S. and I were in the car yesterday, headed to the airport. For us, the Atlanta airport is a forty five minute ride to the south side of town - when traffic is good. It's the longest time we spend together in the car outside of long trips. So the conversations are a round robin, a mix of "don't forget" instructions, recent events in the lives of our friends, and current events.
Somehow, there was a segue from The Real Housewives of Atlanta (I know, I know, I've been talking about this all week) to the testimony the executives from the Big Three automakers gave to Congress the last couple of days.
"So what do you think about this bailout?" I asked. "Every place I've been this morning, all the people are saying the same thing - its not going to happen."
"They've got to do it." S. said, her voice flat as she watched the 75 South traffic begin to merge with the 85 South traffic.
"What I can't figure out," I said, "is what a Chapter 11 bankrupcty filing is supposed to fix if they end up with the same people running the company. The private jet thing is just noise. They're already paying for the jets anyway. Not using six thousand dollars worth of jet fuel this week isn't going to save any of these companies from going under."
"They've got to do it," S. repeated, "because a Chapter 11 will wipe out all the employee stock those people have in their retirement accounts."
And just like that, I realized why Congress doesn't get it. Why Henry Paulson, the great protector of almost anybody with a pulse on Wall Street, doesn't get it. And why, as heartfelt as their pleas for help were, the Big Three CEO's just don't get it - because all of them have reduced all of us from a mass of living humanity to a column of impersonal numbers.
Back when you used to eat nicer meals in nicer restaurants, you used to tip fifteen to twenty percent of the bill, routinely, because the meal didn't serve itself, the water didn't appear out of thin air, and you had no idea what the cook even looked like when you left. The wait staff brought your order to the kitchen and delivered your food to the table, among other things. The tip was a small cost of being in such a nice place to begin with, but a big part of the wait staff's income.
Let the wait staff of this same restaurant walk out of the door en masse and you will see the owner of the business pull his hair out until he can hire a new staff, because he can't deliver all that food by himself.
I don't know what Paulson thinks Wall Street really is. They don't make anything in those glass towers in downtown Manhattan but big phone bills. The auto industry not only employs over 10 million people - its products literally take America back and forth to work, delivering the productivity industries around the country need so the thirty year old guys Paulson is so fond of, who have never had a job that didn't involve a financial calculator and a computer screen, can bet a healthy slice of this year's Gross National Product against a hunch that the Thai baht will fall in value against the U.S. dollar.
And for all that bringing to and fro every day of laborers and teachers and farmers and painters and machinists and yes, waiters and waitresses, all across the country, in order to let his guys keep playing with our real money like it came from Parker Brothers, these guys can't throw another 25 billion on the table, after getting a bill for 350 billion? It is the equivalent of a tip after a big meal - in this case, a big meal that very, very few members of the American public got to taste.
Now I'm sure, if you were able to see a copy of Paulson's American Express bill, you could see that this is a man who understands the concept of tipping. Your people in Congress might not be as familiar with this custom, since they are just now learning how to pay for their own dinners.
So for all the Christian Righters, right wingers, left wingers who skipped history class, and Fair Taxers whose blinders keep them from seeing anything else but that damn flat tax - this is how you get to the communism you claim you hate so much, when there are too many people who are broke, hungry and homeless.
Because if you ever go to a high end restaurant, Mr. and Ms. Congresspeople, and don't leave a tip, you really don't need to go back there.
I would hate to think what might show up in your food.
Very well put! The people in charge seem to be so out of touch with regular people, it's no wonder most of them got kicked to the curb at the beginning of this month. At least Obama has the sense to realize that losing one in ten jobs will create a ten percent higher unemployment rate.
ReplyDeleteI'm fundamentally opposed to a bailout, especially for the financial institutions. But if one of the auto-makers fails it will wreak havoc on the economy. Most people fail to see how many other jobs and industries would be crippled should one of these go under. It's a mess.
ReplyDeleteThese guys are full of shit.
ReplyDeleteThere are only a few markets - CA, FL, MI - that are totally devastated by the mortgage crisis. 50% - 60% equity loss is real in these places, although the average is closer to 30% - 35%.
Most places in the country are down 20% or less.
These FHA Secure programs and Hope for Homeowners programs (I'm in the mortgage biz until something else comes along) were poorly designed and administered with the same type of talent that led FEMA lately.
You don't tweak two or three guidelines and call it a day when your program, which is designed and funded to help tens of thousands, helps less than 200 people in the case of Hope for Homeowners, or less than 5,000 in the case of FHA Secure.
You do manual underwrites, figure out what they can pay, like they do in BK court, and twist the arms of the son of a bitch bankers you just handed the candy store to take a hit on the loan.
All the bank really cares about is whether or not the loan performs and how much exposure they have to market risk - i.e., how high is the LTV on the loan in real time.
The bigger, more fundamental question is when are we going to try some fresh thinking in these executive suites? How much worse could someone else be? Corporate America is as bad as the NFL - there are more than 500 guys who can run Fortune 500 companies, although you wouldn't know that from the way they recycle guys like Nardelli, who never saw a multi-million dollar retention agreement his fat ass didn't like.
If we are stupid enough to continue to give all this fucking money to the same motherfuckers to simply fuck over, then we are fucked.
Perhaps anohter reason the congress has chosen not to bailout the big 3 auto maker is that these companies are destined to fail given their current cost structure.
ReplyDeleteIn fact, one U.S. Senator pointed out that despite all three appearing before the banking committee, they secretly hoped that congress would not bail them out.
Bankruptcy is the only way the big 3 "health care companies that happen to produce autos" can restructure themselves and gid rid of the legacy costs and start anew.
Even with bankruptcy, the big 3 aren't going anywhere! They will just have to compensate their employees as Honda USA or Toyota USA does.
"Legacy Costs?"
ReplyDeleteSay I work for GM. Become line manager after twenty years on the job. Faithfully purchase company stock through the years, which ends up comprising almost 50% of my retirement/savings fund, because...well, because the guys in the front office send me memos every month telling me that investing in the company I work for is not just a good investment, its darn right PATRIOTIC to put my hard earned money behind the products I help to build.
These are the same guys in the front office who have told me year after year in the same memos that they "have a plan for the future", and that "the company's prospects for growth have never looked better".
Since I'm a line manager, according to the GM organization chart, I have absolutely no say so in the direction of the company. In fact, I have very little say so on the line I manage, other than the prescribed remedies for dealing with problems on my section of the line - and if I don't use the GM front office approved protocol for dealing with any issues that may arise, I will quickly find myself out of a job.
I'm a foot soldier with no gun and no bullets.
When the people in the front office, who have walked away with millions in stock options, not because they got money deducted from their paycheck, but because they took the spread between the strike price of one year's option grant price and another, higher strike price of another year's option grant price - a "cashless" exercise of option grants - they have walked away with free money for meeting goals that they set for themselves.
If you were a gambler this would be known as "stacking the deck" in your favor.
American business management may not do a lot of things well, but they are the world's best rationalizers - if their ass was on fire, they'd tell you how it was a "strength building exercise", even as they urged you to hurry up with that fire extinguisher.
Since I'm a line manager, I don't rationalize so well, because it is impossible to convince my superiors that my people aren't slowing down the line if they aren't doing their job properly, and in a timely manner.
It is even harder to convince myself, when I am reading the section of the paper where it explains exactly what happens to all my company stock I've worked so hard all these years to buy when a company wipes out its legacy costs by going through a Chapter 11 bankruptcy.
To this line manager, and the thousands like me who take their orders from the top, none of this is academic. My money is personal. My money disappearing is more than personal, it is an act that should carry the same punishment as a capital murder charge if it doesn't already - because whoever pulls the trigger on a bankruptcy to "get rid of legacy costs" slaughtered my financial future in a premeditated manner.
Houston is just now recovering from Enron, a company who has a fraction of the influence on Texas that these companies will have on the state of Michigan.
If government is "for the people", then it needs to do its job.
I've never met a CEO of a large corporation who didn't believe with every fiber of his being that he wasn't right 95% of the time, and in my neck of the woods here in the ATL, I know more than the average person.
Believing that these guys are capable of making the kinds of radical changes in their mindsets to turn these industries around is ridiculous.
New blood is needed in these executive suites.