Government and Economy
Obama: Small Business Key to Economy
In a speech welcoming winners of an SBA award to the White House's East Room, President Obama acknowledged that small business is responsible for half the nation's private sector jobs and so deserves support from Washington. Google.com/AP
Congress Failing American Small Business
While they talk a fine game, when it comes to action on supporting what they, themselves, describe as the “backbone of the economy” our legislators seem happier to play possum. HuffingtonPost.com
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The President’s sharp words against those investment companies—he called them ‘speculators’—who refused his 30-cents on the dollar ROI deal to keep Chrysler out of bankruptcy court, have been aired far and wide. Now, you should get the other side of the argument. In an open letter to the nation, Clifford S. Asness, the Managing and Founding Principal at AQR Capital Management, LLC, answers the President. His letter, obtained from Zero Hedge, is reproduced here in its entirety.
Unafraid In GreenwichConnecticut Clifford S. Asness Managing and Founding Principal AQR Capital Management, LLC The President has just harshly castigated hedge fund managers for being unwilling to take his administration’s bid for their Chrysler bonds. He called them “speculators” who were “refusing to sacrifice like everyone else” and who... [Read Full Article]
Chrysler is entering bankruptcy, which—along with its wayward big brother GM—it should have done a long time and billions of wasted dollars ago. That is the good news. The bad news, and a troubling glimpse into how the President sees capitalists, is that he has decided that those investors who didn’t like the deal he and his car czar were offering are nothing more than speculators. Here is how Politico.com described it:
The White House had offered Chrysler’s lenders a deal to take roughly 33 cents on a dollar to write off the company’s debt. Most took the deal, but a few holdouts said it wasn’t good enough — and their refusal to go along pushed the company into bankruptcy. Now Obama is calling them out. “A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none,” O... [Read Full Article]
Tell me, when was the last time an executive for a private firm, someone not accused of any wrongdoing or convicted of any crime, was forced out of their position by the US government? That is what happened over the weekend at General Motors. Rick Wagoner was forced out by the Obama Administration. By all accounts, Wagoner is a well-respected, hard-working sort who has been working to set a new course for the company. The GM Board of Directors had given him their full confidence and they had gone along with some rather radical changes he made in a company where labor has long had an adversarial relationship with management. Now he is out and the signature on his pink slip is Barack Obama's.
True, Wagoner is not the first CEO to lose his job after taking part in a government bailout. The CEOs of mortgage giants Fannie Mae and Freddie Mac were forced out after the government took over the companies in the fall. Robert Willumstad, the former CEO of American International Group Inc., left the compa... [Read Full Article]
I will give them credit—they cut their white collar payroll, managed to get rid of that union job bank and they came up with restructuring plans—but after doing all of that, they are back with their hands out. Previously, General Motors and Chrysler received $17.4 billion; but now, as part of their restructuring plans, they are looking for a total of $34 billion to stay out of bankruptcy.
What Do They Want, What Will They Give?
GM is seeking $30 billion from the Treasury, which is up from previous estimates of $18 billion and includes $13.4 billion the company has already received. GM claims that it could run out of money by March without the additional funds, needing $2 billion next month and another $2.6 billion in April to keep going. Chrysler is looking for a mere $5 billion to keep going.
What are they willing to do to get this money? The automakers say they are ready to trim the proverbial fat with plans that call for thousands of additio... [Read Full Article]
What was one of the first things you mother taught you about getting along with people? You say “thank you” when you receive something. It’s nice and polite and it will get you through that pesky post-gift-giving moment with almost preternatural smoothness. A nice “thank you” is both expected and appreciated. Or so thought the folks at Chrysler.
Not All Gifts Require a Thank You
I am sure you recall the auto bailout, where each of the Big Three received billions of dollars to bridge the gap between their business practices and reality (and as we’ve seen from subsequent requests for money, reality is still rearing its ugly head). Chrysler, having received its billions, decided to follow Mom’s advice and thank the American people for the money. For many—enough to remove the entire matter from the Chrysler Blog—it as akin to paying at a toll booth and having the attendant, who would have cheerfully sent the State Police... [Read Full Article]
After that first, humiliating round before Congress, it looks like the automakers have learned a few things: Ford's CEO Alan Mulally promises to work for $1 per year if Ford has to accept government money. What's more, the Ford plan cancels all management employees' 2009 bonuses and merit pay increases for its North American salaried employees. The company also plans to sell its fleet of five corporate aircraft. Similar steps are also promised for the other two automakers. Mulally and GM CEO Rick Wagoner have also announced that they will return to Washington by car this time, rather than by private jet. Chrysler CEO Robert Nardelli will also take a pass on the corporate jet, but his travel plans are secret due to security concerns.
The companies are also looking to swap debt for equity as well as to off-load brands and subsidiaries. GM, for example, is looking at the sale of... [Read Full Article]
There was a spectacle this week on Capital Hill, a trio of poor, downtrodden CEOs—just regular Joes, if you will—coming to plead their case for bailout funds before Senator Chris Dodd and the Senate Banking Committee he chairs. With their companies hemorrhaging cash at a rate of billions per month, Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler ominously warned the committee members that they were likely to go out of business if the taxpayers don't give them $25 billion. “We want to continue the vital role we've played for Americans for the past 100 years, but we can't do it alone," said Wagoner.
It was all very touching, all quite moving, or it would have been if the CEOs had not just flown in on the luxury corporate jets maintained and paid for by their cash-poor companies. According to Ford's Mulally, he has reduced his workforce by 51,000 people and closed 17 plants. Notice the conspicuous absence of Ford's fleet of eight corporate jets from that... [Read Full Article]