America – To The Power Of "The One"
There’s an old saying that states; if we don’t learn by our mistakes, we are destined to repeat them. And so it goes that we are repeating mistakes made within the auto industry.
The media reports on a daily basis the turmoil within the auto industry, particularly two of the “Big Three”, General Motors Corp. and Chrysler Corp. GM is only days away from “Bankruptcy”, or whatever it can be deemed as today, and Chrysler has already accepted their government dictated “Modified Bankruptcy”. Added to this are the tens of billions of taxpayers’ dollars that has been pumped into these two ailing corporations with little to no chance of seeing these funds returned.
The Whitehouse has flexed its muscle, unconstitutionally I might add, and literally taken control of these two corporations by forcing itself upon the will of these private companies. In an article from the Washington Post (dated Monday, March 30, 2009), it is written that long time chairman and CEO
“… G. Richard Wagoner Jr., who met with administration officials on Friday and has agreed to step down.
The White House’s insistence that Wagoner step down is an extraordinary intervention of the federal government into the management of a private company. A senior administration official said Wagoner’s resignation was required because the company needs a “clean sheet.”
“We felt that having a change of leadership would be consistent with the clean-sheet approach,” said the official, who spoke on condition of anonymity because of the sensitivity of the matter.”
So what exactly is proven here? Although the administration feels that it has a responsibility and the right to intervene in such matters, the “senior administration official” was granted anonymity as a condition for the statement. Why is this? Because what the Obama administration is doing by its meddling in private business is unconstitutional and illegal. Can’t you just hear the conversation between Obama and Wagoner? “Well Rich, you just don’t want to play the game the way I, “The One”, wants it played. So, because of that and in the immortal words of “The Donald”, YOU’RE FIRED!”
Chrysler Corp. too, has seen the administration take control of the auto maker’s helm by not only dictating its business practices, but also negotiating its contracts. The UAW has been given, yes given, the lion’s share of the company with a 53% ownership stake. Now, how does this make any sense at all when the UAW, and its outrageous contracts, has been one of the primary factors in the failure of the industry.
As Chrysler has a history in this area, let’s look at that history. In 1979, Chrysler’s then chairman and CEO, Lee Iacocca made the trip to Washington to beg for federal funds for his struggling company. He went looking to thwart bankruptcy and stabilize Chrysler’s financial situation. Chrysler had begun its downward financial slide three years earlier in 1976 and the company’s attempts to recover were ineffective. In a July 13, 1983 article published by The Heritage Foundation titled “The Chrysler Bail-Out Bust”, author James K Hickel explores some of the intricacies and inconsistencies of the deal Chrysler was handed on the company’s announcement that it would complete its repayment of the $1.2 billion in loan guarantees it received by September of that year (1983).
“The way they tell the story, Chrysler in 1979 seemed destined for bankruptcy, and now it’s showing a profit. What saved Chrysler, we are told, are the $1.2 billion in loan guarantees provided by the federal government—so successful was the timely injection of cash that the company could announce today that it will pay off the remaining $800 million by September. And it didn’t cost the taxpayer a penny, did it, they ask gloatingly.”
But, what of the myths and truths of this bail out? Who was the winner and looser? This entire deal was to save Chrysler from certain demise and save countless jobs. The results, interpreted in many ways, were mixed. The supporter of the plan touted the deal as a great success but, was it really? What was the actual cost of this government intervention?
“It shows that if the bailout is indeed the model for an American industrial policy the consequences could be disastrous.”
Today, as in 1979, Chrysler and GM both, by definition, are bankrupt. Both are going through the motions as if they had filed Chapter 11 bankruptcy. The Obama administration has taken the lead as negotiator for redefining and renegotiating contracts with labor, suppliers, bondholders and stockholders. However, any way the administration wishes to spin it, there is no true negotiating going on here. All parties concerned, including taxpayers, have been TOLD how it is going to be and the few who have dared to defy “The One” and his plan, have met with threats. An example was reported by Jake Tapper, ABC News Senior Whitehouse Correspondent in an article on May 2, 2009;
“Thomas Lauria, Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case, told ABC News that [Steve] Rattner [the leader of the Obama administration's Auto Industry Task Force] suggested to an official of the boutique investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for opposing the Obama administration plan, which President Obama announced Thursday, and which requires creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler.
Perella Weinberg Partners, Lauria said, “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence.”
“The charge is completely untrue,” said White House deputy press secretary Bill Burton, “and there’s obviously no evidence to suggest that this happened in any way.” Ummm, OK, but I don’t believe that for a moment! Why? Because there is more than enough proof that the Obama administration is continuously throwing its uninvited weight around. The article continues;
“Perella Weinberg Partners, which owned Chrysler debt through its Xerion Fund, was one of Lauria’s clients in this bankruptcy, but no longer is. The firm is led by Joseph Perella. On Thursday afternoon — after the Wedneday deadline — the portfolio manager for the Xerion fund decided to join the larger four creditors who are owed roughly 70% of Chrysler’s debt and had already agreed to participate with the administration’s plan.
Those four financial institutions – JP Morgan Chase, Citigroup, Morgan Stanley, and Goldman Sachs — are recipients of up to $100 billion in federal government bailout funds, though the Obama administration insists the matters were kept completely separate.”
So why do you think the other four financial institutions accepted the administration’s deal? Gees, I don’t know. Could it be the $100 billion in bailout funds they received and a directive from the Whitehouse, “The One”, to comply, or else?
So what, actually, was the cost of the 1979 bailout of Chrysler? Let’s head back to Hickel’s 1983 article.
“This was the result of a clause in the Chrysler Corporation Loan Guarantee Act of 1979 that required creditors to make certain “concessions” to Chrysler. With this clause to exploit and with Treasury Department officials, including then-Secretary William Miller, pressuring its creditors, Chrysler was able to pay off more than $600 million in debts at just 30 cents on the dollar. In addition, the company was allowed to convert nearly $700 million in debts into a special class of preferred stock—paper relatively worthless in the financial markets because the shares earned no dividends and were to be unredeemable for several years. In early 1983, Chrysler reached a tentative agreement with its creditors to trade this preferred stock for Chrysler’s regularly traded common stock. However, the creditors still get the short end of the financial stick: the face value of the common stock to be received will almost certainly be less than the face value of the original debt.”
Is this deja vu or what? The only difference today is that we are dealing in billions of dollars and not millions. What of the jobs? Well, in Chrysler’s 1979 bailout, nearly half of the company’s employees lost their jobs. The loan guarantee package that Congress approved was specifically meant to protect the company’s workers. However, even after the approval, Chrysler still cut its white collar work force by 20,000 and laid off 42,600 of its hourly employees. It was suggested that a true Chapter 11 bankruptcy filing would have been safer and more effective in the restructuring and reorganizing of the corporation without the realized risks and consequences to taxpayers, employees and investors.
The point here is that we are seeing the same type of government intervention, only on a grander scale. The results are looking very similar to history as GM and Chrysler lay off tens of thousands of employees with even more layoffs projected. Only this time, because of these two companies selling out many of its component manufacturing operations to private entities of the years, the layoffs will and have spread to more than their own corporate holdings.
And, what of the administration’s strong-arm tactics and interference within private business? This practice of growing the federal government and its control has been evolving for decades, from administration to administration. For most part it has been subtle with few radical level bumps in the road, until now. The Obama administration has taken the “Power Grab” to new heights. Our Constitution limits the power of the federal government over her citizens, citizens also referring to private business entities. The level of control that is being built by this administration over the private sector is not only astonishing, it IS unconstitutional.
We have seen the beginning of the “Change” Obama spoke of during his presidential campaign. Only, in his campaign change was not defined by him as “Socialism”, but Socialism it is.
Socialism:
1. Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.
2. The stage in Marxist-Leninist theory intermediate between capitalism and communism, in which collective ownership of the economy under the dictatorship of the proletariat has not yet been successfully achieved.
The American Heritage® Dictionary of the English Language, Fourth Edition
Wall Street and the financial industry, the insurance industry and now the auto industry are being controlled by the administration. They have now set their sights on the healthcare and energy industries and education. They strive to make Americans more and more dependent on government through the addition and expansion of social programs, programs that will have to be funded at the state level even when the bailout funding disappears in a couple of years. This, in turn, will force more taxes at the state level to maintain the programs mandated by the bailout package, in addition to all of the increased and added federal taxes we will be subject to and are already feeling. “If you make less than $250 thousand dollars a year, your taxes will not increase one dime!” These were the words of The One as he campaigned for your vote. We have already seen these increases in many ways, increases that affect everyone under that mark.
To the Obama sheep who blindly threw their vote his way, how are you feeling now? If you still believe in his way of governing and that Socialism/Communism is the way to go, shame on you! Real Americans don’t sit around waiting for handouts; they roll up their sleeves and work hard for a better tomorrow for themselves, their family and their country. If you now feel as though you have been duped and mislead by the Obama political rhetoric and the thought of a Socialist America scares the hell out of you, know that you are not alone.
The time is now, to take back this great nation and again make it the nation of “We The People”.