Last night, the Senate failed to pass a modified Big 3 Auto bailout that would have provided $14 billion in bridge loans through the first quarter of 2009. The sticking point was the refusal of the unions to cut employee salary to the level of non-union employees at other auto plants in the US. Republican senators wanted an immediate pay-cut and the unions offered to cut salaries once the current contracts expired in 2011. Unless the White House acts in the next week or so, both GM and Chrysler will likely file for bankruptcy by the end of the year.
Hopefully, the White House will do nothing. Both GM and Chrysler need to enter bankruptcy. First, if the US taxpayer keeps bailing out every financial and manufacturing corporation, it will be the US that ends up bankrupt. Second, it is not the Senate’s responsibility to negotiate union contracts on behalf of auto-makers. Third, why is the Senate concentrating on union workers when these companies are bloated with over-paid management. A banckruptcy court will address salary issues across the board. It will also address useless boards of directors. Finally, it will put the risk back on the stockholders where it belongs. Investors–individuals and institutional–will be hurt. But, it’s time to understand that stock investment is not a gambling activity. Buyer beware and buyer be burned.
Finally, if a bank that will invest in a useless sub-prime loan believes that a loan to an auto manufacturer is too risky, why should the US taxpayer be the financial resource of last resort?
Your thoughts?
Posted by wwcasey 
Political Thoughts 
Time for Change at SEC
December 16, 2008How does the Securities and Exchange Commission (SEC) miss a multi-year, $50 billion ponzi scheme? This is after Bernard Madoff outperformed virtually every other similar fund without disclosing how. This is after whistle-blowers alerted the SEC to irregularities and were dismissed.
Once again, the SEC has failed us This is after the savings and loan meltdown in the 1980s led to reform. This is after the dotcom meltdown at the turn of the century led to demands for closer oversight and disclosure. This is after the Enron, WorldCom, amd Global Crossing meltdowns led to Sarbanes-Oxley and other reforms.
How does the SEC not sound alarms when the country’s largest banks and insurance companies are making highly speculative investments in sub-prime mortgage instruments? Even the Fed gave mild warnings that something was not right, stating that the housing and mortgage markets were “over-heated” and there was no reason for these securities’ heady increases (per testimony by Greenspan years ago).
The SEC has oversight and audit authority over these public and securities-related organizations. The losses that have been directly under the supervision of the SEC now has placed the American taxpayer with a potential $9 trillion (and rising) bill. Every SEC commissioner should be fired (impeached or however the hell you get rid of them). Every SEC compliance officers should be fired.
The only thing that seems to change with each new financial/securities failure is the magnitude and the number of people financially-ruined people increases.
There is no excuse for such gross negligence. The regulatory authorities have been neutered. This is going to get a lot worse before it gets better.
What say you?
[Posted with iBlogger from my iPhone]