Stupid and Dangerous

Right on cue

A couple of hours after the previous post was posted, the New York Times came out with a story in which Republican Senator Bob Corker blames United Auto Workers President Ron Gettelfinger for the failure of the proposed auto makers' bailout, saying that the UAW would not make adequate, timely concessions that the Republicans wanted as a condition of voting for the bailout.  Gettelfinger, in turn, quoted Corker as telling a union representative that the Uprposed AW concessions were "largely a question of politics in the GOP caucus."  We may not be able to afford movies, or even cable TV, in the coming depression, but politics will always be there to entertain us.

Effective aid for American car makers

What Washington does not do well is pick winners in the marketplace.  What Washington should not do at all is prop up losers in the marketplace.  What Washington does well, and has a lot of practice at, is reduce buildings to rubble, then provide billions in aid to the countries where it has done so.  At a cost of only a few million dollars, or perhaps a few tens of millions, Washington surely could reduce the American auto industry's outdated infrstructure to rubble.  Then they could start over and do it right.  If Michigan has to secede from the Union for a while to qualify for this program, so be it.  It's better than the alternative currently under consideration.

No welfare Cadillacs

Back in the day, the Republican bugaboo was the welfare mother driving a Cadillac.  Now it is Cadillac that wants welfare, and the Republicans, bless their hearts, are being consistent.  No welfare for Cadillac.  But let's be honest.  In  opposing a bailout for the Detroit automakers, the Republicans get to stick to their principles and stick it to a huge bunch of unionized workers.  Similarly, the Democrats wouldn't favor a bailout of GM, Chrysler, and (maybe) Ford, unless so many Democratic voters would benefit. 

Where's the money?

As of today, it has been a month since Henry Paulson told Congress that the world would come to an end if Congress did not give him $700 billion to spend as he wished.  He got the money.  He has spent none.  The world has not come to an end.  May we please have our money back, now?

We're Rich! We're Rich!

Boy, are we putting one over on those Wall Street dummies.  House Republican Whip Roy Blount just went on All Things Considered and said that everyone should vote for the $700 billion bailout bill because it's not a bailout.  He explains that what the government is really doing with its $700 billion is buying assets at their lowest point.  Once the government buys these assets, whatever they are, their value will go up, and the government (i.e., the People--i.e., you and me) will make money.  Lots of money, one assumes, since for $700 billion, the government should be able to buy a hell of a lot of whatever the hell it is that the government is buying. 

The important thing is that we all agree not to tell anyone on Wall Street what the government is doing.  I hear persistent rumors that those boys on Wall Street are not in business for the fun of it; they're in business to make money.  So if they get even a inkling that they are selling these assets for less than they are worth, they may not sell them at all.  Wow, we would all be disappointed if that happened!

Also, let's not be cynical and think, even to ourselves, that perhaps the current price, whatever that may be, of these assets, whatever they may be, reflects the market's (whatever that may be) judgment as to the likelihood of the price of the assets going up or (silly me for even mentioning it) going down. 

The Environmental Cost of Economic Stupidity

In an article today on how it will take a long time to deploy a network of fueling stations for hydrogen cars--if it ever happens at all--the New York Times reports the National Research Council's estimate of $200 billion as the cost of such a deployment.

To put it another way, for less than a third of the estimated cost of the bailout of Wall Street's richest, the entire country could enjoy the economic benefits of an emission-free fuel and the political benefits of not being dependent on the Arabs and the Russians for the gasoline we need to get to the supermarket, school, work, etc. 

No shortage of arrogance

Wall Street may occasionally run out of money, but it never runs out of arrogance. Yesterday on NPR's Morning Edition, Pete Peterson advised that "low paid" government bureaucrats should not be allowed to run the bailout program. Instead, wise Wall Streeters who are paid "far, far more" should be given $700 billion of taxpayers' money to spend pretty much at their discretion.
In the 1930s, bankrupt fat cats who leaped from the window ledges of their corner offices at least had the decency to land on the pavement. Now, not only do they want to land on a nice, soft pile of taxpayers, but they want to get paid to do it.
If there is to be a bailout at all, Congress should tell Peterson and his ilk to hit the street, and give the bureaucrats a chance to show what they can do.   Pete, they can't do any worse than your crowd did.

About these bailouts . . . .

Dear Congresspeople and Executypes:

  Maybe I need to put up all the money I ever earned and ever will earn so that the "markets" can be kept "liquid."  But here are the conditions:

  (1) I won't bail out shareholders who made a bad bet.  When I make a bad bet, I pay.  If the company the shareholders own is worth zero, then zero is what they should get.

  (2) I won't bail out executives who made bad judgments--even if the bad judgment was to join a failing company.  If you must fire some executive who has been making in the millions or tens of millions or hundreds of millions, give him a $25,000 going-away present and tell him that it will feed a family of five for a year.  In fact, it will.

  (3) I won't bail anyone out until you explain one thing to me.  You say that this crisis is caused by people not paying their mortgages.  If we give the lenders a lot of money, they will have a lot of money, and the people not paying their mortgages will lose their houses.  If we give the people not paying their mortgages a lot of money, and tell him to pay their mortgages, then the lenders will have a lot of money, but the people will still have their houses.  Before I give you all my money, please explain to me why the second alternative is not better than the first.

Another suggestion

Yesterday, Stupid and Dangerous suggested that a company should qualify for a government bailout  only if its top executives leap from the roof of its headquarters.   I am started to discover that in a post in March, Stupid and Dangerous suggested pretty much the same thing as a way for Wall Street to restore investors' confidence.

This suggests two things:

First, Stupid and Dangerous has some unresolved aggression issues when it comes to fat cats.

Second, this supposedly sudden and unforeseeable collapse on Wall Street cannot have been all that sudden and unforeseeable if even Stupid and Dangerous was suggesting six months ago that it was time for the the guys who peddling all those bad notes to meet their Makers. 

Meanwhile, remember, it's a sin to waste good meat.

Eat the rich. 

Stupid of last resort

The Federal Reserve (or is it the Treasury Department--what's the difference, the whole government is turning out its pockets for the bankers) used to be the lender of last resort.  Now, it's just the stupid of last resort.  Today's bright idea is that the government should buy up the bad debts of the bankers and insurance companies so that . . . . well, so that the taxpayers can take the loss and the bank presidents and insurance executives can go back to being rich.  This, we are told, adds "liquidity" to the "economy."  We are not told that this is a "safety net" for the rich, because it reminds us that this administration has so consistently opposed anything like a safety net for anyone other than the rich.

There is no way to stop the government from doing this.  It's so incredibly important that the Bush administration will no doubt get it accomplished by the end of the year.

So I have just one suggestion.  Any bank (including investment banks) and any insurance company applying for federal help should be required to certify that its president, the chairman of its board, its chief financial officer, and its three largest individual shareholders will all go up to the roof of its headquarters building and jumped off.  When those guys hit the pavement, then the application can be approved.  If the applicant is a modest institution with, say, a one-story headquarters, those guys will no doubt survive.  As for the rest--well, consider their sacrifice a demonstration of the urgency of their institution's situation, and their sincere regret at having brought the institution to its current state.