Freedom of BLEEP

Instead of developing a plan to save their company, the brainiacs at GM spent their last resources on a huge ad campaign to increase support for their initial bailout. And they are already asking for more money!

If you checked your Gmail or AOL account prior to the first bailout, you might have see ads that looks like this:

In the end, their efforts only served as another reminder that this company is a sinking ship, and the first 17 billion they received only delayed the inevitable. Now they want a second bailout for twice that amount - another $39 billion!

How is GM losing so much money? Well for one thing, their workers currently make about 44 percent more than Toyota workers in the United States. The average worker wages at GM amount to $69 per hour, while American-based Toyota facilities average only $48 per hour. Toyota doesn’t allow unionized labor.

While bailout bargaining, the United Auto Workers have repeatedly said they would be willing to renegotiate their current contracts. But truth be told, all concessions the unions have made are trivial. They’ve only agreed to reduce medical benefits for retired workers by less than 10 percent, and temporarily suspend pay to laid off workers (who previously got 95% of their pay indefinitely). This policy was muscled in by the union and basically made it impossible for GM to cut their payroll. Now the company finally won’t have to pay for workers that aren’t working… Yeah, those union leaders are really bending over backwards.

Fearing that they will lose their power, the unions have also propagated a myth that filing for bankruptcy won’t help GM. In reality, chapter 11 allows companies to restructure their contracts and internal organization. GM would no longer be obligated to provide extravagant benefits to their overpaid employees, and they would not have to fulfill supplier contracts they can’t afford to meet. Just look at United Airlines - they emerged to be an even stronger company after filing for bankruptcy.

Bankruptcy would probably help GM even more than the measly $17 billion band-aid, especially since they lost $39 billion in a single quarter last year.

Still, many are worried about what could happen if GM goes completely out of business. People seem to love bad news, and so the media has been reporting that a total of 2.5 million jobs will be lost if GM disappears. These projections are greatly exaggerated, however. First of all, the derivations assume that all of The Big Three go out of business (not just GM), which is unlikely since Ford has enough cash to last a year and a half.

Additionally, several innovative American car companies have been able to rise in the wake of The Big Three Failures. Carbon Motors, for instance, will have their E7 on production lines this year. This vehicle is essentially a ready-made police car that’s loaded with features and offered at a price that beats the competition. For years, state governments have been purchasing Big Three models only to transform them into police cars and emergency vehicles. So why didn’t GM, Ford, or Chrysler come up with this idea?

Over 70% of U.S. businesses have announced freezes on hiring and/or pay increases. My employer is included in this figure, which is frequently hailed as one of the most recession-resistant companies in the world.

And it looks like the freezes will be around for a while. In the words of ADP’s CEO, this will “likely continue [...] into 2010.” Why do businesses in the United States expect this economic crisis to last so long? Isn’t the government about to pass out an $800 billion stimulus package?

Well, the Congressional Budget Office says only 25% of the money will go out this year. Most of it won’t be spent until 2011 or 2012. How is this supposed to help the economy?

It won’t. An analysis by the Wall Street Journal indicates that only 12% of the stimulus package legislation could plausibly be considered an economic stimulus. No wonder CEO’s have said they won’t be hiring for awhile.

It sure is convenient for the politicians though, as their porkbarrel money will be spent right before elections. And if you still think your government cares about you, think about what will happen to the economy when we print $800 billion dollars and just put it into circulation as if it were mana from heaven. Over the next four years, we’ll see inflation skyrocket while we are stuck with stagnant wages. But we’ll save the economics lecture for another post.

As a side note, the stimulus package could fund all of the soup kitchens in America for about 15 years if we eliminated the wasteful spending. And considering the direction that our government is taking us, this would probably be a good investment.

No one said it better than House republican leader, John Boehner. “Oh…my…God.”

He was commenting on the current stimulus package that House democrats have introduced, just in time for Obama’s rise to the throne.  The phrase ”stimulus package” is being used very loosely, as most of the bill is going towards ridiculous welfare programs and liberal spending that will do little to get our economy out of the trouble it’s in.  At best, it will encourage people to sit lethargically in front of their new taxpayer funded Digital TVs and eat more government subsidized food.

A great deal of the money will go to extending unemployment benefits for out-of-work Americans and creating new “green jobs”  (i.e. lightbulb changers).  While retrofitting government offices, building energy efficient infrastructure, and investing in a green energy grid are all noble causes, there is a disconnect between these projects and stabilizing our economy.  This massive spending may create temporary jobs, but what happens when these projects are finished?  Will we continue to keep these “green collar” workers on the taxpayers’ payroll ad infinitum?

Also hidden in the bill among the other random allotments are the Obama “tax cuts.” Funny how the tax cuts were promised to families making under $250,000, yet the bill only rewards those that make less than $150,000.  By the time the bill is passed, it may be down to $75,000 or even $50,000, since it has become a liberal mentality that all the “wealthy” people should be punished for their hard work and success.  Let’s discriminate against those who create jobs, and see how this stimulus works.  Additionally, the “tax cuts,” as promised, are refundable. This article explains, “[b]ecause it’s refundable, Americans without income could apply for it.”. Without income?  Meaning, non-working Americans?  Meaning, welfare?  Someone explain this, because it doesn’t sound like a “tax cut” to me. But I digress…

Other funding includes: $20 billion to increase the food stamp benefits, $87 billion for an increase in the Medicaid matching rate, $1 billion to aid states in the collection of child support, another $1 billion toward preparations for the 2010 census, $4 billion to support local law enforcement, and $800 million to clean up toxic waste sites.  How exactly does this stimulate the economy?  Anyone can B.S. some tangential economic benefits from these programs, but at the heart of this “stimulus package” is porkbarrell spending on social welfare programs that would give any liberal a wet dream. In the words of White House Chief of Staff Rahm Emanuel, “You never want a serious crisis to go to waste.”

About 2.5 million, according to Obama’s economic recovery plan. And the joke is on you, the American tax payer, because you’ll be footing the bill.

OK, sure, switching to energy efficient light bulbs is a fundamentally sound idea. The problem is that Obama mentioned this as one of the top three ways that jobs will be created through his recovery plan. There just aren’t that many light bulbs to replace! Furthermore, many government facilities have already upgraded to energy efficient utilities because it’s such an obvious way to cut costs. That’s right, it’s already been done!

This aspect of the recovery plan is possibly the most short-sighted solution to unemployment ever proposed. In less than six months, light bulb changers across America will be left in the dark again, wondering why they don’t have a job. Unless of course, Obama comes up with another bright idea - perhaps they could rake leaves in our national forests.

Unfortunately, the recovery plan doesn’t get much better than this. The next component of Obama’s plan grants “use-it-or-lose-it” appropriations to states and municipalities. This means that local governments will be spending tax dollars on things that they don’t really need just so they don’t lose the “free” money. Didn’t Obama once say he wanted to cut wasteful spending? Well, now you can expect to see even more extravagant pork barrel bills go through as we pave our streets with gold.

The third component of the recovery includes putting new computers in our schools. Again, new computers would be nice but it doesn’t solve the problem at hand! How many steps are involved in setting up a computer, maybe three? And it doesn’t exactly require a computer science degree to install Math Blasters. Purchasing the computers will cost 100 times more than the labor, and most computer components are manufactured overseas. We could probably create more jobs by simply shipping boatloads of cash to Asia.

On September 17, 2007 at NASDAQ, Mr. Obama said that “Subprime lending started off as a good idea.” He went on to claim the condition of the real-estate market could be pinned solely on the corruption of financial institutions.

But wait a second. Since when was subprime lending a good idea?

The very definition of subprime lending states that there is a heightened risk of default, meaning these borrowers have a history of loan delinquency or default, a recorded bankruptcy, or limited debt experience. Does it sound like “a good idea” to give these people mortgages?

So why did Obama say that subprime lending was a good idea? Because he himself pressured financial institutions to make these bad loans. While working with ACORN in 1994, Obama sued Citibank because they were NOT making risky loans to unqualified individuals.

That’s right. Obama and ACORN worked together forcing financial institutions to make extremely high-risk loans. During his presidential campaign he denied all ties to ACORN, but this clearly contradicts a published statement by Chicago ACORN Leader, Toni Foulkes:

“We have invited Obama to our leadership training sessions to run the session on power every year, and, as a result, many of our newly developing leaders got to know him before he ever ran for office. Thus it was natural for many of us to be active volunteers in his first campaign for State Senate [...]. By the time he ran for U.S. Senate, we were old friends.”

Obama provided legal training to ACORN workers so they could intimidate banks into granting risky loans to people with low income and bad credit. Check out this video to learn more about ACORN tactics.

So how did this all come about? How can the government force banks to make bad loans? This excerpt from a CNS News Analysis sums up the answer to that question:

According to Sheldon Richman, editor of The Freeman and an economist with the Foundation for Economic Education, government policy is to blame.

Under the Clinton administration, federal regulators began using the [Community Reinvestment Act] to combat ‘red-lining,’ a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”

The Clinton-Reno threat of ‘vigorous enforcement’ pushed banks to make the now infamous loans that many blame for the current meltdown, Richman said. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”

Stay tuned for more Obamanomics…