Obama To Decide Who Is Too Big To Fail!

We heard during the financial meltdown in September 2008 that some companies were too big to fail. Among these companies were many of our banking institutions and later our automotive manufacturers. But I am still perplexed as to what is the measure to determine which companies are too big and which ones should fail. More importantly why should the government get to choose which companies are to be saved and which ones go away.

I bring this up because our president,B-Rock Obama, listening to his now to be known incompetent economic advisers, has decided that the Federal Reserve should be the policer of which companies are to be saved. And we have those out there who do not think that this president harbors a socialist agenda.

The Fed was created and chartered to prevent banking panics, regulate the money supply and to supervise and regulate some banking practices in the U.S. not to act as a governmental bureaucracy to decide which industries and companies get to survive. We already see how government has been able to chose those industries thus far.

First we said that the Big Three automakers could not fail. They could not be allowed to go into bankruptcy. Too many jobs are in jeopardy. They must have a financial bailout even though all these companies really wanted was a government backed loan. Many business pundits and politicians openly discussed a controlled bankruptcy for Chrysler and General Motors but the government determined that they were "too big to fail" and bailed them out any way. Fast forward four months into the Obama reign and Chrysler was forced to file for bankruptcy protection even though they were "too big to fail."

Gone are the $8 billion that was already given to Chrysler. Now because General Motors has not come up with a viable business plan they too are being told to plan for a bankruptcy filing. Now the taxpayers will be on the hook for $15.4 billion that GM has received. But the Fed is being proposed as the group who will decide going forward which companies will get federal dollars for their survival even in the face of some of the obvious things that should occur when a company is not able to meet its obligations. Bankruptcy.

Americans should be outraged that Obama is proposing more of this sort of government interference in American business. Government, not George Bush, was the reason for the financial problems we currently have. The bureaucrats (government) that were charged with regulating and watch-dogging these institutions were not able to perform. The government, not George Bush, was heavily involved in the mortgage crisis. The government, not George Bush, is just "too big to fail" at its responsibilities yet B-Rock expects this same government to decide who the winners and losers are. Some say that we had a lack of oversight and regulations under George Bush.

I know that it has become popular to blame George Bush for our current economic crisis and everything that is bad or deteriorating in this country even though millions of Americans successfully prospered under the first 6 years of Bush. But for the current president to propose "more of the same government" oversight will only lead to industries that are politically connected being allowed to survive, i.e. newspapers! Bureaucrats only create bureaucracy not efficiency. By the time the Fed were to figure out that a company was in dire straits it would take 5 months to come up with a plan to save them only to tell them to file for bankruptcy two months later.

The government is not suppose to chose winners and losers. It is not suppose to determine when a company goes into receivership or bankruptcy. It is not suppose to be above the law and decide which creditors of a failed company gets paid first. It is not to be a representative or stockholder in a company. The government should be a caretaker of our tax dollars. We have too quickly become a country of government interference. The tide must recede and it must recede now.

These are my words! Please post yours!

I Agree With Obama...

...that the automotive industry plans from Chrysler and General Motors were not acceptable.
But that is where I stop agreeing with him and his administration over this fiasco.

Finally someone in Washington has taken it upon themselves to read a document that has been placed in front of them. I posted a month ago that these plans were lacking in substance and direction. Now Obama says that these companies can no longer receive any more of your money to survive. Wait, that is for at least another 60 days for GM and 30 days for Chrysler to fix their plans. Once you receive government welfare you are not allowed to get off that welfare until the government has tried to find ways to keep you on it. I will wager that at the end of these time frames both companies will be given another 30 days as an appeal and an appeal to the appeal if it does not turn out in their favor.

Big "O" has finally used the "B" word (bankruptcy) with regards to the automotive industry. Although his administration is calling it a 'court supervised' process. I believe that the Obama's minions have finally wised up that they can save face and let a judge be in charge of the automotive problems thus removing Obama from any possible UAW showdown. Obama is a big union supporter and he keeps stating that all 'stakeholders' must come to the sacrificial table in order for these companies to survive. In other words you gotta give up something to get something. By letting a judge decide who gives up something he can lay the blame anywhere but at the Oval Office door.

Obama has clearly decided that Washington knows how to run the automotive industry better than those "wily veterans" that have been doing it for sometime now. He asked for the immediate resignation of the GM CEO, Rick Wagoner while leaving Chrysler CEO, Bob Nardelli in position. The automotive task force has concluded that GM is still relying to much on the sales of 'high margin' trucks and SUV's (profit is not allowed by Washington) and that Chrysler's best hope is to merge with another company, Italian automaker Fiat (will that make Chrysler an Italian automaker and ineligible for bailout money?). Obama has indicated that automotive companies must "thrive by building cars of tomorrow." Yet those same hybrid green vehicles are tough to sell these days. When gas prices were above $4 per gallon these cars were hot items. Now that the price of gasoline is hovering around $2 per gallon hybrid cars are clogging up dealer inventories.

The government has long insisted upon automobiles meeting certain MPG standards but they now are telling automakers exactly what kind of vehicles to make. In short consumers focus on present day realities not carbon emission fallacies. Gasoline prices will dictate what people buy not Washington, unless they force all of the automakers to only produce green vehicles. The good news is that if you purchase a green vehicle you can get a tax credit and a deduction of the new-car sales tax. The sales tax deduction is part of the $787-billion stimulus bill. But at present day gasoline prices you must be willing to wait for sometime to offset the additional cost of these green vehicles versus the amount of money you will save on fuel.

Maybe the Obama administration will create artificial demand for these products by temporarily drying up the gasoline supply thus causing gasoline prices to rise and the fair weather moonbats to go searching for hybrid cars again. Remember that when W. left office gasoline prices had dropped to their lowest level in 4 years. So if they rise again it will be Obama's fault not Bush's.

That's my word! Please post yours!

Pimp My Ride: Presidential Task Force On The Auto Industry

What if Chrysler and GM built a car and no one wanted to buy it? What if our federal government employees charged with overseeing their return to competitiveness refused to own it? Would you feel comfortable loaning them money as a part of a bailout?

The Big "O" formed a task force, Presidential Task Force On the Auto Industry, to tackle the process of monitoring Chrysler and GM and determining if they can get more of your money to stay in business. The task force will be co-chaired by Timothy "TurboTax" Geithner and Lawrence Summers, the White House National Economic Council Director. There are 6 other members on this task force along with 10 senior policy aides. There are two openings on the committee but they have not been named as they would be the secretaries of Labor and Commerce, who have not been appointed by the Big "O" yet. Initially the Big "O" promised that he would appoint a Car Czar to oversee the auto industry but that was scrapped in favor of a committee. You see Democrats believe in Mob Rule. Let's get a group of experts together and vote on how to run a company.

According to the Detroit News, both of these gentlemen own foreign automobiles. Geithner, a 2008 Acura TSX and Summers a 1995 Mazda Protege. Of the entire group, two do not own an automobile and only two own American models. Now you wonder why the automobile industry is in such dire straits. Americans always vote with their wallets. We want value, reliability and great looks in our cars. Yet Detroit automakers continue to lag behind their Japanese counterparts in providing these things. I am not saying that American automobiles are far less reliable but their is a perceived unreliability that goes back over 25 years on American cars.

Our Democratic controlled congress would have all corporate CEO's make a maximum wage of $500K but overlook the fact that the people chartered with oversight of bailout money to GM and Chrysler be allowed to own foreign vehicles. Because Obama believes in fairness then make these overseers divest themselves of their foreign automobile and buy a new Dodge Challenger or a Chevrolet Malibu. C'mon, its only fair. They get to tell Chrysler and GM how much and what they need to do but they don't support buying American. For them to drive foreign automobiles to work daily would be the same as a Coke employee bringing a Pepsi Cola to drink during their lunch break. I am not opposed to Americans owning foreign cars as this is a free market place, I am just putting the hypocrisy back at the Obama administration and the Democrats who think that they should always tell others what to do with their money.

Both Chrysler and General Motors presented their business plans to the White House as part of the terms of the agreement from December. Chrysler's plan consists of 177 pages (mostly fluff) little in the way of planing and GM's plan has a total of 117 pages which will include focusing on its core brands, GMC, Cadillac, Buick and Chevrolet. The Task Force on Auto Industry will have until the end of March to review and decide whether to grant further government aid to these failing behemoths or to structure a controlled bankruptcy filing.

Will these automakers survive? Not if they are not allowed to fail. They must fail in order to fix their cost structure and focus on efficient manufacturing and assembly of cars that Americans want to buy. Failure is an option and should be explored.

Car selling should be simple. Make what people want to buy. Price it where people are willing to pay(successful market research and branding). If they buy it make more of it and make improvements to it. If they don't buy it stop making it and mark it down to liquidate immediately. Automakers sometimes stay with a model too long before discontinuing it. I like what Detroit used to make. Maybe I will see more of these on the street really soon!



That's my word! Post yours!