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April 30, 2009
IQ Tests and Obama Math
So, Arlen Specter is a Democrat, because the Republican party has turned 'far right'. I guess that's why middle of the road McCain was our candidate, hmm?
Specter is being such a fool, it's a pleasure to have him out of the party. Really. He repeats the little excuse spoon-fed to him by the Dems, and they pledge he'll run for his Senate seat on the Dem ticket. All the Dems want are his votes and the victory of having a 'filibuster proof' majority. When they're done with him, he'll either have a challenger in the primaries or he'll get socked by Toomey, and he'll be put out to pasture, damage done and all it did was cost the Dems a few empty promises and hollow words. And Specter fell for it! Goes to show you have craven he is, how drunk with power and control he is.
What's even more amusing is he purportedly made a deal with Reid to keep his seniority on committees and the rest of the Dem caucus balked at it, so he lost that seniority. Real smart, Arlen! Next time maybe you should make sure everything is 'signed' and the ink is dry before you announce anything.
Of course the other big item for me is Obama Math, or Government Motors, take your pick. It seems that for a measly $10 billion, the UAW can get a 39% share of GM, while the government is supposed to get 51% for $9 billion. The bondholders, who helped float GM over the past few years and kept GM running, invested $27 billion. You can already see that the math isn't favouring the bondholders; they are supposed to get only 10%. This is called 'inversely proportional' and the country is truly in trouble when the people who take the risk and put it 'on the line' as it were are penalised, and the government gets right of first refusal of the lion's share just because.
Everyone who voted for Obama still has their panties in a bunch over him because they don't think any of this will happen to THEM. It's the mean rich people who are finally getting their due, it's the bad companies that will have to bow to the people now; no one ever thinks they are one of THEM. They forget that there is always someone poorer than they are, and that by the government making a precedent seizing some control of not only the banking industry but the car industry, the door is now open to other intervention.
You could argue (not too convincingly, but you could make a feeble case), that the banks are the government's business. Since banks are a huge factor in the economy, and since our economic health impacts everything from our national security to our ability to pay back our foreign debts, the government has a right to stick its nose in. I think precedent shows (CRA, the Fed, subsidies, etc), that the government sticking its nose into business too much causes problems, but lets table that for a second. You could make a tenuous case that the government should be an interested party vis a vis banks.
GM is a different matter. GM is a publicly traded company, and a DOW 30 component, along with companies like Coca-Cola, Microsoft, Dupont, 3M and Merck. The manufacture of cars is NOT vital to our national security or solvency, however, but because GM employs a large number of people (primarily in the Great Lakes area), the government has used that as an excuse to become an interested party and meddle.
The biggest problems that face GM are the cost of labour and the non-beneficial trade agreements that the government has negotiated in foreign markets. GM was the global leader in car sales for 77 years, from 1931 to 2007, but has recently fallen behind Toyota. The cost of labour - pension, benefits, pay scale - are all egregiously disproportionately high when compared to companies like Toyota, which have been able to open plants in the United States and pay their workers fair (not over inflated) wages, and who have been able to re-tool and modernise without risking the wrath of the UAW. By way of comparison, the average Detroit auto worker gets comped at $73/hr in pay and benefits, (totaling about $132,000/yr), while someone employed at a Toyota plant in the US in a similar position is paid $43/hr (about $78,000/yr), making it close to HALF of what GM pays. (GM employs about 123,000 people in North America).
There is absolutely no reason why the company that sold the most cars in the world for 77 years should be in such dire financial straits, unless its cost of doing business was hyper-inflated. Such is the case with GM, as you can see by the figures above. The restrictions in some foreign markets (like Japan), are definitely a stumbling block, but by far the biggest problem that GM has had is its labour costs. The Democrats, clearly in the UAW pocket, have somehow decided that they are not part of the problem. This is in spite of the news last year of the notorious contract the UAW had negotiated with GM that forced them to create 'job banks' where workers who would otherwise have been made redundant because of modernisation sat in a room and were paid about half their salary for doing crossword puzzles. A company forced to these measures is doomed, its just a matter of time, and since there doesn't appear to be much in the way of concessions from the UAW, we're looking at GM being the next Amtrak; constantly running in a deficit, but propped up by the government.
It's a shame; GM used to make good cars, reasonably priced and as I've said elsewhere, we LOVE our Chevy truck.
Posted by hanyap at April 30, 2009 7:14 PM