Before continuing, it would only be fair to engage in full disclosure. I am not an Obama fan. Although I have tried to be objective in previous posts, I am sure that I gave myself away.
That being said, I was a strong Hillary supporter . I would have preferred that she had dropped Bill along the way, but I would imagine she was advised that would be committing political suicide. I wasn't always one of her advocates but following her during her run for the Dem. nomination and listening to her in the debates and on various interviews, my respect for her grew not only for her acumen as a politician, but as an individual. She was and has been a professional in every aspect of her recent life and especially in the public arena. She understands “Politics”.
Back in Jan 2009, after his first “100 Days”, I felt it premature to pass judgment. Obama truly inherited a mess, so, in all fairness, I deferred until now.
In his interview with Oprah in December, she asked him how he would grade his first year. It was obvious, that he knew the questions in advance of the interview. He gave himself a B+ , qualifying it by saying, “an A- if healthcare is passed” When Charlie Gibson of ABC was asked what he thought of Obama’s grade of himself, he responded. “…I would have given myself an incomplete…” Very astute of Charlie.
Regrettably, Obama came across to the nation and the world as an egocentric narcissist.
He did do a few things that I liked. Unfortunately, he did so much more that I didn’t.
What I liked:
• Engaged Hillary to be Secretary of State.
• Brought Paul Volcker in as an advisor on the economic council (even though he was shelved for a full year until last Thursday)
• Legislature that he instituted bringing down the fees that credit card companies were charging.
What I didn’t like:
• He allocated the same priority to everything, accomplishing little.
• His priorities didn’t mesh with the those of the people who elected him.
• It’s the economy S_____! Larry Summers shares the final grade.
• Please do not get me started on the GM/Chrysler/GMAC bailouts.
• He stressed bipartisanship in his campaign, yet made it too difficult for the Rep to participate.
• The deplorable administration of the TARP (Case in point AIG, bonuses etc)
• Did not address the housing crisis
• Allowed the creation of a 2,000 page healthcare bill full of pork and special interest give aways, that was too complicated and long to read.
• Showed his brilliance as an orator in Cairo, without any follow through.
• He promised transparency yet hid from C Span.
• Ineffectiveness of the stimulus- favouring more liberal union oriented projects and not creating long term employment
• Completely misunderstanding the concept of stimulus. Getting the money out ASAP to areas which would create the most jobs
• Adding over $1 trillion to the deficit
• Inability to comprehend the consequences and slowness in reacting to the Christmas Day Bomber
• Acts like a manager and not a leader being reactive in lieu of proactive
• Too dependant on Pelosi and Reid (who hopefully will be only a bad memory in November)
• Still blaming the Bush administration
I would like to be a fan of Obama. I wish he gave me just reason to be one. He went to Washington with an incredible agenda, a Dem. House and Senate and accomplished very little. He promised hope and change but did not follow through. The Audacity.
What I would like to see in the next year is tangible substance and not a pretty image.
With the above in mind, my grade for his first year is D-
I would really like to believe in President Obama, and overcome my cynicism but he has to prove to me that he is more than a proficient orator and demonstrate that his words translate into meaningful actions.
I am sincerely hopimg that next January, I have reason to raise his grade.
.
Showing posts with label Bailout. Show all posts
Showing posts with label Bailout. Show all posts
Monday, January 25, 2010
Sunday, January 18, 2009
The First 365 Days
The day after the inauguration, both the pundits and the public start the customary countdown. The First Hundred Days. Historically, the President and his administration hit the ground running. Judgment is rendered on day 101.
Commitments which were made during the campaign are front and center in the minds of all and the implementation process commences.
But these are not normal times The veneer no longer shields the harsh reality of what is happening in the United States today. That hypothetical aura which prevails in the storybook world where promises translate into certainties ceased to exist.
President Obama has inherited a Pandora’s box of troubles: The debacle of the TARP bailout, banks camouflaging reddened balance sheets - reticent to lend to zombie companies, high unemployment, states who cannot meet payroll, insolvent car manufacturers with outstretched hands heading a potential line up for future bailouts from other industries, a health care system which doesn’t work, under funded social security, statistically too low a percentage of University graduates as compared to other countries in the developed world, a road and bridge infrastructure which is literally falling apart and two wars, (not to mention the on going Israeli Palestinian problem and a potential situation in Pakistan).
We won’t discuss America’s sullied reputation now.
We should give him 265 days grace and not pass judgment until January 21st, 2010. The previous administration made several dubious decisions without thinking through the consequences. Hundreds of billions of dollars was spent with little positive impact on the economy.
Perhaps President Obama might consider dividing his stimulus package into three tiers with well defined goals. Short-term (as defined by 6 months), where tax cuts would give ownership of their spending power to the average American, address the health care system with an eye to government funding as opposed to business and facilitate the ability of the average student to get a University education, mid term (6 months to 2 years) where the infrastructure of the country is concentrated on, and long term (2 to 4 years) where social security is the focus.
I am willing to wait for 365 days before judging, are you?
.
Friday, December 5, 2008
Hard Cold Reality
As a result of the high unemployment and speculation of what is to come, there is tangible fear on the pedestrian streets.
November job losses were in excess of 500,000. well above the forecasted estimates. Since September, the cumulative figure is approximately 1.2 million jobs lost. Frightening numbers.
On Dec 4th, individual retailers released their comparative store sales (CSS) for the month of November. It was dire. . Later this week, the industry as a whole will be releasing their figure. As it is well known in industry that retail is notorious for its layoffs during January, expect more volatility in the markets. With Christmas around the corner, and the consumer not buying small ticket items, it is difficult to imagine them buying cars.
This was a contributing factor and set the tone for the speeches in Congress on Friday. At the onset, one knew that regardless of what they said or presented in their reports, the gentlemen from Detroit will be returning home with committments for financing.
To many consumers, the likelihood that General Motors will cease to exist as a going concern is a high probability. This was indicated by November sales. GM was down 41%, from November 2007. The drop in sales at the other car manufacturers was approx. 32% for November.
This is really about General Motors. Short term Ford is holding its own.
Chrysler, is 80% owned by Cerberus, which is a private equity fund. Due to the nature of the ownership there is little information available. Prior to any funding from the government, it is imperative that a due diligence be performed to ascertain if there has been any movement of Chrysler assets.
Regardless of what it is called or how it is restructured, this endeavour to return General Motors to solvency must also work to restore consumer confidence in the company or it will be to no avail.
This must be the number one priority. The consumer has to feel confident enough in the ability of the company to survive. Without that confidence, they will continue to purchase their cars elsewhere.
The question is, how will this bailout “package” be structured? In what terms will it be referred to? Unfortunately, this past month, the labels, bankruptcy, re-structuring, insolvency, Chapter 11, Chapter 7, among others gives the public very negative connotations of what bankruptcy might lead to.
The UAW, automobile executives and media are alluding that if there is a bankruptcy, the industry will not survive, resulting in the loss of millions of direct and indirect jobs.
If not handled with the proper expertise, there is concern that the automobile industry in the US could implode.
In line with that perspective, perhaps what is necessary is to structure the “bailout” to shadow the Chapter 11 process but refer to it a bridge loan. It is all in ones perception.
Treat it exactly as a bankruptcy but refer to it as something else. In essence it would be like a pre-packaged Chapter 11, with the government guaranteeing the DIP financing and mandating the Czar as the bankruptcy judge.
The difference between concessions under a government bailout or re-organization under a Chapter 11 bankruptcy filing is the degree of structure and elasticity that would be demanded of General Motors, the most needy . Keep the stringent rules as if an actual filing under Chapter 11 had occurred.
Detailed below are some thoughts on the restructuring:
· Each company must be evaluated on its own merits.
· Completely replace the board of directors. The Chairperson of the board would be appointed by the government. The balance of the board must include representation from each major class of creditors, along with representatives from management.
· The CEOs and upper management of the companies be evaluated and if dismissed, agree to leave without severance.
· Restructure all categories of debt. Each class of creditors would have to accept a certain percentage of forgiveness of their debt in turn for a debenture or an equity position in the newly reorganized company. The main categories of creditors would include: UAW, employees, bond holders, trade creditors, service creditors, dealerships, landlords, financial institutions, and retires.
· All existing contracts are open to re-negotiation including the UAW, retires, vendor agreements and leases.
· An independent auditor be commissioned to crunch the numbers and present a more realistic report than that, that was submitted on December 2nd.
A predetermined amount of the loan would be allocated to honouring of warranties, along with an ongoing percentage of sales.
There has to be a high level of transparency. Learn from the mistakes of the rescues of the financial institutions. If the public knew that their money was being used by banks to purchase other banks……
A sense of urgency has to be established. Waiting for the next administration or until after the holidays is not an option. A temporary loan of $10 or $15 billion to tide the companies over until March is not a solution, or even a band-aide.
Proceedings must take place immediately. Otherwise, it is hard to imagine car buyers going to GM during December and January.
November job losses were in excess of 500,000. well above the forecasted estimates. Since September, the cumulative figure is approximately 1.2 million jobs lost. Frightening numbers.
On Dec 4th, individual retailers released their comparative store sales (CSS) for the month of November. It was dire. . Later this week, the industry as a whole will be releasing their figure. As it is well known in industry that retail is notorious for its layoffs during January, expect more volatility in the markets. With Christmas around the corner, and the consumer not buying small ticket items, it is difficult to imagine them buying cars.
This was a contributing factor and set the tone for the speeches in Congress on Friday. At the onset, one knew that regardless of what they said or presented in their reports, the gentlemen from Detroit will be returning home with committments for financing.
To many consumers, the likelihood that General Motors will cease to exist as a going concern is a high probability. This was indicated by November sales. GM was down 41%, from November 2007. The drop in sales at the other car manufacturers was approx. 32% for November.
This is really about General Motors. Short term Ford is holding its own.
Chrysler, is 80% owned by Cerberus, which is a private equity fund. Due to the nature of the ownership there is little information available. Prior to any funding from the government, it is imperative that a due diligence be performed to ascertain if there has been any movement of Chrysler assets.
Regardless of what it is called or how it is restructured, this endeavour to return General Motors to solvency must also work to restore consumer confidence in the company or it will be to no avail.
This must be the number one priority. The consumer has to feel confident enough in the ability of the company to survive. Without that confidence, they will continue to purchase their cars elsewhere.
The question is, how will this bailout “package” be structured? In what terms will it be referred to? Unfortunately, this past month, the labels, bankruptcy, re-structuring, insolvency, Chapter 11, Chapter 7, among others gives the public very negative connotations of what bankruptcy might lead to.
The UAW, automobile executives and media are alluding that if there is a bankruptcy, the industry will not survive, resulting in the loss of millions of direct and indirect jobs.
If not handled with the proper expertise, there is concern that the automobile industry in the US could implode.
In line with that perspective, perhaps what is necessary is to structure the “bailout” to shadow the Chapter 11 process but refer to it a bridge loan. It is all in ones perception.
Treat it exactly as a bankruptcy but refer to it as something else. In essence it would be like a pre-packaged Chapter 11, with the government guaranteeing the DIP financing and mandating the Czar as the bankruptcy judge.
The difference between concessions under a government bailout or re-organization under a Chapter 11 bankruptcy filing is the degree of structure and elasticity that would be demanded of General Motors, the most needy . Keep the stringent rules as if an actual filing under Chapter 11 had occurred.
Detailed below are some thoughts on the restructuring:
· Each company must be evaluated on its own merits.
· Completely replace the board of directors. The Chairperson of the board would be appointed by the government. The balance of the board must include representation from each major class of creditors, along with representatives from management.
· The CEOs and upper management of the companies be evaluated and if dismissed, agree to leave without severance.
· Restructure all categories of debt. Each class of creditors would have to accept a certain percentage of forgiveness of their debt in turn for a debenture or an equity position in the newly reorganized company. The main categories of creditors would include: UAW, employees, bond holders, trade creditors, service creditors, dealerships, landlords, financial institutions, and retires.
· All existing contracts are open to re-negotiation including the UAW, retires, vendor agreements and leases.
· An independent auditor be commissioned to crunch the numbers and present a more realistic report than that, that was submitted on December 2nd.
A predetermined amount of the loan would be allocated to honouring of warranties, along with an ongoing percentage of sales.
There has to be a high level of transparency. Learn from the mistakes of the rescues of the financial institutions. If the public knew that their money was being used by banks to purchase other banks……
A sense of urgency has to be established. Waiting for the next administration or until after the holidays is not an option. A temporary loan of $10 or $15 billion to tide the companies over until March is not a solution, or even a band-aide.
Proceedings must take place immediately. Otherwise, it is hard to imagine car buyers going to GM during December and January.
Friday, November 28, 2008
Bailouts Breed Entitlement
Memo
Date: November 28th, 2008
To: Speaker of the House
Senate Majority Leader
From: The Taxpayer
Subject: “Audacity of” Bailouts breed Entitlement
It is with the utmost respect that we, the taxpayers, humbly ask what was the purpose of the Senate meetings with General Motors, Ford and Chrysler two weeks ago?
At the onset it appeared to us that the Big 3 were in town to receive what they referred to as a bridge loan of $25,000,000,000 (note all the zeros).
What we, the tax payers refer to as a bailout. Please note, in this context, we are using the term bridge loan as a synonym for bail out and government as a synonym for bank.
They came with hope, their hands outstretched (Audacity).
They brought nothing with them to the table to justify the loan (Audacity).
They left a large carbon footprint, shadowing their tail, (Audacity).
We understand their perspective. They felt entitled.
The actions of the government the past few months have been to “rescue” (another synonym for bailout) the financial institutions.
Well, why not? The Big 3. American icons, employing directly and indirectly millions of American workers. They support the economy of several mid west states with their taxes. They support the local economies with the bloated salaries of their unionized workers. How could the government let them fail?
After all, they are not the airlines or the steel companies. Entitlement?
Did you, Ms. Speaker or you, Mr. Senate Majority Leader lead them to believe and therefore expect that it would be easy for them to come to Washington with nothing and leave with $25 Billion? Did they really believe that they could come empty handed and walk away with a cheque? No strings attached?
Was that inferred? If only it was that easy for a business to get a loan.
It was suggested by Mr. Senate Majority Leader that it would be easy to take $25 BILLION, from the $700 BILLION. Mr. Paulson, said NO!
Several of your duly elected senators voted with much trepidation to extend $700 BILLLION to rescue the banks. Those who voted for the $700 Billion may not support a re-allocation of $25 BILLION to the Big 3.
Especially, we would imagine, those senators who hail from the southern states, where the healthy car manufacturers (with foreign ownership) have multiple plants, and support the economies of several states and towns. They employ thousands of American taxpayers, both directly and indirectly without bloated salaries…. yet still generating a profit.
Sir, if the decision is made to bailout the Big 3 using money from the $700 Billion, then please, respect our elected senator's positions and have a separate vote. We would like to know how they voted! .
With all the forecasted job losses, coming from the financial sector, perhaps some of the unemployed can be put to work keeping the printing pre$$e$ running.
Date: November 28th, 2008
To: Speaker of the House
Senate Majority Leader
From: The Taxpayer
Subject: “Audacity of” Bailouts breed Entitlement
It is with the utmost respect that we, the taxpayers, humbly ask what was the purpose of the Senate meetings with General Motors, Ford and Chrysler two weeks ago?
At the onset it appeared to us that the Big 3 were in town to receive what they referred to as a bridge loan of $25,000,000,000 (note all the zeros).
What we, the tax payers refer to as a bailout. Please note, in this context, we are using the term bridge loan as a synonym for bail out and government as a synonym for bank.
They came with hope, their hands outstretched (Audacity).
They brought nothing with them to the table to justify the loan (Audacity).
They left a large carbon footprint, shadowing their tail, (Audacity).
We understand their perspective. They felt entitled.
The actions of the government the past few months have been to “rescue” (another synonym for bailout) the financial institutions.
Well, why not? The Big 3. American icons, employing directly and indirectly millions of American workers. They support the economy of several mid west states with their taxes. They support the local economies with the bloated salaries of their unionized workers. How could the government let them fail?
After all, they are not the airlines or the steel companies. Entitlement?
Did you, Ms. Speaker or you, Mr. Senate Majority Leader lead them to believe and therefore expect that it would be easy for them to come to Washington with nothing and leave with $25 Billion? Did they really believe that they could come empty handed and walk away with a cheque? No strings attached?
Was that inferred? If only it was that easy for a business to get a loan.
It was suggested by Mr. Senate Majority Leader that it would be easy to take $25 BILLION, from the $700 BILLION. Mr. Paulson, said NO!
Several of your duly elected senators voted with much trepidation to extend $700 BILLLION to rescue the banks. Those who voted for the $700 Billion may not support a re-allocation of $25 BILLION to the Big 3.
Especially, we would imagine, those senators who hail from the southern states, where the healthy car manufacturers (with foreign ownership) have multiple plants, and support the economies of several states and towns. They employ thousands of American taxpayers, both directly and indirectly without bloated salaries…. yet still generating a profit.
Sir, if the decision is made to bailout the Big 3 using money from the $700 Billion, then please, respect our elected senator's positions and have a separate vote. We would like to know how they voted! .
With all the forecasted job losses, coming from the financial sector, perhaps some of the unemployed can be put to work keeping the printing pre$$e$ running.
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