Tag Archives: socialism triumphant

Socialism has never worked and it won’t work here

Congressional interference with GM isn’t helping. Quelle suprise!

Federal support for companies such as GM, Chrysler Group LLC and Bank of AmericaCorp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members — 100 U.S. senators and 435 House members.

Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.

Democratic Sen. Amy Klobuchar of Minnesota persuaded GM to rescind a closure order for a large dealership in Bloomington, Minn. In Tucson, Arizona Democratic Rep. Gabrielle Giffords did the same for Don Mackey, owner of a longstanding Cadillac dealership with 80 employees. Rep. Giffords argues it made sense, even for GM, to keep the Mackey dealership, which sold 750 cars last year. “All I did was to help get GM to focus on his case,” she says.

Lawmakers say it’s their obligation to guard the government’s investments, ensure that bailed-out firms are working in the country’s interests and protect their constituents.

Executives say congressional demands gobble up time and make a rocky business environment even more unpredictable. Bank chief executives say incessant calls from Capitol Hill, combined with threats of legislation, were among the main incentives for them to pay back money injected by the government and escape Washington’s clutches.

Thomas Geisel, chief executive of New Jersey’s Sun Bancorp Inc., says the bank paid back its federal money in June because of legislation that imposed limits on bankers’ pay, among other areas. “Lawmakers let emotion and ego get in the way of making good business decisions,” he says.

Probably no company has been more on the receiving end of congressional attention than GM, whose widely scattered factories, suppliers and dealership network put it in touch with nearly every U.S. congressional district. After committing $58 billion to keep the company afloat, the federal government took a 60% stake in the auto maker when the slimmed-down GM emerged from bankruptcy.

In May, even before the government’s ownership became official, lawmakers erupted when GM disclosed it planned to produce a new subcompact car at its factories in China. Under congressional pressure, GM dropped those plans and promised instead to retool an existing U.S. facility in Michigan, Wisconsin or Tennessee for the new model.

Lawmakers from those states demanded and received high-level meetings in Washington to quiz GM on the criteria for site selection and to tout their states. GM in the end picked a site in Michigan.

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Obama takes over the car industry

When Harry Truman nationalized the steel industry he was stopped by the Supreme Court. Obama has done more than that but, because he’s doling out federal cash, he probably hasn’t violated the constitution. But we have just seen the state nationalize a major private industry in a move that, had Venezuela’s Hugo Chavez done it, would have generated howls of  outrage from this country’s leaders. We’re moving into socialism and cheering Obama on.

Obama’s automotive task force was created in February and granted sweeping powers. Already it has:

Fired the CEO of General Motors and dictated who would replace him.

Ordered Chrysler to merge with Fiat

Rejected GM’s proposed loan of $150 million to its major parts supplier, Delphi, which GM wanted to keep alive

Has dictated what car models will be made in the future and which will be discontinued

All of that in just a few weeks. Going forward, there is no reason to believe that the ambition and reach of the task force will lessen. History suggests that it will expand, instead. And as Friedrich von Hayek warned in “Road to Serfdom”. that grasp must expand until complete fascism is achieved. 

This is centralized planning, as centralized as ever seen in Nazi Germany or the Soviet Union. This model of economic planning has failed miserably everywhere it’s been attempted and discarded by those who tried it. We are turning to it. Why?

After nationalizing the car industry, Obama promises to turn his attention to health care and energy. I had thought that we could survive four, even eight years of this madness if necessary but there may be little left to salvage if he continues at this pace. And I see no group working to stop him, especially the remnants of the Republican party.

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The black helicopters have taken off

G-20 summit approves limits on pay, new regulations on business to establish ” the new world order.” 

The Group of 20 policy makers, meeting in London, called for stricter limits on hedge funds, executive pay, credit-rating firms and risk-taking by banks. They tripled the firepower of the International Monetary Fund and offered cash to revive trade to help governments weather the turmoil resulting from the surge in unemployment. They avoided the divisive question of whether to deliver more fiscal stimulus to their own economies.

The statement amounts to an effort to rewrite the rules of capitalism to address an integrated world economy that has outgrown the ability of nations to keep it in check. The assembly echoed — on an international stage — the introduction in the U.S. of securities regulation after the 1929 crash.

“By any measure the London summit was historic,” President Barack Obama said after the talks. U.K. Prime Minister Gordon Brown said, “we have reached a new consensus that we take global actions together to deal with the problems we face.”

Even as the G-20 leaders said they will maintain power over their own markets and companies rather than cede it to a cross- border regulator, they closed ranks behind “greater consistency and systematic cooperation” to flesh out a new regulatory order first outlined at a November meeting in Washington.

The crackdown is “a major step forward,” Nobel laureate Joseph Stiglitz, a professor at Columbia University, said in an interview. “It’s a historic moment when the world came together and said we were wrong to push deregulation.”

Blaming “major failures” in regulation as “fundamental causes” of the credit crunch, the G-20 said national regulators will be revamped to better monitor threats to the international system.

A new Financial Stability Board will be established to unite regulators and join the IMF in providing early warnings of potential threats. Once recovery is underway, work will begin on new rules aimed at avoiding excessive leverage and forcing banks to put more money aside during good times.

Hedge Funds

Hedge funds that are “systemically important” will be subjected to greater oversight as will all key financial instruments, markets and instruments, the G-20 said. That signals a setback for German Chancellor Angela Merkel and French President Nicolas Sarkozy, who wanted all of the investment funds to brought under the spotlight.

Principles will also be introduced on pay and bonuses to create “sustainable compensation schemes” after concern that executive remuneration rewarded short-term risk-taking over the long-run interests of companies. Accounting-standard setters were urged to improve valuation methods and credit-rating companies will be forced to meet a code of good practice.

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