ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Saturday, May 02, 2009

Must See Smackdown of Stewart

Bill Whittle has this excellent, must see response to Jon Stewarts idiocy regarding Harry Truman being a war criminal for dropping the A-bomb on Hiroshima.

Unfortunately, I doubt Stewart will even see it. And if he did, his response will surely be, "I'm just a comedian!!! Don't take anything I say seriously! I mean, come on... I'm on right after puppets!!!"

The Daily Show - Where our next generation gets its news.

Your Co-Conspirator,
ARC: St Wendeler

Thursday, April 30, 2009

Gettelfinger Motors

Or, why I will never buy a GM car for the rest of my life.

Gettelfinger Motors
The mauling of GM's bondholders reveals Treasury's political hand.

President Obama insisted at his press conference last night that he doesn't want to nationalize the auto industry (or the banks, or the mortgage market, or . . .). But if that's true, why has he proposed a restructuring plan for General Motors that leaves the government with a majority stake in the car maker?

The feds have decided they should own a neat 50% of GM, yet that is not the natural outcome of the $16.2 billion that the Treasury has so far lent to the company. Nor is the 40% ownership of GM that the plan awards to the United Auto Workers a natural result of the company's obligations to the union.

Yet Secretary Timothy Geithner and his auto task force, led by Steven Rattner, have somehow decided that Treasury and UAW chief Ron Gettelfinger will get to own a combined 90% of GM. If there's a reason other than the political symbiosis among the Obama Administration, Michigan Democrats and the auto union, it's hard to discern. From now on let's call it Gettelfinger Motors, or perhaps simply the Obama Motor Company, though in the latter they'd have to change the nameplates.

The biggest losers here are GM's bondholders. According the Treasury-GM debt-for-equity swap announced Monday, GM has $27.2 billion in unsecured bonds owned by the public. These are owned by mutual funds, pension funds, hedge funds and retail investors who bought them directly through their brokers. Under Monday's offer, they would exchange their $27.2 billion in bonds for 10% of the stock of the restructured GM. This could amount to less than five cents on the dollar.
Memo from the Obama administration to private investors, retirees, citizens of this great land who decided to lend some cash to GM for a profit:
DROP DEAD!!! You're not politically connected!!!
The Treasury, which is owed $16.2 billion, would receive 50% of the stock and $8.1 billion in debt -- as much as 87 cents on the dollar. The union's retiree health-care benefit trust would receive half of the $20 billion it is owed in stock, giving it 40% ownership of GM, plus another $10 billion in cash over time. That's worth about 76 cents on the dollar, according to some estimates.

In a genuine Chapter 11 bankruptcy, these three groups of creditors would all be similarly situated -- because all three are, for the most part, unsecured creditors of GM. And yet according to the formula presented Monday, those with the largest claim -- the bondholders -- get the smallest piece of the restructured company by a huge margin.
But of course! This isn't about fairness. It's about political pull. And this is just the beginning.
This seems to be by political design. GM CEO Fritz Henderson says Treasury insisted that bondholders receive, at most, 10% of the company. "We went to the maximum and offered 10%," [...]
Why the Treasury is empowered to decide what percentage creditors should receive is beyond me, but I do know we're not in Kansas anymore!
Some Treasury officials have told the media that 50% government ownership is important to ensure that taxpayers get repaid for the $16.2 billion in Treasury loans. But this is false logic. Taxpayer-shareholders are likely to be far better off with a smaller stake in a truly private company that is better insulated from political meddling. Private owners are more likely than the Treasury or the unions to try to run the company for profit, and so increase its equity value over time. Treasury says it would be a hands-off owner, but that hardly seems plausible and in any case that would merely leave the UAW in control. At the next labor contract bargaining session, the union would sit on both sides of the table.
This isn't about taxpayer money, return on investment, or any of those things. This is about turning GM into a political machine that, oh by the way, produces cars that are politically approved.
[...]GM's SEC filing on the debt-equity swap also warns darkly that if the requisite 90% of bondholders don't agree to these terms, they may recover little or nothing in bankruptcy court. But given the choice between a 10% stake in Gettelfinger Motors and the independent mercies of a bankruptcy judge, bondholders could be forgiven for taking their chances in court.

Certainly the bondholders deserve to take a haircut like everybody else. But squeezing them in such a blatant fashion has other consequences. Who would be crazy enough to lend GM money in the future? The Treasury also says it wants banks that do poorly in its "stress tests" to try to raise private capital before putting in more public money. The mauling of GM creditors tells investors not to invest in TARP banks because everything this Treasury touches turns to politics.

Monday's offer is so devoid of economic logic or fairness that it confirms the fears of those who said the original bailout would lead to a nationalized GM run for political ends. This fiasco will in part go down on George W. Bush's copybook, since he first decided GM was too big to fail.

But rather than use his early popularity to force hard decisions through the bankruptcy code, President Obama has decided in essence to have the feds run GM and Chrysler. This inevitably means running them for the benefit of the UAW that is so closely tied to the Democratic Party. Next up will be tax changes and regulations intended to coax, or coerce, Americans to buy Gettelfinger Motors cars. This tale of taxpayer woe is only beginning.
I just know that the quality of the product that the new Federal Gettelginger Motors will be far superior to anything created by the semi-private General Motors of Wagoner.

Of course, with regard to GM I always love to point out that only in the US is GM unprofitable. GM's non-US divisions were always more profitable than their US division. And the attempt by Fiat to pull off a turn-around at Chrysler, something that Daimler and Cerberus could not achieve, is absolutely laughable. Of course, if Fiat has any sense as it watches the debacle with GM, it'll back away from Chrysler in short order.

Given this evidence, one might begin to ask the question as to why the US market is so unprofitable. Perhaps it has to do with the cost inputs for the vehicles manufactured in the US?????

Your Co-Conspirator,
ARC: St Wendeler

Tuesday, April 28, 2009

The Stupid. It hurts!

How stupid do you have to be to think that flying a massive 747 low over the skyscrapers of New York City would not cause a panic?

Apparently, stupid enough to also think that you're prepared for the presidency based on your prior experience as a community organizer.

Of course, we all know why Obama decided to get the photo op of Air Force One updated. The one of it near Mount Rushmore just wouldn't do, you know?

He just wanted to have a more exciting picture to use for his acceptance speech for being theWinner of the Iowahawk Earth Week Virtual Cruise-In.

And the Winner Is...

Yow! Despite tough economic times, 2009 saw the biggest Iowahawk Earth Week Virtual Cruise ever. The 4th annual edition attracted over 60 contestants from every corner of America, plus Canada, Australia, New Zealand, South Korea, Dubai, Qatar, and Iraq; in total almost 100 beautiful carbon spewing conveyances of every type, pushing out an estimated total 200,000 horsepower and over Five Million (?!) climate-soothing foot-pounds of torque. Best yet, those 100 green machines totaled nearly 500 miles per gallon -- now that's efficiency!

The downside of all this, of course, is the difficulty it poses for the Grand Prize Selection Jury. All of the entries were worthy in their own way. If we were to go by the objective fuel consumption numbers, the 1600 gallons / minute Wartsila-Sulzer would win handily.
[...]
Yet, neither of those yardsticks captures the true spirit of the Cruise, which is really about attitude. It's that menacing glimmer that warns Gaia: my pimp hand is strong. The sassy insouciance that invites the moralist biddies and prim religious scolds of the green movement to Kiss. My. Ass.

Luckily, there was one last minute entry which exemplified that spirit more than any other, perhaps in the entire history of the cruise. And thus I am please to announce the unanimous 2009 Iowahawk Earth Week Virtual Cruise-In Grand Champion Carbonator is:


New champ pops down to Whole Foods in the family SUV to pick up some free range arugula

Although he did not submit an entry of his own, President Obama was nominated by several admiring Iowahawk readers. Sure, his customized Boeing Air Force One only gulps about as much fuel as a typical Earth Week Cruise-In vehicle, but, by golly, the Carbonator-in-Chief knows how to burn it with panache. The feat that cinched the coveted Carbon Obelisk of Excellence for the Prez: taking a joy ride to Newton, Iowa on Earth Day to deliver a lecture on energy conservation. (h/t: Instadude). No word on whether he cruised over to Maid-Rite for a root beer and parking lot burnouts.

The sheer, mindboggling nerve it took to pull off a eco-prank like that simply shames anything I've ever accomplished, and I daresay the same goes for you. And here's the best part: most of the clueless ecoweenie marks still don't realize they've been punked! Now that's what I call "The Audacity of Carbon."

Well done, Mr. President, and congratulations. On behalf of the readers, creditors, and fuel suppliers of Iowahawk, here's hoping you will wear your crown with pride!
It is hilarious that while Barry is pushing to tax energy out of our lives, his massive jet is flying circles around New York City at high speed, killing the planet & sending New Yorkers into a panic for a photo op! No doubt NYC air traffic control had to delay flights to Newark, Laguardia, and JFK during the photo op.

I know, I know... let's move on.

Your Co-Conspirator,
ARC: St Wendeler

Monday, April 27, 2009

The Aristocracy of Pull, Part 6

Another Rovian Conspiracy has pointed out numerous instances where the desire to centralize & nationalize economic decisions only increases the likelihood of corruption and reduces the freedom of the individual.

This story from Cleveland.com points to the problem of government regulation which results in market inefficiencies, resulting in the government trying to resolve them through regulation or incentives, which invariably attracts "special interests" to make sure those regulations or incentives favor them.

Obama administration concerned about growing shortage of primary-care doctors
by Robert Pear/New York Times
Sunday April 26, 2009, 9:59 PM

Washington -- Obama administration officials, alarmed at doctor shortages, are looking for ways to increase the number of physicians to meet the needs of an aging population and millions of uninsured people who would gain coverage under legislation championed by the president.

The officials said they were particularly concerned about shortages of primary-care providers who are the main source of health care for most Americans.

One proposal -- to increase Medicare payments to general practitioners, at the expense of high-paid specialists -- has touched off a lobbying fight.

Family doctors and internists are pressing Congress for an increase in their Medicare payments. But medical specialists are lobbying against any change that would cut their reimbursements. Congress, the specialists say, should find additional money to pay for primary care and should not redistribute dollars among doctors -- a difficult argument at a time of huge budget deficits.
Replace the consumer in the health care system from the individual to the government and the government is the new customer. Therefore, the providers start to market to their new customer (which doesn't need health care, just campaign cash).
[...]
To cope with the growing shortage, federal officials are considering several proposals. One would increase enrollment in medical schools and residency training programs. Another would encourage greater use of nurse practitioners and physician assistants. A third would expand the National Health Service Corps, which deploys doctors and nurses in rural areas and poor neighborhoods.

Sen. Max Baucus, Democrat of Montana, chairman of the Finance Committee, said Medicare payments were skewed against primary-care doctors -- the very ones needed for the care of older people with chronic conditions like congestive heart failure, diabetes and Alzheimer's disease.

"Primary-care physicians are grossly underpaid compared with many specialists," said Baucus, who vowed to increase primary-care payments as part of legislation to overhaul the health-care system.
[...]
The experience of Massachusetts is instructive. Under a far-reaching 2006 law, the state succeeded in reducing the number of uninsured. But many who gained coverage have been struggling to find primary-care doctors, and the average waiting time for routine office visits has increased.

"Some of the newly insured patients still rely on hospital emergency rooms for nonemergency care," said Erica L. Drazen, a health policy analyst at Computer Sciences Corp.

The ratio of primary-care doctors to population is higher in Massachusetts than in other states.
Of course, I don't think health care rationing was the goal of the Massachusetts law, but I could be mistaken.

I would submit that the reduction in primary-care physicians is positively correlated to the decrease in the probability of a profitable career as a primary-care phycisian. I mean, going through school to take on huge amounts of debt with the ultimate goal of seeing & helping sick people every day is fine, but there's got to be some remuneration involved.

This is what happens when you turn over control to bureaucrats and elected officials. They, numbering in the hundreds, must make the decisions about supply & demand which historically would have been made by 300 million independent actors in the form of consumers.

Previous examples of the Aristocracy of Pull available here.

Your Co-Conspirator,
ARC: St Wendeler