The Bush Administration’s decision to release $27b from the Troubled Assets Recovery Program to prop-up Citigroup has pissed-off Motown’s bailout brigade but good. “Financial industry rescue criticized as double standard” the Detroit Free Press‘ headline kvetches. “While the pending bailout of Citigroup is absolutely necessary because they’re too big to fail, it’s the height of hypocrisy of the outgoing administration and the treasury secretary to not make a more robust effort to do the same with Detroit,” said Anthony Sabino, a professor of business and law at St. John’s University in New York (chosen especially for his non-Detroit residency). “One cannot sit here in America and say Citigroup is more important than any one of the Big Three, let alone all of them together.” On the bright side, the funds directed Citi’s way have played straight into the hands of MSM class warriors like MSNBC’s Rachel Maddow, who see Congress’ reluctance to spread the national debt to Detroit as a classic triumph of evil champagne-swilling bankers over Bud-drinking blue collar builders. Paper shufflers vs. honest folk who make “stuff.” The meme is picking-up a head of [non-hybrid] steam– despite the fact that the banking system IS more important than Detroit’s stuff makers, and two wrongs don’t make a right, and where do you draw the line and who do you think you’re foolin’ (I got the presidential seal)? Never mind. Hubris will get you every time. Bank on it.
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They are 100% right, but it also shows something much more damaging – the deep and pervasive ties between Washington and Wall St., or as I like to call it – the merchant class.
Wall St. doesn’t give a hoot about what a company is composed of long term – it is all about the deal, trade, or short term gain. They have managed over the last 70 years to socialize any risk or loss they may expose themselves to, but get to keep all the profits.
They will bankrupt the country if it puts money into their pocket.
taxman100:
“They will bankrupt the country if it puts money into their pocket.”
Sounds like the big-3, UAW and NADA.
Take a look at Richard N. Tilton’s “GM Death Watch 219: GM Prepackaged Reorganization” editorial as an example how to actually save the American auto industry, not just pay off the special interests that leach on to it while it slowly dies.
Nobody in the UAW cares if the Auto industry survives as long as they get their bloated pay until their fat pensions kick in (when the high school grad, at best, screwing in component parts is making more than the engineer you know the company is doomed). Nobody in NADA gives a damn as long as they get paid off for their dealership.
While I agree that the Big-3, the UAW and the NADA have caused many of their own problems and is only interested in their own self interests, I would like to say that if we are looking which of these two groups, the automotive industry or the banking industry is the better corporate citizen, there is no discussion-the auto business wins hands down.
Last time I checked, the credit card industry was not exactly viewed as a great corporate citizen. I don’t hear financial advisers telling all of us to cut up our cars, but they sure do suggest that you cut up your credit cards as often as they can-and Citigroup is perhaps the world’s largest issuers of credit cards and amongst the most savvy players in the ‘gotcha’ business of re-writing the rules of your loan agreements whenever and however they wish to their own advantage-For example how in the Hell can anyone defend a bank when they can raise your interest rates on your credit cards if you have a car accident and your car insurance goes up? How in the Hell can you defend a bank that can and does raise your rates if you fall one payment behind on another existing loan, utility bill or your mortgage payment EVEN if it is just lost in the mail or the receiver’s fault in processing. Groups like Citibank make a loan sharks rules seem fair.
Not too mention-Okay I’ll mention it that most of the blame for why the world-wide depression is eminent could reasonably be placed at the feet of the Wizards on Wall Street, Fannie Mae, Freddie Mac, Countrywide and banks around the world who thought that bundling unviable loans to people who were not credit worth into a equally unviable ‘securities’ and building their house of cards on top of that actually had financial merit-what a crock of excrement and we’re supposed to coddle these people who have nearly sent the world into a Depression? Where’s the firings on Wall Street? Where’s the investigations into the House and Senate staff? Where’s the perp-walk for the people that have caused this?
The automotive industry; the Big-3, Transplants, Suppliers etc helped to build the basic foundations of the middle class in many countries, not just the U.S.-Henry Ford’s $5.00 workday was a heavy influence upon the rest of the manufacturing world to catch up and pay a similar wage if they wanted to attract and retain people. The automotive industry created wealth and prosperity for millions of people around the world, helped fund the growth of towns, cities and even helped to improve the states or countries they were doing business in with billions and billions in tax revenues over the last 100+ years. The automotive industry is amongst the most generous philanthropic industries the world has ever seen.
Organizations like Citigroup are big important banks yes, and their survival is important too, but there is no way to compare the expansive growth and wealth CREATION caused by the automotive industry around the world to the unethical and unviable policies and practices of groups like Citigroup.
Ditto Stu Sidoti. Wall Street is undeniably the cause of the financial strain we are suffering currently. They, almost single handedly with their creative financial instruments and sub-prime lending, have created a global financial crisis. Let’s all get that straight at the outset.
Now, the Bush administration and a willing Congress are ready to throw unlimited amounts of federal dollars at Wall Street institutions without hearings, mea culpas, reform plans, national humiliation, etc.
If indeed, RF, “two wrongs don’t make a right” could we not at least agree that there be just a little consistency and less of a blatant double standard in the “wrongdoing?”
I work for Citigroup. I know the bailout has protected my (non-income producing and likely to be cut) job for a few more weeks/months.
Though I would have much rather seen GM or Ford get the money. At least they have a plan (kind of) to save themselves. Pandit just insists that things are “fundametaly” great(!) with Citi. The fact that Pandi said fundamentaly strong so many times in the last town hall meeting scared the crap out of me. It is the same way both Bush and McCain described the economy when they had no clue what was happening and were utterly clueless.
So far there has been no mention as to how they are going to correct the ship other than to cut 53,000 jobs. Cus we all know that unemployed people will help the economy.
SS, many kudos for an insightful comment. I agree completely. I have been the recipient of the largesse of the car business, and a more democratic (small ‘d’) group you would be hard pressed to find. There will be blood in the streets from the wounds the dealers are going to receive before this is over, and this is the tragedy of this mess. These people have poured their sweat, dreams and toil into their businesses, only to watch their equity and blue sky evaporate. My Father would routinely work 70-80 hours at his 200 annual planning volume store, and loved it because of the promise it showed to him. He, at 91, says he doesn’t recognize the business anymore. He wasn’t a Hall-Dobbs or Wayne system store, just an honest small town businessman with his whole family working the counters. These types, while far fewer in number than in my day, will be the fatalities of this crisis, not the bonus babies at the GM tower. I guess the American dream I grew up with truly is dead. What a shame.Because of foolish unchecked greed. How many billions does it take to satisfy these selfish accumulators? Thank God for dual citizenship.
when the high school grad, at best, screwing in component parts is making more than the engineer you know the company is doomed
No class bias here, nope, none at all. I know a few automotive engineers. While they’re not thrilled with unions and their work rules, I’ve never heard an engineer complain that he or she was paid less than an assembler.
Ronnie Schreiber:
Well the engineers should be mad that high school drop outs get better pay and benefits. And the UAW workers are scumbags for throwing new workers under the bus giving them half the wages and less benefits just to keep their fat contracts.
I make less than six figures, and I didn’t drop out of high school and walk down the street to the GM plant. I actually have to invest in an IRA account, I don’t have a defined benefits pension. I’m the first person in my family to go to college. My father was a union carpenter, and I hate the disgrace that the UAW is to unions. To be clear I’m not anti-union, I’m anti UAW. My dad actually paid for trade school, and his union exists to provide pensions and healthcare and to assure skill levels. There was no job bank, and any company that didn’t like a carpenter could fire him that day.
Good for the UAW for extorting as much as they have out of the big-3 for slackers that haven’t even gone to trade school; but now that they’ve helped destroy those companies my tax money isn’t going to their speed boats.