Monday, March 9, 2009

AIG, GM, Corporate Empires, Central Planners, the Wall Street Journal, Limbaugh, Hannity, and "Too Big to Fail"

Let us consider just jow big a failure AIG and GM represent--not only for themselves, but for government policy and the entire "principle" of central planning advocated by the newly minted fascists/Communists on Wall Street (LARRY KUDLOW and CNBC--other than Rick Santelli--this continues to mean YOU). Yes, AIG also represents a failure of the people of our financial community, including those now running our economy (a real confidence bulilder). As this blog has repeatedly shown, these are the Stupidest People on Earth.

Remember my brother? He had that trucking company (Shippers Transport) which just stopped operations (meaning more than 100 people lost their jobs, and more than 200 over the last year). A mere 2 MILLION dollars would have saved my brother, who actually had a business plan that was working, but not enough cash to fully implement it (partially because a GE unit--GE Fleet Services--had refused to work with my brother over an entire year to try to help them both--meaning that GE will lose more than a million dollars; GE is one of those corporate empires that deserves to fall, and yet my brother has to watch GE get help, while my brother got none). Despite his situation, my brother is a free market capitalists (unllke Larry Kudlow, the people at CNBC, and the people in big business and our financial community (including AIG and GM). My brother did not expect to be bailed out, and thinks it would be bad public policy to do so. But it gripes him that people who made worse mistakes than he did are gettting bailed out left and right, so long as they are "too big to fail" (or favorites of the present central planners/Wall Street/financial/big business people running our economy).

Last week, it turned out that AIG really does have a "blank check" from the taxpayers, as has always been obvious The bailout number for AIG is now 180 billion dollars. How many smaller companies, like that of my brother, could that amount have saved. The number is still rising, as the AIG losses continue. And when there is this talk of this "tight credit", it mainly means that lenders have come to their senses and realize that companies like AIG,, GM and GE are bad credit risks, along with loaning money to people in general who have some chance of paying it back at a reasonable interest rate.

Meanwhile, the auditors of GM expressed "doubt" that it could continue as a going concern without filing for bankruptcy protection. This is after the taxpayer's have poured billions of dollars into GM ("cash, which is the same as money"--or is it the other way around--to quote the immortal Yogi Berra).

No one could possibly explain how AIG does not have a "blank check". It is a zombie corporation (the dead walking). Yet, it has been designated as "too big to fail". If taxpayers have "no alternative" (lol) but to put 180 billion dollars into a company--meaning the company has already "failed"--then that company has a blank check. If 180 billion dollars is not enough to cut off the company's credit card backed by the taxpayers (like parents cutting off a child's credit card), then what amount is too much? 500 billion? 1 trillion? 2 trillion?

Nope. AIG has a blank check. Sure, the shareholders have lost out. But I will tell you a dirty little secret. The management of these companies and the people on Wall Street do not care a whit about the shareholders, unless they happen to be shareholders themselves. AIG was run by, and for the benefit of, corporate empire builders who care about their own power and position, just like Henry Pauslon, Geitner, Obama, and the central planning empire builders in Washington.

How much more a failure of public policy can there be that one company has to receive 180 billion dollars of taxpayer money because it is "too big to fail"? Then there are the hundreds of billions being given/"loaned" to banks, GM, and all of the rest (except my brother). Yes, these corporations have had to accept being turned into virtual government enterprises, but that is part of the public policy failure and not part of the "success". As I have said, this is economic fascism: defined as "socialism with a capitalist veneer. This is a central planning partnership between Big Government and Big Corporations--a partnership that was developing even before this "crsis" (created by panic by our "leaders" rather than panic by people in general).

Henry Paulson (the worst failure in the history of world finance) built the same kind of financial empire at Goldman Sachs, and turned Goldman Sachs into a zombie Wall Street firm (house of cards) by the time Paulson left. In fact, Goldman Sachs became so big and "successful" by helping companies like AIG create their corporate empires "too big to fail". Then Paulson, Bernanke and Geitner refused to let Goldman Sachs fail by bailing out AIG (which none of them had perceived as a big problem until the very end--showing how really stupid they all are). Yes, if AIG went under, Goldman Sachs (dead walking as it was and is) was going under. That is why these people panicked: to save Goldman Sachs.

How do you know that there is now this incestuous partnership of economic fascism between government and the financial/Wall Street/big business community? Well, the bailouts tell you. But it is worse than that.

Why did we let AIG get "too big to fail".. Yes, you are wrong if you believe we did not "let" it get that big. It was not mainly a matter of "regulation". It is a matter of failure of anti-trust laws. One of the forgotten purposes of anti-trust laws is to prevent companies from getting "too big to fail"; to prevent corporations from being so big that their decisions visibly affect not only an industry but the entire economy. You tell me how it was not a public policy disaster to let Goldman Sachs and these corporate empire builders control so much. Of course it was a public policy failure--one of the worst in history.

AIG did not become "too big to fail" by "efficient" competing. They went on a buying binge, creating this corporate empire "too big to fail" by a series of big mergers. It ist he same for Citigroup and Bank of America. It is even the same for GM (but the overconcentration in the automobile industry was already accomplished a half century ago). For those of you Wall Street Journal types who say that corporate empire building is merely an example fot he strong and efficient taking over the weak: BITE ME. I am proven right by this "crisis", and you are proven wrong. It is disastrous public policy to let corporations become "too big to fail" by merger.

You have probably noticed something. I am the only one saying this. The number 2 and number 3 companies in the waste management business (Allied Waste and Republic) have just been allowed to merge. That actually played a part in my brother's company going under--although how big a part is hard to know. There was, and is, no public policy excuse to allow such a big merger of healthy companies. It affected my brother, because one of the companies had agreed to buy his building in Nashville. The merger--at least in part it was the merger--ended up making it impossible for my brother to sell the building (to get needed cash) by the time he needed to sell it. This type of "unintended" consequence is what you get with these big mergers. Have you noticed they ALWAYS result in employees being laid off, as competition is being reduced? Yes, Pfizer (maybe the world's biggest drug companies) is buying Wyeth (another big drug company). This is not because Pfizer has succeeded. It is because Pfizer has FAILED (to develop a good drug "pipeline"), and decided to buy business on the New York Stock Exchange. BITE ME, you Wall Street Journal people. This is another merger that never should be allowed--helping create another corporate empire "too big to fail".

No one, except me, seems to realize how bad an admission of public policy failure it is that we allowed a company like AIG to get "goo big to fail". The dirty little secret is that I am about the only one who cares. Democrats like Obama don't care, because they WANT government control. These large companies, and even this "crisis", can be used by these "central planners" to gain POWER. Plus, the central planning aspect of corporate empires does not bother leftist Democrats. They are central planners at heart anyway. They just want their government empire to control the corporate empires, or at least join together in control of all of us.

Why are you not hearing this from Rush Limbaugh and Sean Hannity? It is because their mindset is the old pre-Reagan mindset that conservatives/Republicans represent the idea that business is always good--even big business--and that Wall Street SHOULD control the country. Yes, I have heard Limbaugh talk about how big business has turned leftist, and about "country club" Republicans. Yet, he then turns around and ignores the public policy failure of letting any company get "too big to fail". Then Limbaugh acts like the most important tax break is not a general reduction of rates but a Wall Street "special interest" elimination of the capital gains tax--not to mention a big cut in the CORPORATE income tax.

No, you are not getting the truth on this from Rush Limbaugh. And you are certainly not getting the truth on this from leftist Democrats. Who is it that is telling you that we should at least learn the lesson from this "crisis" that we should never again let any corporation get "too big to fail"--especially by means of merger?

I am really the only one telling you this, and no one is paying any attention to me. Do you wonder that I am a pessimist? The Stupidest People on Earth (Wall Street, Geitner, Bernanke, et. al.) are running the economy of this country, after getting us into this mess. And they say things (like "AIG is too big to fail", whoever much we regret it), as if this is an Act of God instead of something with public policy implications.

It is tough to take: being a true Prophet (unlike the false Messiah, Obama), but unrecognized in your own time. I will just have to try to bear up.

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