty autoworkers.
It’s funny to watch these politicians discuss business with the big 3. They’re making the decision for us on TARP expenditures and they can’t differentiate between simple economic terms like, net income vs. cost of capital, operation margin, working capital, etc.
November 19, 2008 at 8:17 am
John
Your so fast to approve giving our money to others.
How about supporting those of us that made good decisions and pay our bills. There is no doubt, that will help us and the economy. It would be something that we (us responsible people) can actually see! And keep the government out of our pockets going forward!
November 19, 2008 at 8:15 am
aboutthis blog
Alexis Glick is an anchor for FOX Business Network. Prior to joining FOX, Glick served as a correspondent for the Today Show and co-anchored the third hour of that program. Before her stint at NBC News, she was the senior trading correspondent for CNBC and reported from the floor of the New York Stock Exchange.
Subscribe to Comments
136 views
Wayne Steiner
Bailing out the big three auto makers would be a classic case of throwing good money after bad. If we want to bolster the auto industry in the USA why not give the $25 billion to the winners rather than the losers? An investment in Honda, Toyota, and Nissan, with the stipulation that they invest in USA production, would be a much more effective use of our money. Has anyone in Washington even thought of that?
John H. McCammon
More left wing drivel from this journalist(?). Why is she still working for a supposedly reputable organization? It doesn't matter what administration is handing out the cash in these already failed bailout schemes. Does she really think that SUV's ever really defined success in this country for the majority of Americans? How shallow can a person be?
Don
No, you are not crazy. There is only one solution. As Andrew stated, any more money from here goes in AFTER restructuring; or AFTER banks have written down mortgages and the homeowner's payments to 38% of income (hopefully they have some income; if not forclose). Any negative amortization gets paid back to the bank before homeowner has a gain in the future. Take the hits now all at once, don't dribble write offs over time. We need to find the bottom, so we can rise again with responsible management that takes only prudent risks with other people' money. By the way, why is the CRA Act of 1977 still on the books? That Act and lack of discipline to regulate the massive growth of FNMA and FHLMC are the cause of this bubble, SO REPEAL THAT ACT.
Jack Frayer
Your right about Sheila Bair. She's the only one that has presented and tested a plan to actually reduce foreclosures. I am not a big fan of her,though, because of her hard-handed approach with WAMU. Her plan will only help the overall problem; but, it won't fix it. At least one US auto company needs to survive. Where are we going to make our tanks and military vehicles if we need to ramp-up production? It's a real national security issue. I agree with Pickens that we should force them to manufacture cars that reduces oil consumption. There should be big financial incentives for the consumer to make this an economic reality. Unfortunately, the US auto makers are slow to change and some won't have such a car available until 2010. Ultimately, some money will be needed for them to survive today; and for those that are ready, credits for oil consumption reduction vehicles will be necessary next year so that they can sell their products. Maybe they can even gain market share if they execute well. The CEO's just asking for $25B to continue their plan without talking of future support is crazy. They are all overpaid even with a %50 reduction. They want the same blanket check the financial institutions got because they recognize that fear is a great motivator. The real economic problems seem to be the pensions and medical benefits of past union workers. This old model needs to be eliminated like was already done in most of the US. The expense will ultimately be passed into the US system. But, it just makes the retirement line a little longer. Mandating by agreement would be a little easier on the economy than filing for bankruptcy. Where is our leader here? I have heard of nothing from the President other than it is up to Congress. For someone so concerned with national security, it greatly disturbs me that he doesn't take action. A leader makes things happen.
Chris Davids
Alexis, This is getting so sad...our Politicians and just about everyone else are pointing fingers, running, hiding and asking for More More More!!!! There is ONE and ONLY ONE simple solution to getting the Economy BACK. A Trillion and One Half Dollars MUST be injected into the economy and they MUST "LOAN" these Car Companies and the other Nuts the Money with VERY STRICT GUIDELINES!!!!!!!!! The Unions need to start waking up.....A guy putting a wheel on a Car will simply not be able to make $70/Hour in USA anymore. While they pick their noses on Capital Hill, us small Business owners are failing! Banks must either Loan or give the Money BACK NOW! Or the Government MUST appoint Lending Groups to Lend the Government Money DIRECT. PAYROLLS MUST BE MADE! These people are NUTS and like to talk all day about what to do. They should be kicked out of Office. ALL of them. Thank You!
Bob Hoppe
Not crazy but you forget we are dealing with Washington. For almost forty years now we have been given the slogan oil independence and we have gone from 20-30% imported to 70% imported; only in Washington is that a start at reduction. Just like the budget which is said to be cut when in reallity it increases each year but they claim it didn't go up as much as the agencies wanted, so therefor its a cut. So why expect them to actually do anything they say. Except for when it comes to raising taxes which somehow they manage to do. As for deflation, when you take out the decrease in the cost of fuel it is only one tenth of one percent which is hardly a major move.
john
no bailout for anyone, and definitely no stimulus package. Quit spending my money(taxpayer). I was not for the $700billion, but now that it is there and law, help the homeowners and not the fat cats. Any fat cat that gets a bonus should have the funds withdrawn by the government. I fear that come January the big give aways will begin. All those who voted for the fat cat union loving demos will get what they want, which will be doom for the free market.
Larry
A couple things: The unions just make the cars that management/marketing think will sell. From the above, the big 3 are already making LNG/NG vehicles. Why aren't they marketing them in the USA? The assembly lines are already there and so is the demand. Congressional help to develop the infrastructure for LNG/NG would be infinitely better than giving $25 B to the automakers. It would help with long term marketing strategy. Giving the automakers $25 B will do nothing to change the current management thinking. Sen. Shelby is correct in that they (the investors) need to fire the CEOs for running the businesses into the ground. [That is not the union's fault.] The new bankruptcy laws will prevent the CEO from pocketing taxpayer bailout money in the form of bonuses (remember financial group that blew $400K at a spa after the bailout???!!!). The CEOs are motivated (read bonuses) by short term (Q to Q) results and not long term as well as the institutional investors who just want a return on their money. The workers are there for the long term hence the retirement and healthcare in their contracts. Those goals work in opposite directions. Until the management starts looking long term there will continue to be failure in the auto industry.
Kevin B
You're not crazy. Americans can recreate its auto industry for the good. The big 3 wont do it until its forced to. Throwing good money toward an oversized disfunctional auto industry is bad. Seems America may be getting a new ballclub, via the big 3 its new name? the Detroit Pirates.
Burnsie
No, Alexis, you are not crazy. This whole episode is causing thinking people to approach issues, questions and therefore, solutions in a new way, it just feels crazy. It is sad when companies will adjust their charter to line up for gov't/our funds in this "bail out". I hope some good learning and some good ol' fashion shame and some solid indictments comes out of this. Our country will survive but in what state? I wish our country felt some strength and operated from a position of it and not out of fear or crisis mindset. Decisions made in haste rarely workout with the original intent. What's pleasing to the eye In the delusion of my sight Is not what I find when I reach into the light I have lost my mind I'm walking through time Deluded as the next guy Pretending and hoping to find That distant peace of mind - Beastie Boys
Shawn
I watched most of the hearings that were on tv. What I see is collusion fron the auto industry to inject fear. Basically what they are doing is extortion. They refuse to even think about a chapter 11 and threaten a chapter 7. If we need an auto maker in the US and they refuse to file chapter 11 then let them merge into one company and go it on their own. What they really want is for us to foot the high bills of their failures.
Joe Sellitto
Alexis, I could not agree with you more. I think filing Chapter 11 and restructuring, with government backing on warranties, would be the best solution. Detroit has completely misread the U.S. auto marketplace and we all know they have mismanaged their businesess for years. I certainly didn't like what I heard from the CEO's at the House hearings yesterday. Didn't it seem like they were just flat out lying when asked how they planned to pay the money back? One of them said they would be able to do so because they would increase the qulaity of the cars and thus become more profitable. Hello! Why didn't you make better cars all along?...you wouldn't be in this position if you had. Why would anyone want to give them any money when they've proven that they can't manage their businesess properly? If the government gives them a "bridge loan" it will just buy them a few months of operating capital. Eventually, they'll come right back looking for more. What Detroit has to do is basically start over. If they file Chapter 11, they can get creditors off of their backs, break out of the ridiculously expensive labor agreements they have, and bring in some new management who can position the companies well for the future. We can't let them fail outright, because the impact on unemployment and the chain of suppliers down the "production line" would be too immediate and too overwhelming. But handing them free money just doesn't make any sense to me when Chapter 11 is available. Joe
Monty
Alexis, Great blog. I have had the opportunity for the last several weeks to watch our congress in action and quite frankly, it scares me. I listen to Paulson stammer each time he is asked a question like a school kid making up the answers on the spot. I was impressed with Sheila Bair and the answers she put forth. The difference between these two and their ability to answer was astounding. Something that concerns me though was the gentleman from Ohio asking Paulson about the bank from Ohio that basically was in good financial shape and yet was never offered the opportunity to participate in the TARP plan. It looks like the same thing that happened to Washington Mutual. I am astounded that Fox has not reported anything on these items and focuses so much on Yahoo. Yahoo made their bed and are now having to lay in it. These banks (and now I wonder how many more) were not allowed to participate under the same rules that the big boys were. Who is making this decision on who participates? By limiting the participation are they allowing some banks (who were doing well) to be consumed by the big boys for pennies on the dollar? I just don't understand as I'm sure many Americans don't even know this is happening. Very news worthy I would think. I watched the big 3 automakers plead their case. From my point of view, Ford is already making changes for success, GM is in a horrible bind and Chrysler will do anything congress demands just to get some money. I am not sure America even knows what cafe standards are for the most part. I find it ironic that the general consensus for the auto makers is that the unions have tied their hands and are preventing a competitive opportunity against the foreign companies who are paying less in wages. At the same time our new President, Congress and Senate are going to push more unions at us. Doesn't sound right to me but what do I know. I am just an American, proud of my country, and watching with much dismay as our leaders erode what our forefathers created. Good job on this article Alexis. Keep shining the light on truth.
Scotty
One out of every three barrels of imported oil goes into the manufacture of diesel fuel for tractor-trailers to move goods around the country. If, as he says, over the next decade, trucking company’s diesel vehicles switch to Compressed or Liquified Natural Gas, we would meet our goal of cutting oil imports by 30%. We could kill two birds with one stone. Why not?" Because everyone keeps investing in oil companies, guys like Eric Bolling feed this dependency. You know TARP is about taking care of your buddies. I don't know if it will create a "catastrophic collapse," but there will be massive tax revenue loses. Let's play you make the call: (Assume you are powerless to stop TARP, I believe it's a realistic assumption) One choice 1. Give money to Paulson's cronies in a back room with no stipulations or guidance for any performance measure. Tax benefits realized probably approach zero because of tax evasion tactics. 2. Loan money to a poorly managed American auto industry that injects billions of dollars of tax revenue into the local, state and federal governments and economy. Yes, poor performance, but as a tax investor through TARP, I believe if these companies trim down and get lean we could actually make money on this deal. You know maybe the problem has always been an over taxed society across the board. All the money these companies have generated for the US government in tax revenue and they have to beg for help. The US government pulls this on an individual level as well. You know maybe GM, FORD, Chrysler, wouldn't be as burdened by employees of the past if they weren't taxed ridiculously. Industry is not the villain it's the government's aggressive tax structure. I haven't taken my eye off that principle, even though Dodd and others create this circus of deception. Hilarious to hear guys like Dodd criticize the labor benefits of autoworkers. What about your lobby money and inflated retirement package that we paid for. I'll at least feel somewhat relieved giving money to a line worker who puts in a full year of work. Hey take another vacation on us Mr. Dodd. Yea those dirty autoworkers. It’s funny to watch these politicians discuss business with the big 3. They’re making the decision for us on TARP expenditures and they can’t differentiate between simple economic terms like, net income vs. cost of capital, operation margin, working capital, etc.
John
Your so fast to approve giving our money to others. How about supporting those of us that made good decisions and pay our bills. There is no doubt, that will help us and the economy. It would be something that we (us responsible people) can actually see! And keep the government out of our pockets going forward!