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?
…
Showing posts with label Big 3. Show all posts
Showing posts with label Big 3. Show all posts
Saturday, December 13, 2008
Tuesday, December 2, 2008
The Pride of Texas!
Was pride lost in Texas yesterday? Perhaps not!
Pilgrim’s Pride Corp., the largest poultry company in the US, filed for Chapter 11 bankruptcy protection. They are headquartered in the Lone Star state. They chose bankruptcy, not a request for a bail out.
In the business and finance environment, there was little surprise. The company, unable to meet its credit obligations, had applied for three waivers. The last of which expired yesterday. With a $25 million interest payment due this week, and tight cash flow, they had little alternative.
Laymen are questioning this as a consequence of the credit freeze and economy. It is not. This is the result of questionable business decisions, which leveraged the company to such an extent that the slightest reduction in cash flow would trigger major repercussions.
According to the 2007 10K, the company had revenue of $7.6 billion up from $5.2 billion the previous year. The increase in revenue was directly attributed to the acquisition of Gold Kist, the 3rd largest poultry company in the US,. Pilgrim’s Pride purchased the company in December 2006 for $1,139 billion.
Acquisitions come at a cost. Long term debt increased to $1.5 billion and it appears that the penalty to a this business decision is a Chapter 11 filing. Unusually high corn and oil prices along with well capitalized competition were contributing factors.
The business commenced operations in 1946. One of the original partners, Lonnie Pilgrim, remains as Senior Chairman of the company today.
As of Sept 2007, in the US, they had 35 processing plantsm. 34 are located in the south. The company employed 49,800 employees of which 16,350 were members of a union.
They are presently in the process of negotiating a $450 million DIP facility with the Bank of Montreal.
Why bring up Pilgrim’s filing?
The government appears to be entering into a new venue, that of financing. Its format, bailouts. What is the criteria for a bailout?
Twos weeks ago 3 candidates from the car industry applied.
On the 1st Thursday of every month retailers post their comparative store sales (CSS) for the previous month. There is little question that the news this Thursday will not be good. What happens next?
The retail industry employs millions of taxpayers throughout the country. How does the insolvent retailer restructure? Do they request a bailout or go through Chapter 11? The only retailer, who is considered "too big to fail" will not be asking. Their competiton might..
.
Pilgrim’s Pride Corp., the largest poultry company in the US, filed for Chapter 11 bankruptcy protection. They are headquartered in the Lone Star state. They chose bankruptcy, not a request for a bail out.
In the business and finance environment, there was little surprise. The company, unable to meet its credit obligations, had applied for three waivers. The last of which expired yesterday. With a $25 million interest payment due this week, and tight cash flow, they had little alternative.
Laymen are questioning this as a consequence of the credit freeze and economy. It is not. This is the result of questionable business decisions, which leveraged the company to such an extent that the slightest reduction in cash flow would trigger major repercussions.
According to the 2007 10K, the company had revenue of $7.6 billion up from $5.2 billion the previous year. The increase in revenue was directly attributed to the acquisition of Gold Kist, the 3rd largest poultry company in the US,. Pilgrim’s Pride purchased the company in December 2006 for $1,139 billion.
Acquisitions come at a cost. Long term debt increased to $1.5 billion and it appears that the penalty to a this business decision is a Chapter 11 filing. Unusually high corn and oil prices along with well capitalized competition were contributing factors.
The business commenced operations in 1946. One of the original partners, Lonnie Pilgrim, remains as Senior Chairman of the company today.
As of Sept 2007, in the US, they had 35 processing plantsm. 34 are located in the south. The company employed 49,800 employees of which 16,350 were members of a union.
They are presently in the process of negotiating a $450 million DIP facility with the Bank of Montreal.
Why bring up Pilgrim’s filing?
The government appears to be entering into a new venue, that of financing. Its format, bailouts. What is the criteria for a bailout?
Twos weeks ago 3 candidates from the car industry applied.
On the 1st Thursday of every month retailers post their comparative store sales (CSS) for the previous month. There is little question that the news this Thursday will not be good. What happens next?
The retail industry employs millions of taxpayers throughout the country. How does the insolvent retailer restructure? Do they request a bailout or go through Chapter 11? The only retailer, who is considered "too big to fail" will not be asking. Their competiton might..
.
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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