The Automaker's Carcass: Hanging from a Union Tree

By Bill Glynn

Bail them out? Who is going to buy cars? And while they go bankrupt, union workers get paid way over market value. Sorry to say, unions are a thing of the past and will force other industries down the toilet just like the airlines. It's a form of cancer that can be cured but has to be ripped out of the body. The problem to be fixed isn't one company at a time; it is systemic and the entire industry needs to be revamped. The bailout buzz around the big automakers, especially GM, is finally coming to a head. Even if the companies are bailed out, the results will be the same - dying on a vine or in this case already a carcass hanging from one - and unions are a big part of the lynching. If the companies were bailed out, I will bet my life that people won't buy enough cars to keep them afloat anyway. Yes, the industry touches 1 in 5 jobs in America, but it's a dinosaur industry compared to the rest of the world. Strapped with unions and debt, and the fact that they have so many cars in the system right now that aren't selling, their dealers can't absorb more and stay in business as well. This means that automakers, even if they stay in business, can't push cars into a consumption economy that can't or won't buy them. So they keep making more cars and staying afloat, but in the end the body can't be resuscitated while workers keep getting paid and the cars don't sell - even to the dealerships. [more...]

Auto Workers Suffer as Big Banks Reap the Benefits of TARP

By Robert Weiss

Whether or not you believe "The Big Three" (General Motors, Ford and Chrysler) still deserve a place in our society, there is no question that they have greatly impacted the development of what we call "America." "The Big Three" are not only by far the largest automakers in North America, they were for a while the largest in the world and are still a mainstay in the top ten. "The Big Three" are also distinguished not just by their size and geography, but also by their business model. The majority of their operations are unionized. Although the car companies were hardly multiracial utopias, they, especially Ford, employed African-Americans when many industries would not. Through the decades, the automakers and their higher wage scales provided a route to the middle class for many low-income Americans, especially those with limited education. Could it be that the failure of banks would result in wealthy, college-educated, high tax-bracket people on the streets looking for jobs, while the failure of our AMERICAN AUTO INDUSTRY will result in lower-income, working class men and women on the streets? When these working class men and women lose their jobs, there will be no golden parachute or million-dollar severance package waiting for them. Waiting in the wings might be a bread line or clothing shelter for them... and, yes, Americans are in fact standing in food lines. [more...]

Economic Catastrophe: Lost Faith in the U.S. Dollar

China Explores 'New' Currency Options to Replace Dollar
By Bill Glynn

Today China expressed its concerns and ideas for replacing the dollar as the underpinnings of world trade. This overture is not only a shot across our ship but could spell the beginning of the end. This is exactly what I have been saying and fear the most. This will not happen in the near term but represents the first public sign that America is losing or has lost the world's trust. This issue is the most important and potentially devastating in our history as a nation and the 300+ year capitalist experiment. Yes, I am a naysayer and full of gloom and doom these days but I speak to the real issues facing the nation - MINTING MONEY and BORROWING MONEY. It is coming home to roost! So what if China and the rest of the world seek a neutral currency to isolate any systematic risk like with the U.S. market. What if China and the world lose faith in the American economy and our nation's ability to support our debt and currency? The world's faith in our system is necessary for our economy and much of our nation to simply survive. Once this faith is lost or one nation sells off treasuries or currency, there will be a worldwide rush to get out of America's financial products. When this happens - and I am telling you it will - America will sink far below a depression; our nation will be institutionalized for its recklessness. This is the knockout blow for all of the U.S. [more...]

AIG Bonuses Unconscionable

By Robert Weiss

Along with millions of other Americans, I found the AIG bonuses to their executives unconscionable. AIG's use of taxpayers' monies to pay millions of dollars in BONUSES felt like a dagger in the back of America. News of Democrat Senator Chris Dodd's involvement in the drafting of the stimulus bill to allow such compensation felt like a dagger jabbing deeper and deeper into the pockets of the American people. Over the life of Senator Dodd's career, his top five campaign contributors include Citigroup, Bear Stearns, and yes - AIG. In the 2008 presidential race, the top contributors to President Obama's campaign included Citigroup, Chase, and Goldman Sachs. We all know what happened during President Bush's tenure - restrictions and oversight from the SEC and FDA relaxed. What is to come in the next four years? [more...]

How Greed Defines America: AIG is Just One Example

By Bill Glynn

"Greed is all right, by the way I think greed is healthy. You can be greedy and still feel good about yourself." --Ivan Boesky

It is greed that makes people want to do things, since they will be rewarded for their efforts. America is built on this principal that creates enormous wealth, opportunity and innovation but is also one of the primary causes of the denigration of our economy and society. The lust for power and wealth are two of the primary motivators in our society. Theft, fraud, abuse of power, reckless behavior, risk taking, on and on - even pride, power and politics are driven by greed. Advancement in our society, not just the financial sector, is driven by personal desires to obtain a higher social status and the acquisition of wealth, power and property. This beast is within us all and very few tame it. And the genie has gotten out of the bottle.

In the case of AIG and other large financial institutions that have failed, are failing or have caused catastrophic economic conditions, the GREED is excessive and appalling at best. Yes, there are contractual obligations; but there are moral obligations, too. The fact is there is little correlation between morality and greed.

Sure, in good times derivatives traders, investment bankers and heads of corporations made off with billions in bonuses. Yes, it is BILLIONs, not just hundreds of millions, when you add it all up. Executives and employees that reap enormous rewards for running their businesses and our money right into the ground are the very ones profiting – certainly not us! This is the way the financial industry and business world at large works. People get paid but do not give back when their actions cause havoc and massive economic loss. This is never truer than in the case of the derivatives group at AIG. The contractual obligations of the business are obvious and the government is caught in a mess of good money after bad. So how do we navigate this issue that has Americans screaming across the country? [more...]

'Obama Insults Small Business Owners'

The Only Small Businessman to Run on a Modern Day Presidential Ticket Says 'Obama Insults Small Business Owners'
By Wayne Allyn Root

My response to President Obama's claims that his administration is helping small business owners is to say Obama doesn't get it. Small business owners don't want government loans. We don't want government anywhere near us. We just want to be left alone. Obama's tax plans frighten us. His taxes will put us out of business. His loans do nothing for us, if we can't afford to stay in business in the first place. We are insulted by Obama. This is a man who knows nothing about small business - or any other kind of business. He's never started a business of any kind, never funded a business, never run a business, never created one job in his life. He thinks like a typical Illinois politician - the answer to every problem is to tax business owners to death. Now Obama thinks he can lecture us about his solutions to save small businesses? The only loan we want is to be LEFT ALONE.

Obama's federal income tax increases; cap and trade tax increases; the Social Security tax increases that will surely be proposed soon by Obama; card check legislation that is supported by Obama; combined with Obama's proposed loss of deductions to pay for government-run health care; will all combine to destroy untold number of small businesses and cost millions of jobs. Obama's small business loans are just a deceitful politician's usual way of distracting the voters' attention away from the truth.

I believe the economy won't recover until Obama gets out of the way (or is defeated). The economy continues to crater because it is obvious to business owners, business executives, entrepreneurs, and investors that Obama has no clue what he is doing. There isn't one person in his entire administration that knows anything about business. Nothing. Zip. Zilch. This man who we elected to oversee the U.S. economy is poison to the economy. That's why the stock market is down thousands of points since his election. That is why the economy continues to deteriorate. That is why his approval ratings are sinking like a rock. Obama is clueless. Business leaders now realize that he is in over his head. [more...]

Marxism vs. Capitalism - Redistribution of Wealth

By Bill Glynn

How about this! Turn to chapter 2 of the Communist Manifesto written in 1848 by Karl Marx and Friedrich Engels. The first three principles described are:

* Take control of and redistribute assets
* A heavy progressive or graduated income tax
* Abolition of all rights of inheritance

They presented ten measures that have influenced the tax systems around the world. Their goal of economic justice is wide ranging but an underpinning of their philosophy is that the masses will be reliant for their subsistence on wealth redistributed by the state. Sound familiar? Although I don't think our leaders are communists by any stretch, our system of taxation certainly approaches this philosophy, doesn't it? With tax changes being contemplated, is this on the money?

Did I hear Nancy Pelosi and President Obama correctly? 'Redistribution of wealth' were their exact words, right? The underpinning of this philosophy is concentration of capital; while it may undermine a free and Democratic order, a higher order of economic justice is that everyone has a human right and an equal opportunity to become an owner of capital. Isn't this supposed to be the American dream? Philosophers dating back to Aristotle contest that property is essential to preserving a free society. So you want to seize my capital property and give it away to others by means of unfair and discriminatory taxes biased toward one "class" of citizen over another "class"?

Now, turn to socialism - at its core is an economic system governed by a political elite with a more concentrated ownership and wielding more economic power than a capitalist system where capital is concentrated in the hands of the few. Big government... out of control spending and borrowing to do so... Complete discretion with no oversight and forget about the people because our voices just don't matter. [more...]

A Penny Saved is a Penny Corporate Giants Earned?

By Robert Weiss

A penny saved is a penny earned... isn't that what we were taught? I guess AIG and other corporate giants missed that lesson in grade school because what they believe is a penny somebody else saves is a penny they earn. AIG's use of bailout money to pay nearly a billion dollars in executive bonuses is one of the most despicable things I have heard. From the beginning of this economic crisis, I warned every person who would listen that these banks would not allow a "trickle down" of bailout money to Americans. I was right - and this is the first time that I can honestly say, that I hate being right. Why? Because in this situation, me being right means more Americans losing their homes, losing their jobs, and losing all of those pennies they have worked years to save. Pension funds across the country have invested nearly half a trillion dollars in CDOs. These CDOs have failed, causing these pension funds to lose billions of dollars with no end in sight. Where is the money to help these Americans? These are people who bleed red, white and blue each day - they are our firefighters and police; they are our autoworkers and factory workers. These are the same people who have seen their sons and daughters fight for our country across seas, yet, when they suffer, Capitol Hill could care less. Our own Americans have now flooded food banks and clothing donations as if they have been punished for going after that American dream. The corporate CEOs have spun this country out of control – no restrictions, no punishment... but, oh, I forgot, they have a contract, which necessitates millions in bonus compensation. Wouldn't common sense dictate that if you didn't do the job, you don't get paid? The banks didn't do their job - they failed and now are depending on taxpayers' money to bail them out. Why are these corporate giants treated differently? Why should we be held to a higher standard? [more...]

Democratic Financial Discrimination

By Bill Glynn

I make more than $250k a year. I am a married 40-year-old. I am the target of discriminatory laws being contemplated to raise taxes, eliminate mortgage interest deductions and a laundry list of other items directed at the demographic I occupy. Any law designed to target or benefit specific races, classes or individuals is discriminatory. Financial discrimination in a capitalist society is about as vile and backwards as I can imagine. I believe I am the first to bring light to this issue in America as a legal and Constitutional violation. My civil rights are being violated.

The definition of discrimination is: treatment or consideration based on class or category rather than individual merit, partiality or prejudice. As a noun: unfair treatment of a person, racial group, or minority. Discrimination of any sort under any condition in America is illegal when it comes to race but not when it comes to income - laws need to be amended for sure. Discriminating against a bracket of individuals and families based on income has not been brought before our judicial system. Where is the ACLU now? Also, if racial profiling was found to be illegal by the Supreme Court, wouldn't financial profiling be a case worthy of a serious hearing and debate? I think so; and I, for one, will take the cause head on.

If taxes are being raised then taxes need to be raised on everyone equally. Singling out one demographic or another and passing laws that clearly target that demographic while the same laws advantage another demographic is UNCONSTITUTIONAL. Racial profiling and discrimination have been issues that ripped through America, the media and the courts. I think financial profiling and discrimination is equally as horrifying and deserves this country's utmost attention. [more...]

Understanding the 'Claw Back' Provision

By Robert Weiss

Executives at seven major financial institutions that either collapsed, were sold for distressed prices, or bailed out by the government via the taxpayers, received a total of $464 million in performance pay since 2005. These same firms reported losses of $107 billion since 2007 due to their own missteps and a spiraling economic downturn. A growing trend is to demand that executive compensation received shortly before problems emerged be given back. This is a concept known as 'claw back.' "There is a fine line that separates fair compensation from stealing from the shareholders," says Frederick Rowe, a money manager in Dallas, in addition, a founder of Investors for Director accountability. "When management ignores that line or cannot see it, then you should be required to give the money back." Corporate boards say they encouraged superior performance, and therefore bonuses were directly tied to benchmarks like profitability. Currently there is no legal mechanism for forcing the payback of past compensation, so such efforts would be needed to be bolstered by new legislation. With a public backlash against excessive pay and bonuses, the idea of recouping compensation known as 'claw back' is gaining traction. [more...]

AIG: What People Don't Know

By Bill Glynn

AIG is getting more loans and lines of credit from the government. You really want to know why? AIG is one of the world's largest insurance companies. AIG, like many insurance companies, was very involved in the mortgage meltdown but not in a capacity that many actually understand. This really has nothing to do with insurance, as you and I know it to be. This is largely about RE Insurance. I mentioned this would be a catastrophe as big or bigger than the banking bailout and it will turn out to be, and is certainly the fact, just with AIG. Preamble: You and I get mortgages at $100 each with a 10% interest rate. The bank lends us $100 each. The bank has depleted its coffers by $200. The bank then lends several thousand others the same amount, more or less, at say 10% interest as well. The bank then takes all those loans and bundles them into a Collateralized Mortgage Obligation and sells this instrument into what was a massive bond market to get their money back. In other words, if the bank put out $1 billion in loans, it sells a $1 billion CMO so it can borrow its money back from the bond market. Now here it is. The bank should sell this bundle of mortgages with an interest rate for investors at least 10%. The problem is the banks can't borrow the money back to lend again at that rate because they can't borrow and lend and make money if the interest rate is the same or higher on the bonds. Here is the reason why...

What is at Stake

By John LeBoutillier

Amid all the back and forth over the Obama budget, Rush Limbaugh, the C-PAC meeting, the Jindal meltdown, the GOP opposition in Congress, and the new leftward direction we as a nation are taking, no one has yet raised another important - political, economic and historic - consideration: What happens if, after the Obama plan is adopted and becomes law - which it will in large part with a few tweaks here and there - and then by 2011 or early 2012 the economy starts to rebound?

• First of all, President Obama and his crack PR/campaign team will take all the credit and proclaim him a transformational, historic president - and he would most likely be re-elected;

• The Democratic Congress will also stay in the majority;

• But equally as important - massive government spending, trillion dollar annual deficits, a new, more interventionist federal government - will be seen as the reason the economy is recovering - even if it was not! (After all, at some point the economy will bottom out and begin - on its own - to rebound and recover. The Obama plan may actually hinder and delay the recovery. But we will never know the causes and effects - if it recovers during Obama's first term);

• Liberal economists will be vindicated! They and their political followers will all proclaim, "Big Government works!" [more...]

Hard Working American First!

By Robert Weiss

This weekend, the Wall Street Journal reported that the U.S. economy deteriorated far more than previously thought in the fourth quarter, according to new revisions of government data, casting fresh doubt about the chances of a recovery this year. "With falloffs in consumer spending and exports, gross domestic product declined at a 6.2% annual rate in the fourth quarter of 2008, according to a Commerce Department report Friday. The agency's first estimate for GDP, reported in January, was for a 3.8% decline. The more recent figure - which represents the steepest drop-off since the depths of the 1982 recession..." Amidst these somber reports, Washington touts investment banks as the forefront of America. By this, they mean that without our big Wall Street Banks, America would not be what it is today. I believe that this is a horrible mantra - America is the people. Hard-working Americans put this country as the #1 superpower at the beginning of the 20th century and although times have been tough, Americans are what kept this country growing. Now as the economy hits turmoil, the government first bails out CEOs making millions of dollars each year, leaving those who have invested their confidence into America, with nothing. They now face a hemorrhaging retirement portfolio or a sinking pension fund. Where is their help? The much awaited stimulus package has not taken into account the investors who have built Wall Street - these investors are left out in the cold. I have been an attorney for twenty years and I know the battle they face - I fear that their battle will now be harder due to the billions of dollars the investment banks have received to fight my clients. The larger fear lies in the fact that many of these investors have not enough felt the worse of what is to come. [more...]