Where is the Leadership?

The Canadian public learned a new word in early December, “prorogue” which means to suspend or end a legislative session.

This was precipitated by the justifiable fear of a modern day coup. Had the Conservative Canadian Prime Minister not suspended parliament on December 5th, there would have been a vote of non confidence, bringing down the government.

A coalition of the absurd was formed by the three remaining Canadian parties, the national center left liberals, the national socialist NDP and the regional Quebec Bloc separatists.

Imagine inviting a regional separatist party into a national coalition.

The Canadian government is now on hiatus until January 26th , at which time, this coalition can still initiate for a non confidence vote.

In summary, a coalition is formed by separatist, liberal and socialist parties with the sole purpose to bring down a government which was duly elected by the country six weeks before. The new PM, would be the humiliated ex- leader of the liberal party, who lost in a crushing defeat to the present PM, Stephen Harper.

Where is the leadership?

In September, Republican Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernake, initiated a $700 billion bank “rescue” plan. Initially, its primary objective was to purchase the toxic mortgages held by the financial institutions. The bill was passed with reticence by both Republicans and Democrats.

In essence, it would “detoxify” the balance sheet therefore encouraging financial institutions to commence lending to one another again. This, in turn, would enable the commercial banks to start lending to credit worthy businesses and consumers, ultimately easing the credit crunch. Unfortunately, to date, based on media rhetoric, (actual statistics are not available) there is little evidence of this happening.

Paulson, Bernake and the congress let down the American tax payer. Once the funds were disbursed, it was the banks prerogative to distribute the funds as they deemed appropriate. What Paulson and Bernake failed to do. nor were they mandated by the congress, was to implement realistic policies with pre-determined individualized conditions and accountability for each of the TARP borrowers.

What was surprising was that the CEOs and board of directors of these companies, who were responsible for the financial armagedon, remained in their positions. To date, the government has not put one of their own representatives on any of the boards.

As of today, the Treasury has not disclosed a list of the beneficiaries who received approximately $335 billion of TARP funding. The logic for this lack of transparency stems from the potential for panic should the public know which of the financial institutions the government was bailing out.

This lack of transparency does not help to encourage confidence in the average American. The perception is that the financial situation is much worse.

Where is the leadership?

Taking the above into consideration, it wasn’t surprising when, in mid November, CEOs from General Motors, Chrysler and Ford flew into Washington asking for a $25 billion lifeline.

The Democratic Speaker of the House along with the Democratic Senate Majority Leader didn’t request that the Big 3 prepare plans and projections, along with concessions that they would be initiating to obtain this money.

As the government hadn’t required accountability or performed a due diligence on the recipients of the TARP funds, it was not surprising the Big 3 came empty handed. Perhaps they expected it to be a slam dunk.

They returned to Washington in early December increasing their request to $34 billion. After all, perhaps they justified the increase of $9 billion because they brought a written report.

In todays world, corporations applying for financing are required to submit both quantitative and qualitative information and bonifide projections to the lender in support of the loan request.

Where is the leadership?

Last week, the $34 billion request was reduced to $14 billion and subsequently refused by the senate. There appeared to be a impasse between the senate republicans and Gettelfinger, the President of the UAW.

This past week, Gettelfinger appeared on several television news shows, voicing the position of the UAW. He stated the UAW have made considerable concessions in their most recent agreement (2007). What he did not elabourate on, what the original amounts of the benefits prior to these concession were. In his opinion, their part was completed and it was now time for the other classes of creditors and shareholders to do the same. In itself, this was not wrong, but it resulted in the bill not being passed.

In the 2007 agreement, UAW workers average 42 paid days off per year, comprised of approximately 5 weeks vacation and 17 paid holidays. Was that the result of prior concessions?

Job banks - If the tax payers were cognizant of what a job bank was and how it was funded, not only would they be up in arms but it could seriously impact their future purchases of a Big 3 car.

Gettelfinger alludes to the great sacrifice the UAW workers have made these past years but as the President of the union, his sights appear to be short term.

They were so close to an agreement on Thursday. Gettelfinger played his bluff. The republican White House had stated, in advance of this session that they wanted this loan to pass. Perhaps, the White House feel that since there is question as to the success of the bank bailout, they do not want to be the government in power who was responsible for the fall of the Big 3.

In approximately one month there will be a Democratic President who is union friendly. Does Gettelfinger know that the UAW will fare better or was he bluffing?

Winning this battle could be the first step to losing the war.

Hours later, GM announced they will be closing 20 factories throughout North American thereby reducing their production by approximately 250,000 vehicles. Will these laid off workers benefit from the job bank?

Where is the leadership?

Subsequent to the election, President elect Obama (democrat) stated there is only one President and stepped back.

President Bush (republican), has been giving exit interviews to the media and saying his goodbyes. Due to his ineffectiveness, his urging to senate to pass the bailout bill for the Big 3, has been to no avail.

Neither the President or President elect appear to have a sense of urgency with respect to the dilemma in the automobile industry. Something definitive has to be done and quickly.

Everyday that goes by fewer and fewer of the Big 3 cars are being purchased. The prospect of a Chapter 11 isn’t what is frightening the public. The fact that absolutely nothing tangible has been accomplished since the middle of November when the Big 3 first came to Washington, is what is absolutely terrifying them.

WHERE IS THE LEADERSHIP?


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