Saturday, February 24, 2018


Posted on November 26, 2008

Where do I start with this? It seems the word “bail-out” is the most popular phrase in government these days. While our economy continues to slide down the hill into the abyss, the government insists on running up the dept in order to “stimulate” it. I just saw one figure that estimated the total costs of this “welfare” package could reach or exceed $7 trillion dollars. That’s correct, $7 TRILLION DOLLARS! Let me put that into perspective for you; 7 trillion seconds ago the year was 211 B.C., 7 trillion dollar bills lined up end to end would wrap around the globe more than 27,241 times, 7 trillion dollar bills weigh more than 7,709,251 tons!

Does this “bail-out” make sense to anyone else but those writing the checks and those with their hands out? I don’t see how giving money to companies, who’s poor management and leaderships team have put them in their current position, is going to solve anything. All I see is us, the taxpayers, investing good money in a bad deal. If management changes aren’t made immediately in these companies, what is to prevent them from ending up back at the well asking for more? In one word, the answer to that question is “nothing!” We have already seen this with AIG. The problem with this approach is we will have so much money invested in these companies that if they do continue to lose money, we will not be able to let them die on the vine like they should but rather will be required to invest more in the hopes of preventing the loss of our initial investment of billions. The phrase for this is “throwing good money after bad.”

To me, it’s simple economic and investing strategies; invest in sound and solid companies that provide or produce a quality product or service and have a strong management teams in place. Nowhere in that does it say or imply that you should invest in a company that has a failing and losing record simply in order to try and save the jobs they provide. In situations like the one we are in now, sacrifices need to be made. Us taxpayers all have made sacrifices in the last months with the high prices of gas, travel, and food. I just heard news today that Whole Foods has lost 75% of their stock value in the last few months due to the fact that people are making changes to their shopping habits to try and save a few bucks. People who have shopped at Whole Foods and preferred organic foods are now shopping at the local grocery store and foregoing “organic” for “cheaper.” Normally, when a company is faced with the choice of extinction or survival and survival is chosen, sacrifices are made on all fronts; the executives, the employees, etc. What we haven’t seen from any of these companies that are asking for federal assistance is any of these sacrifices. The execs won’t resign or take a pay cut, the employees (i.e. unions) refuse to give up some of their benefits or wages, and we as taxpayers are expected to just write them a blank check and hope for the best.

This is what I would like to see:

  1. No company should receive more in loan dollars then they have in assets, just like you or I when we borrow money.
  2. All “borrowers” should be required to put up those assets to cover the risk involved.
  3. Every CEO, Chairman of the Board, et. al should be required to work for the “Lee Iacocca” salary of $1 until things are back on track and the debt is paid off or they should resign immediately, no exceptions.
  4. All unnecessary expenditures (i.e. Christmas parties, sales junkets, bonuses, corporate jets, etc.) should be eliminated immediately. Again, no exceptions.
  5. All unions should be required to make concessions in wages, benefits, etc. in order to help cut the bottom line. ( I personally witnessed the demise of a large and successful trucking company because the Teamsters Union wouldn’t make any concessions when confronted with the possibility of the company going belly up. They thought management was bluffing about the state of things and chose to stand their ground and not retreat on any of their stances. When they found out that there was no bluff and that the company would have to close their doors, they tried to make some of the requested sacrifices but found out it was too little too late and all those union members lost their jobs. A textbook example of the proverbial “cutting your nose off to spite your face.”)

Otherwise, I would like to see these companies forced to enter Chapter 11 proceedings, reorganize, and then ask for assistance if they still need it. None of them should get something for nothing in return.

Earlier in this post I referred to the “bail-outs” as “welfare” because that’s exactly what it is. I am not a big fan of welfare for I feel it doesn’t do what it was intended, help eliminate poverty. What it does do is create more and more dependents of the government. Welfare should work just like unemployment insurance does, limited assistance for a limited time and in order to qualify for it, you must show that you are trying to disqualify yourself for it. I digress, this is a whole other subject for another post. Back on subject, if we give “welfare” to these failing companies and banks we will be creating an atmosphere in which there will be no risk of failure and risky decisions that wouldn’t normally be made in business will be the norm. The execs will have no worries about losing their butts since the government will be there to throw them a lifeline should those decisions fail. In my opinion, this is just one step closer to socialism.

We as citizens need to speak up and be heard on this subject. We shouldn’t stand for just accepting the bar tab at the end of the night for a party we had no part in planning.

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