Tag Archives: AIG

Double Shock – Socialism Fails!

Following yesterday’s impressive news from Ford Motor Company of their $1 billion profit in the third quarter, one may have wondered how the two government run American automakers fared by comparison. The answer was not long in coming, as following immediately on the heels of Ford’s news was a very dire report that GM, Chrysler are struggling mightily, and that their eventual demise was very likely only briefly delayed by the government’s intervention including the wasting of $75 billion of the American taxpayers’ money.

Analysts quoted for the story agreed that both companies are far from profitability, are still at great risk of failure and are likely to need at least one if not multiple additional rounds of federal bailout funds in order to overcome their current predicament. Of course, the problem with this is the federal government has no money to invest, already owns a large percentage of these “dead” companies and would simply be throwing good money (taxpayer money) after bad.

In slightly more than 24 hours we have been reminded of the lesson we long since should have learned from watching the second half of the 20th century. Capitalism works; Socialism, Stateism, Fascism fail. For those who are slow learners, this lesson will continue to play out for years to come in the quarterly reports of Ford versus GM and Chrysler, of Geico versus AIG, of J.P. Morgan Chase versus Citigroup and on and on. if someone out there is still not convinced perhaps a review of the performance of Amtrak, the U.S. Postal Service or the Department of Education would clarify things for them. Despite monopolies in both passenger train service and mail service, the federal government can’t profitably run Amtrak or the post office! And since the federalization of the American education system our world ranking has declined at a statistical rate that borders on impossible.

The government has never, can’t now, nor will ever be able to successfully run anything. The sooner the American people get this fact through their collective heads,  the sooner priorities can be adjusted to getting government out of the way of business resulting in the best environment for the potential prosperity of the greatest number of Americans.

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Filed under Financial, Government

The Check Is In the Mail

Can there be a more blatant example of the stupendous incompetence of government bureaucracies (and there are soo many to choose from), then the latest news that they have somehow managed to run the U.S. postal system into the ground. Think about that – even with a federally mandated monopoly they cannot operate profitably. The USPS lost $2.8 billion in 2008 and are seeking financial aid from Congress in order to stay afloat. Now before you say it, let me remind you that neither GM, AIG nor any of the other bailout recipients had the post office’s luxury of zero competition and forced consumer usage.  Sure, there are FedEx and UPS if you’re sending a package or an overnight envelope, but in this country, if you are mailing a letter, bill, advertisement, magazine or even ‘junk’ you have no choice, you must use the post office.

With all this guaranteed patronage, the unfettered discretion to raise prices whenever it suits them (not surprisingly, it suits them often!) and the monumental competitive advantage of tax exempt status, they still can’t make it work. Meanwhile FedEx and UPS are going strong, FedEx most recent quarter ended with a $97 million profit. Of the three, the post office has by far the lowest customer approval rating as well.

For those of us in business, the idea of having the federal government force the entire population to use our product exclusively and still not be capable of operating profitably or satisfying our customers is unimaginable. We operate in the real world where you have to earn your customers patronage and loyalty, where price increases come with an inherrent risk of lost business, where a competitor could open a new location or develop a new service and take market share away.

In the end, the USPS, with none of these worries, and with the backing of the U.S. government, still can’t manage to run its business effectively. And with that we see the demise of the last example of a service or function the government performs better than the private sector. The government can’t balance its budget, but expects its citizens to do so. Can’t educate the country’s youth, but refuses to allow parents a choice in what school their child will attend. Can’t protect its borders and yet has the audacity to allow illegals to sue an American who protects his property since his government won’t. And, now we find that the government can’t effectively run a monopolized business. Yet the administration has the audacity to take over GM and expect to survive going head-to-head with all the world’s succesful auto makers. I wish them luck with that. Common Sense and experience tells us this can’t possibly turn out well.

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Filed under Financial, Government

Your Paycheck Is Not Safe!

Just this week the President of the United States fired the CEO of a publicly traded U.S. corporation. He did so without consulting the company’s board of directors. He did so without consulting the company’s stockholders. And he did so without ANY authority.

Now the media is lobbying against Mr. Wagoner getting his separation pay. Monday night while being interviewed by Greta Van Susteren, Rick Kline of ABC news suggested (actually more like dreamed of when) public opinion would force Obama to reconsider paying the ousted CEO, Rick Wagoner’s $21 Million separation contract.  Never mind that this individual was a 32 year employee of GM or that this money was legally earned and GM is contractually obligated to pay it; Kline, seems to believe that public outrage should over rule legal contracts. Kline cited the public outrage surrounding the AIG bonuses and Congress’ actions to place a retroactive tax on that legally earned money. In case you missed it, and I can see how you might have since the media didn’t bother to report it, that Democratic action turned out to be UNCONSTITUTIONAL.   Whooops!

Folks, this is the French Revolution with the tax code as the guillotine!  This is open class warfare being egged on by the press. Two weeks ago a group in Connecticut organized a bus tour of the homes of the AIG executives. This is a community organizing group in action – in case you were still wondering what that entry on our President’s ever so thin resume was all about. Stirring up the masses against their fellow citizens is their specialty and it is extremely dangerous.

Maybe you don’t have any sympathy for AIG or GM executives.  That sentiment is understandable.  But, you must ask yourself where it will stop? This week the House Financial Services Committee led by everyone’s favorite lunatic, Barney Frank, has approved legislation that would impose government controls on the pay of all employees (not just top executives) of companies that have received capital from the U.S. government. Yet again, the Democrats are trying to impose a retroactive tax measure that would change the terms of legally binding compensation agreements already in place.

As usual, I’m left doing the usual stunned stare at the computer screen asking myself, “What the heck is wrong with people?” Unjust, illegal actions by our government should concern all American citizens regardless of their feelings about the individuals being targeted.  Some day, that citizen may be you! Will it be ok if the government rewrites your employment contract ex-post-facto? Will it be alright if protestors march in front of your home because they think you make too much money?

Remember, the French Revolution began due to economic turmoil. Citizen’s unhappy with their financial status became determined to oust the ruling elite (read – upper class).  At first, the King and other members of nobility were the targets of the outrage, but eventually some 30,000 people were executed as “enemies of the Revolution” many of them common citizens (people we’d today call middle class) who argued for reason and Common Sense, people who dissented.

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Filed under Other Random Thoughts

What’s Good For the Goose

Senate Democrats have been railing for the past week against the executives at AIG who accepted their bonuses even after the collapse of the company and subsequent bailout by taxpayers. But it doesn’t seem the same Senators feel quite so strongly about giving money back when it’s their own money.

In a Washington Times article today it was revealed that the Democratic Senatorial Campaign Committee received $100,000 from everyone’s favorite scumbag, Bernie Madoff, since 2005.  This is money STOLEN from his investors.  But, guess what?  The Democrats aren’t giving it back, at least not yet.  It seems that while it’s perfectly reasonable to pass ex post facto legislation to take back bonuses from AIG executives – bonuses that were legally although perhaps not morally earned – it’s too much to ask that Senate Democrats would give back $100,000 worth of STOLEN money.  Apparently, what’s good for the goose isn’t good for the gander, but we knew that about our politicians already, now didn’t we.

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Filed under Congress, Ethics & Corruption, Government Spending