Now I will describe instances where no longer is the free-market the decider, but those in government, elected or not, who choose winners and losers in what used to be American Capitalism, based on the idealogicial philosophies, payments to, relationships of, a very few very powerful, politically-connected people. In free-enterprise capitalism, markets, millions of buyers and sellers, bring decisions, which over the course of a couple centuries have been right. Politicians who don't spend their own money have no personal financial risk, and, of course, often lack knowledge and experience in "business". America is the greatest nation in history based on the freedom of markets and free enterprise/capitalism. No longer. In power are those who want their opinions to be law. Decisions are no longer made in the marketplace but in Washington, District of Columbia.
TO WIT:
Liberals attack the free enterprise system for seeking profits. Well without them, there's no jobs, growth or wealth. For example here's how well the government does:
A new study offers sobering news for those who want the government to run America's healthcare system — the government-subsidized Amtrak rail service loses an average of $32 for each passenger it transports. The study by Subsidyscope, an arm of the Pew Charitable Trusts, found that 41 of Amtrak's 44 routes lost money last year. The biggest loser was the Sunset Limited between New Orleans and Los Angeles, which lost $462 per passenger. Even the popular Northeast Regional trains, which connect Washington, New York and Boston, lost $5 per passenger last year. According to the study, Amtrak will receive $2.7 billion in subsidies and stimulus dollars in 2009.
Mr. Czar Kenneth Feinberg, President Barack Obama's absolute ruler United States Czar of compensation is causing troubled and under-capitalized financial institution Citigroup Inc. to give up -- give away -- probably somewhere around a billion and a half of dollars. What, one might ask. Citigroup owns energy trader Phibro LLC, producer of $1,860,000,000 of earnings for Citi over the last only five years. Because Phibro's head trader (Andrew Hall) is contractually owed around $100,000,000 in bonus for 2009 (on top of an earned $98,900,000 last year) and Czar Feinberg thinks that would be embarassing to Citi...embarassing!...it is peddling the unit to Occidental Petroleum Corp. on the dirt cheap. Using those numbers, (from the Wall Street Journal, October 10 - 11, 2009, page B-1, "How Occidental Scored Citi Unit Cheaply") Phibro's average contribution to Citi is $372,000,000 a year. Taking some Citicorp general and administrative costs (10%) and income taxes (at, say, 35%) out would leave around $218,000,000. Assigning an 8 price earnings ratio (low) would indicate a back of the hand valuation of $1,744,0000,000. Oxy (as Occidental is popularly known) is apparently paying $250,000,000 which, under all these assumptions, hands to Oxy nearly $1.5 billion. Now, the United States of America owns 34% of Citigroup. The CEO of the owner, the United States of America, has charged his hand-picked absolute Czar to give away, yes, give away, to some corporation $510,000,000. Being cynical, 1) shouldn't the aforementioned United States of America file some derivitive law suit against its CEO and Czar? and 2) is Oxy and its executives, employees and/or related Political Action Committees, contributors to Democrats, the Democratic Party or Barack Obama or any of his affiliated organizations of affiliates or friends?
The Obama Administration mandated that financial companies which needed capital from the government undergo "management team reviews" as part of its overall "stress test". The Federal Dempost Insurance Corp. demanded that Citigroup's board use one of FDIC's recommended consulting firms (instead of one Citigroup wanted) and Egon Zehnder International was selected. Is this meddling? Micromanaging? The answers will have to come in the future. But this along with Obama's Pay Czar indicates a very troubling indicator for the future control, directly or indirectly, of busines by Obama.
And today (October 6, 2009) Obama's Pay (Don't Call Me) Czar, who works for nothing (and as the saying goes, you get what you pay for), will singlehandedly set the compensation for many of the nation's largest companies. And just how is he so perceptive that tens and hundreds of Compensation Committees can't see what he sees? Doesn't matter, he's the Czar. His unelected word is God's Word for those working for "privately-owned" corporations in America. And don't think Obama will stop at the seven companies the U. S. Government controls. Just wait for upcoming legislation. No one certainly remembers that back when perceptive Bill Clinton was president, the Democratic Congress capped the amount of compensation at $1,000,000 that corporations could write off their income taxes . Result? Corporations replaced cash compensation over $1,000,000 with non-qualified incentive stock options which grew in value in some cases to hundreds of millions of dollars -- the very compensation Czar Feinberg is trying to rein in as we speak! Go figure. Well one thing you don't read about is the very genesis of the incentive stock options -- a major unintended blunder by Democratic politicians attempting in the '90's to rein in compensation higher than their own. Illegal, of course! Jealosy has no bounds.
And through the backdoor, the Democratic Finance Committee voted Thursday, October 1, 2009, to limit healthcare insurance executives' compensation to...to...a lousy half-million dollars, half of what Clinton did twenty years ago. Do these imbeciles never learn? The reason given is that the insurance companies would be enriched through having so many more customers. And who wants profitable companies, anyway? They are so...so anti-government. The vote? 13 + Sen. Olympia Snowe, from Maine, against the Republicans' 8. While it isn't law and with the pushback on Obamacare won't likely to be, it indicates the extent of anti-business/anti-insurance comkpany/anti-capitalism on Capitol (as opposed to CapitAl) Hill. But the horror of it all is, the Democrats aren't trying to understand healthcare, or how to really "fix" its high costs, they are simply trying to lock-step get any healthcare bill passed so they can crow how "they" (Democrats, not Americans) won.
Since the Federal Reserve System couldn't find its way to the "bubble" outhouse and only promoted it rather rather than thoughtfully rein it in, President Obama wants it to have more power; and he wants to line up a guaranteed source of campaign financing of the Democratic Party by lablling some institutions "too big to fail" or government-sponsored entities (GSE, a term used to describe trillion-dollar-failures, Freddie Mac and Fannie Mae and Sallie Mae). Some institutions. Hmmm, perhaps those that have Democrats as CEOs and campaign contributions to Democrats in the hundreds of thousands of dollars? I wonder. But ceratinly have the president of the United States make the call, not markets of free buyers and sellers.
Everyone knows that U. S. banks are sinking with "toxic assets" which came from loans made to people who can;'t pay them back. Many were bundled into "securities", with specified attributes, such as safety of principal or high yields. Ever brilliant in free enterprise, Wall Street is remaking these bundled securities and styripping out the good -- and selling them -- and writing off the bad. The result is more equity and less risky balance sheets in the banking industry. And immediately Congress, the Members of which 1) originated the beginnings of these risky assets and 2) clearly don't understand them, is raising doubts. Either to stop the transactions because the private sector might be successful or to gather more campaign contributions. But on the other side, the U. S. /Obama Treasury Department as agreed to dump more money into doing the exact same thing. Go figure. Treasury will "invest" and I use that term loosely up to $2,250,000,000 if the Annointed private hedge funds will match it in the PPIP (Public-Private Investment Program)( government is nothing if not clever with initials). With (that evil) leverage, a total of $40,000,000,000 will be available to purchase toxic assets from the government's risk pool of $1,640,000,000,000 (trillion) in guaranteed mortgage-backed securities from Fan, Fred, FHA and well, you know, other initials. If allowed by Washington DC, the private security "revisions" could reach $30 to $90 million this year. I guess it depends.
Wind-turbine makers whine that free-markets aren't good enough for them. They need government-directed subisdies to continue their growth. "Stimulus" grants apparently kick-started the industry, in which General Electric, whose CEO is close to President Obama and whose National Broadcast Company acts as Obama's publicity headquarters, is the largest U. S. participant, with 43%. But recently orders were down for GE and its oligarchy of wind-turbine "competitors". Obama's anti-trusters, where are you? Various bills mandate that U. S. utilities, private or public, get 20% of their energy from "renewable" sources by 2020. Subject to change and campaign contributions.
Congresss and the Federal Communications Commission wants to regulate telephone, wireless phone and cable companies which have spent billions of dollars investing in broadband "pipes" through which voice and data flows. (AT&T alone $18,000,000,000 in 2008.) While there is no "abuse" the new Obama Democratic Chairman of the FCC wants it his way, not the marketplace's way. And Google's way. Google invested huge dollars into the Democrat coffers and has people in the Obama administration, including its chief lobbyist, Andrew McLaughlin, now deputy head of Obama's telecom policy. Google which hasn't spent a dime laying fiber-optics, wants to use it all free of charge. In fact, its highly-profitable business model depends on it. But its success is not now from the marketplace, but from Washington DC. It's misleadingly- called "Net Neutrality", by Google and Democrats, wherein they get control over the private interests that financed broadband and might be in a position to dictate what goes over it. Propaganda anyone?
In 2007 milk prices hit all-time highs, vastly enriching dairy farmers. As a logical, market-based result, they greatly expanded their herds. The market-based result of that? Lower prices, dropping 35% to $11.80 a hundredpound vs. $18.40 the year earlier. The result? The highly-powerful dairy farmers demand a industry probe of the two major purchasers of milk by the Obama Justice Department, aided and abetted by equally powerful Democrats, Chuck Schumer of New York and Russ Feingold of Wisconsin and "independent" (socialist) Bernie Sanders of Vermont. Whether or not the probe is launched or whtether or not is brings action, is immaterial. The marketplace is transcended by Washington DC and its powerful Democrats.
Whatever is "flash trading"? Dunno but it was invented by bankers and traders, so, according to Sen. Chuck Schumer of New York, it must be outlawed. And, so customers -- the free-market -- doesn't decide, Chuckie does. And what does he know about it all?
What about the ability of the U. S. government's financial people to brilliantly understand the status of markets and discover "systemic" risk and reduce it before it crushes the country? Let's hear it for Alan Greenspan, late of the Federal Reserve System, the single source of regulation of American monetary policy. He failed miserably, as did his successor, Ben Bernanke, as did government. In fact many believe (me included) that easy money from the Greenspan Fed, coupled with Democratic Congressmen, started the various "bubbles" led Fannie Mae and Freddie Mac into buying trillions of dollars of sub-prime, marginal and poorly documented consumer mortgage loans in the name of "affordable" housing. (Meaning votes.) Rather than adding to the thousands of pages of regulations and hiring thousands of hall monitors, perhaps Obama should consider getting rid of the centrally-controlled Federal Reserve System and Fan and Fred and Federal Housing Authority. Oh, sure that will happen! Democrats see each new government worker as a vote for their party.
Well, there are a few successful business decisions made by our government that I can find. (President Eisenhower's interstate highway system.) But failures? Obviously. The following will outline failures of government central decision-making, planning and operation (management?) of companies and organizations. Why do people think a few people can make the right decisions every time, when it has been shown that decisions made by "the markets" -- millions of consumers -- have been successful. This is at the very root of America's past success and the failure of the United Kingdom, France, Italy, Germany and on and on. It is in part becuse a bad decision by one or even a thousand consumers out of millions is miniscule in damage compared to one decision of a politican which negatively impacts millions of people.
Just to name a few government-run organizations, initiatives or endeavors: Amtrak, United States Postal Service, Medicare, Medicaid, Fannie Mae, Freddie Mac, Ginnie Mae, "Cash for Clunkers" and...Biofuels/Ethanol...and on and on as the following indicates:
Stop harping on this. Speaking of HARP (Obama's brilliant Home Affordable Refinance Program), Mr. Obama in March 2009 announced that HARP would help millions of borrowers (from evil mortgage companies). And, yes, like all government programs it has helped...but only 60,000 voters...through the end of July (that's materially less than "millions", for your information). Way to go Mr. Prexy! In a candid moment of honesty, an Obama representative, an assistant Treasury secretary, Michael Barr said, "It hasn't met our expectations." Well said, sir. A failure? Not at all because Mr. Obama simply made it more risky to taxpayers, if you can imagine; initially it was established for those whose home values were less than their loans up to 5% underwater, now if their home loans are up to 25% IN EXCESS of their home values they're eligible. These are Fannie Mae and Freddie Mac loans made to increase home ownership for voters too poor to afford homes. And Congress got this right, they could not afford them. The solution: change the terms to keep them in houses for, what? A month? Six months? Until after the next election? If they can't afford them, they can't afford them. Only Congress and the Obama administration with our taxpayer money will make everything OK. Change?
Another government give-away to those who got mortgages they couldn't afford, Obama's trial loan modification program also has been a bust. Only 12% of those eligible for the $75,000,000,000 program. 570,000 out of Obama's expected 4,000,000. However that is good news to people who think programs and bailouts to the stupid are stupid.
The "Cash for Clunkers" -- "CARS" -- program rushed through Congress and signed by President Obama threw out $3,000,000,000 to buyers of some new cars -- see below for a more complete description. The original program was $1,000,000,000 and it was gone in a couple weeks so of course the Democrats added a couple more billions of our money to it. Most important is less than 20% of buyers have been paid. The administration has moved 3,000 people to do the paper work and will add a couple thousand more next week. If this was a Republican initiative the left-leaning media would be screaming how inefficient government is. It is equally as true that the Democratic government bureaucracy can't handle a simple program like this; maybe folks it is government.
Which takes us to the FDR-era program, the Federal Housing Administration. The Democrats have Fannie Mae-, Freddie Mac- and subprime-mortgage-like eased the ability for less-than-capable people to get low or in some cases no-down payment loans, and recently for higher amounts. Hmmmm. Yes, it is a popular deal, with its market share skyrocketing to 23% of the U. S. mortgage market (up from less than 3% in 2006). Everyone, what do you think the outcome? 1) Congress doesn't want to learn from or admit its mistakes with Fannie and Freddie and 2) bad loans are skyrocketing, duh! FHA's loan reserve, adequate in 2007 is heading for the dangerzone: 2% of the $429,000,000,000 in loans it guaranteed. And yes, the U. S. taxpayer is on the hook. Democrats, 1) how stupid do you think us? 2) How stupid are you? (The answer, not stupid at all, it is these highly-risky endeavors that get them elected and re-elected, and that is Job One for politicians.)
The Federal Deposit Insurance Corp., was invented by the FDR administration to stop runs on banks in the 1930's. It started to work after a while. Back in the 1970's a it bank deposits when Congress upped the guarantee to $100,000 from $25,000 and the number of covered institutions exploded along with bad loans hurriedly (and sometimes illegally) made. The Resolution Trust Corp. was chartered to take over the assets of the 1,000 failed banks and work out these failures. It worked fairly well. Today, Congress in a typically political knee-jerk reaction to the "meltdown" last year upped guarantees to $250,000. The total deposits guaranteed by the FDIC exploded to upwards of $4,500,000,000,000. The $250,000 was to cease by the end of 2009, but, of course big government can't stop anything, so Congress extended to to 2013. Since last year, the FDIC's reserves have shrunk from $45,200,000,000 (before a special levy of $5,600,000,000 from banks) to about $10,400,000,000. All of the $4.5 trillion is guaranteed ultimately by the taxpayer to the federal government, initially with a $500,000,000,000 "line of credit" from Treasury. Stay tuned for more failures and the tapping of us, the taxpayers.
Add what will become the latest fiasco. Let's simply blame Wall Street right now. Morgan Stanley and Citigroup, Inc. have each invested $100,000,000 to finance windfarms this month, August 2009, TAKING ADVANTAGE of yet another cash spigot from Central Command Whirling Dervish Obama. Energy and Treasury together will rebate 30%of the cost of building a "renewable energy" plant with a check sent 60 days after application approval; don't know if this means they don't have to build it or not. Plus accelerated depreciation income tax deductions. Oh, there is no cap on the cash, no maximum. Applications of $10 billion by Wall Street are seen. General Obama Electric is on the scent, said its Energy Financial Services division managing director. A similar program led to the failure of Lehman and American International Group (AIG) last year. Stay tuned.
And what about A123? It is a central figure of Obama's central control of our economy. Like it or not, Washington DC is the center of everything in economic-America now. Venture capital can't keep up. (But what if Obama's decisions are wrong?) A123 is a winner! The Obama socialist-lottery winner is...A123. OK it makes or intends to make or wants to make a car battery, advanced to be sure. The Obama Energy Department isn't saying for sure which of the 100 contestents was prettiest enough to win part of $1,200,000,000; might be Johnson Controls-Saft Advanced Power Solutions LLC, Ener1 Inc. or Celgard LLC. But soon there will be a extravaganza media event with officials, and photogenic electric vehicles from GM, Ford and Chrysler (none of them foreign ones that really run.) Now get this: all these products that Obama wants them to make are readily available in Asia, but Obama doesn't want those. Chairman Obama knows that lithiun-ion battteries are preferred for autos, and that they won't turn into commodity products, they'll all be somewhat technologically different. Obama knows who the winners will be and those will most certainly bring a comppetitive advantage to his GM. These billions are to create jobs in the U. S. and SuperCEO Barack Obama's transformation of the U. S. auto industry to be more competitive and less, of course, polluting. (Except that electricity in America comes mostly from oil and carbon-based resources, but pay no mind no that.) And what if he's wrong aboiut the future?
And how about the humiliating fiasco of Obama's Cash for Clunkers that sold 1) Toyota Corolla 2) Honda Civic 3) Toyota Camry 4) finally an American brand, Ford Focus FWD 5) Hyundai Elantra 6) Nissan Versa 7) Toyota Prius 8) Honda Accord 9) Honda Fit and finally number 10) another American brand, Ford Escape FWD. Where were the U.S.-owned brands, GM and Chrysler? Seems a total of 684,380 cars were crushed and destroyed for I'd guess a value over $7,000,000,000,000. What a pitiful waste of assets. 679,000 were purchased. And looking to the future sales of American brands, all of the top ten given up for destruction were American brands. Hmmm.
How about Mae and Mac? After the $85,000,000,000 government takeover (with another $10,700,000,000 upcoming)necessitated by Congress changing laws to allow Fannie Mae and Freddie Mac to buy sub-prime mortgages, how are they doing? Well our -- the U. S. taxpayer -- exposure is a cool $5,400,000,000,000. A major decision facing the Obama administration and the Democratic-controlled Congress is whether to completely privatize them or keep them owned by the government. Partial private ownership (courtesy of LBJ who didn't like the growing liabilities on his balance sheet. Better to have a non-legal, but implicit, guarantee, which became explicit, but still off balance sheet last year) in part led to the meltdown fiasco, so that seems stupid. The major government intervention in home ownership has not been very successful, with homeownership increasing to 67.3% up only a pathetic 3.4% points over the last 20 years, at the above-mentioned cost and risk. But Congress loves Fannie and Freddie as do many members of the Obama administration, some of whom made millions of dollars as board members or executives. (Rahm Emanuel made $16 million, for example.) It will likely remain owned by the Obama administration and U. S. Congress as a moneypile.
Biofuels are a bust. Two-thirds of U. S. biodiesel production capacity now sits unused. The result of these decisions and legislation of around 275 (more or less) primarily Democrat Congressmen has so far created and killed 29,000 jobs $3,250,000,000 in wasted subsidies. And fraud. One of the most successful venture capitalists of all time, Vinod Khosla (formerly of Kleiner Perkins, arguably one of the two most successful venture capital investors of all time), got seduced by the religion of global warming and the truckloads of money flowing from Washington DC, and lost millions to an apparent lying founder of Cello Energy, Jack Boykin. Even smart people can get suckered, like Mr. Khosla, when they suspend belief and their common sense. The "profit motive", free markets and capitalism creates wealth. Governmetn destroys it. Biofuels are an expensive lesson that, of course, Congresspeople and the president of the United States will disregard. My guess billions more of my money and yours will be poured down the drain of biofuels, by the bad decisions of a few politicians. (REMEMBER ACID RAIN! After that religious panic, the U. S. government, then actually wanting to get to the truth through facts, completed in 1990 a ten-year $537,000,000 study with 700 scientists, the National Acid Precipitation Assessment Program, which found acidity in only 5% of lakes and 10% of streams and not coming from acid rain, but runoff from surrounding soils, none of which threatened humans. But hey Congress didn't care -- it didn't then nor now care about facts -- it mandated costly scrubbers on smokestacks.)
The problem is always that government companies are run simply for the benefit of the politicians. Their only goal: to get re-elected. Hard decisions? Make me laugh. Their want to please as many people as they can most of the time they can. Hard decisions? Not in their vocabulary. If they don't succeed they get more taxpayer money. Endlessly. That is the simple truth of why there aren't any successes in governments running companies, economies or societies. With the opposite, free enterprise/capitalism, individuals attempt to please enough people to make sales and a profit. It they can't, they simply go out of business. Simple. And highly successful. Not all companies are successful, but enough have been over history to have caused the United States of America to be the most successful economy with the highest standard of living of any country ever invented. And its success has spilled over to other countries, and has raised the personal standard of living for millions of individuals in foreign countries as well as the United States.
The other truth to remember is that politicians are humans, no better nor no worse than other humans. Nor less prone to the emotions of fear and greed, those which drive humans. In the 2007 "meltdown" politicians did no better than other humans, businesspeople or not, in foretelling the upcoming stock and financial markets crashes and recession and acting. No better. Many believe that many politicians including the chairman of the Federal Reserve Bank and myriad Congresspeople (many with their own greed agendas) were just as culpable as any banker or businessperson.
Medicare. MEDPAC -- the Medicare Payment Advisory Commission of Congress -- reports that hospitals lose 5.9% for every dollar they receive treating Medicare patients (getting only 94.1% of their costs). Privately-managed health insurance companies treating non-Medicare patients SUBSIDIZE Medicare. According to the Medicare Trustees' “intermediate assumptions,” $38 trillion (260% of current GDP) would have been needed at year-end 2008 to fund over the next 75 years projected shortfalls for Medicare hospital coverage and to meet the federal government’s statutory obligation to pay its share of other Medicare benefits, including prescription drug coverage. Regardless, in the four years from January 2003 to December 2007, Medicare trustees reported that the unfunded liabilities of Social Security and Medicare grew by a stunning $10.4 trillion. The average annual growth was $2.8 trillion, it can only be measurably worse by now. Hey government, great management! Let's do it to the entire healthcare industry. Why wait for the bankruptcy of the United States, let's hurry it up.
The Government National Mortgage Association ("Ginnie Mae") bundles, plops on a government guarantee and sells to investors...mortgages. With Fannie Mae and Freddie Mac together the three government companies guarantee almost 90% of the mortgages originated in the United States. By 2010 it is estimated that Ginnie Mae will be on the hook -- oops U. S. taxpayers will be on the hook -- for upwards of $1,000,000,000,000 (double 2007). Gin is a subprime mortgage bundler: low downpayment loans (as low as 2% down all-in), below average to poorly-rated borrowers; high loan limits (depending on state) of up to $725,000. All the ingredients for another government failure. And yes, it is failing, with a 7% default rate (double that of prudent lenders), and 30% delinquencies of more than 30 days, plus (according to HUD's Inspector General, June 18) lax practices and a 33 - 1 leverage, comparable to Bear Stearns (RIP). But wait! Congress feels sorry for people who are too irresponsible to pay their mortgages by offering the Home Affordable Modification Program (HAMP) and reducing mortgage principal by up to 30%. Yes, Senator, U. S. Taxpayers will pay for all this. $400,000,000,000 for Fannie and Freddie so far, and could be $50,00,000,000 to $60,000,000,000 for ginnie Mae. Let government run the world!
Amtrak: That’s no way to run a railroad, says the U.S. Congress’ Amtrak Working Group (AWG), in finding that mismanagement within Amtrak has led to a lack of confidence by the public and unpredictable funding from Congress. In November 2005, a two-year investigation by the Government Accountability Office (GAO) into Amtrak’s management and spending practices concluded “while Amtrak has recently reduced costs, revenues are declining faster than costs, leading to operating losses exceeding $1 billion annually. These losses are projected to grow by 40 percent within four years; no effective corporatewide cost containment strategy exists to address them.” Financial results for the first 6 months of 2009: Revenues of $1,165,00,00 LOSS of $913,000,000. Is this Obamarail?
The United States Postal Service (USPS) is in financial disarray, with plummeting levels of mail being sent and heathcare costs for retirees increasing, according to a report released Thursday, August 6, 2009 by an investigative arm of Congress, the Government Accountability Office which placed the agency on its "high-risk list". This year USPS is expected to have a net loss of $7 billion, with total outstanding debt levels reaching $10.2 billion, and an expected $13.2 billion in debt by the close of fiscal year 2010. USPS posted a loss of $2.4 billion for the most recent quarter, which ended June 30. There are approximately 38,000 postal facilities throughout the country and the USPS employs more than 625,000 predominantly union career employees, who assist in the delivery of mail to nearly 150 million addresses. You can bet those union bosses won't let USPS cut anything.
And from the Puget Sound Business Journal, August 7 - 13, 2009, Page 9:
Oregon may get a share of bankrupt ethanol producer". The story describes Cascade Grain Products LLC which filed for Chaper 11 bankruptcy seven months after opening the "crown jewel of Oregon's...ethanol industry". Oregon loaned Cascade $20,000,000. The previous page, 7, wrote of EnerG2 getting a $21 million federal grant to develop a longer-lasting battery as part of the federal government choosing which companies and technologies into which to sink taxpayer dough. The grant is part of $2,400,000,000 thrown at batteries. This plant will be put in Oregon to make "high energy density nano-carbon for ultracapacitors". Whatever. Back in the free-enterprise days venture capital companies would choose which entrepreneurs to back and put up its own money. Now President Barack Obama and the Democratic Congress picks and chooses. I'd guess campaign contributions, "political correctness" and the so-called "green lobby" not potential had a lot to do with this decision.
As worrysome as the government RUNNING companies is the government micro-managing companies. For example, many in Congress think those who work for a living are paid too much. Executives (not rock stars, athletes or actors, of course) get paid too much and Congress is reining them in. The Securities and Exchange Commission (a useful product of Franklin Delano Roosevelt) is claiming that it can "claw back" (confiscate) some bonuses and stock sale proceeds when it wants, regardless if it possesses evidence of wrong-doing. It is suing Mr. Maynard Jenkins, former CEO of CSK Auto (parts) Corporation which had formerly settled with the SEC and restated financials for $4,000,000. Mr. Jenkens was not accused of any wrong-doing. Let's see the SEC voted 3 (Democrats perhaps?) to 2 (Republicans perhaps?) to sue. You decide: arbitrary or the Rule of Law?
In a completely unheralded development the ingenuity of the free market is demonstrated again. Credit Suisse Group cobbled together a $5,000,000,000 fund of toxic assets (bad bonds and mortgages) and granted it to 2,000 of its top bankers as a major part of its bonuses. Up 17% since January, it has satisfied the participants while helping Credit Suisse. A non-government-intervention that proves the merit of the free-enterprise system. Make incentives correct and success will follow. (Article, Wall Street Journal, Friday, August 7, 2009, "Bankers Win Big In Toxic Pay Plan".)
So the United States of America has a pay tzar or czar or dictator. Kenneth Feinberg singlehandedly is charged with setting the pay levels of executives of American companies who have taken government funds such as TARP. Well, one of Mr. Feinberg's subsidiaries, Citigroup Inc., of which the United States will soon own 34% has legally contracted to pay for performance Andrew J. Hall the sum of $100,000,000. This will test the power of the presidency to crush a single American citizen. Stay tuned. A couple days later, an article mentioned that the aforenamed pay dictator will attempt to force renegotiation of any paycheck he thinks doesn't fit into his idea of appropriate. No matter contracts, no matter free enterprise, no matter. As with a king with absolute power, Mr. Feinberg's word is law. Rule by arbitrariness. Hopefully Mr. Feinberg has empathy. He is the..."Special Master".
Soon the Democrats are set to introduce legislation to eliminate private lenders from the federal student loan program, leaving the government as sole provider.
Are consumers intelligent enough to agree to contracts? The answer, "No", is the basis behind a new credit-card law passed by Democrats which mandates how credit-card companies operate. Interesting, part of it forces parents to guarantee minors' credit cards, unless they have independent income to qualify. (Yet, the federal government does not force minors to have to ask parents for them to have abortions. Kids can kill their fetuses but not have a credit card. Go figure!) The law signed by President Obama May 22, prohibits rate hikes on existing balances, stops non-agreed upon over-limit fees, double-cycle billing and other contractual items previously agreed to by consumers and companies. It also allows lawsuits for disputes, overriding contracts signed by consumers which forces less costly arbitration, and enriches the trial lawyer supporters of the Democratic Party. It does this because Democrats consumers either are too lazy to read the contracts (much verbiage of which comes from government) or too dumb to understand them. The government will dictate terms in the future, with its proposed Consumer Financial Protection Agency Act of 2009, to make them whatever it thinks is best for the consumer. The Obama administration also doesn't like banks to charge customers money simply because they write checks when they don't have sufficient funds in the bank. Of course the government should stop those acts. Banks, like healthcare companies, should not charge their customers anything; and the act of making any profit should be shamed.
One near term unanticipated result is that the two major companies involved in settling through arbitration credit card disputes withdrew from that business. This is a clear victory for trial lawyers who make their living instigating the costly lawsuits that arbitration reduced. And a clear victory for President Obama and Democrats who are majorly financed by winnings of such trial lawyers.
And since in Obama's mind insurance companies are responsible for everything that's wrong in healthcare, let's tax'em. How about $100,000,000,000 to start? Will this keep them "honest" as he likes to describe what he's doing? Well yes, by putting them out of business so Obama can get on with his desired one-payer government healthcare.
Citigroup, Inc., shook up its senior executive group in early July 2009, bowing to President Obama's demands. Obama, CEO of the United States of America has no other executive experience than this 100+ days. But he's definitely calling the shots over the private sector as well as the government. Citi's CEO Vikram Pandit replaced new CFO Edward Kelly but there has been much movement in top management. Only time will tell if Obama is an effective overseer of the private sector.
Earlier, Obama appointed an auto Czar who appointed a new chairman, with no auto experience, who appointed a new products Czar, a thirty-year GM veteran, Bob Lutz. Maybe Lutz will get it right now. A new board of directors for GM is next, augmenting several non-auto former company CEOs.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment