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Tuesday, March 31, 2009

GM Is now Obama's Problem

Now the GM is a wholly owned subsidiary of the Obama White House, some are saying the company's turnaround, or collapse, will reflect directly on the President. I'm not sure Mr. Teflon will see much of that stick to him. Much like the 30% drop in the stock market since he took office, he'll deflect criticism to those who came before him.

With GM though, Mr. Obama has put himself into a tighter spot than the economy in general. As he mentioned while pushing Rick Wagoner under the bus, there is a lot more restructuring to do at GM.

The problem is now the restructuring rests mainly with two groups, bondholders who are carrying billions in GM debt, and the UAW. Both are suspicious that the other isn't going far enough to help the company survive, and both are playing chicken with each other.

The major problem bondholders have is the UAW's unwillingness to see 50-60% of GM's outstanding debt to the UAW retirement fund be paid in stock. That would cause an immediate dilution of shareholder value, but at the same time would eliminate tens of billions of liabilities off the company books. Bondholders don't want to renegotiate their debt to better terms until they see that debt gone and feel GM can actually do something towards paying them off.

The UAW, on the other hand, doesn't want the stock, since right now it would be an embarrasement on a penny exchange. They want bondholders to renegotiate the terms of the debt, and even forgive billions of it to bolster share value before they even discuss such an idea as stocks to the retirement fund.

Since neither side seems willing to move on those two problems, which happen to be the two biggest impediments to making the company solvent, now Chapter 11 is back on the table. That would end up costing both sides much more than what Wagoner proposed, and they rejected.

This creates a tightrope for Obama's group. They've already said they are working on a way to "cushion" a chapter 11 filing. The question is for who? If it's the bondholders the UAW ends up a shell of itself, but the markets might react favorably to something from the White House. If it's the UAW the union vote stays strong, but they risk a huge tank in the markets as other institutional investors realize the White House cares little for them, or the billions in market capital they provide.

Welcome to the real world, Mr. Obama.

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Monday, March 30, 2009

Sweating With The Socialists

Too damn funny! Don't know who did it, but they should win some kind of award.

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Thursday, March 26, 2009

Mind Your Helm

Many years ago I learned how to steer a ship. Not a boat, a ship. And I didn't get to cut my teeth on a small one, instead it was 54,000 tons of prime US steel named USS New Jersey.

I got that experience at probably the worst time you could learn to drive something large and lumbering, when it was moving slowly, and had a lot of restrictions on what you could do.

At 25 knots New Jersey steered like a dream, 15 degrees of rudder was probably too much for most turns. But try driving something almost 900 feet long, drawing 30 some feet of water at 5 knots, and all of the sudden 15 degrees of rudder was needed just to correct your course. Turn off a few of the propellers to save fuel and then all of the sudden maybe 20 degrees or more was needed.

Where am I going with this? Our President, of course. It seems that like me, he didn't start to learn to steer on anything small, say a Senate Committee or governorship. He decided he wanted to drive a big ship right away (I didn't get a choice). Much like my early turns on the helm, the President seems to be given to over use of his rudder, sending things turning wildly. The problem is that it takes much more work to correct for oversteering than the initial mistake.

I was lucky, I was surrounded by results oriented people as I learned to drive a big ship. Their goal was to teach me how to do it right, and safely. Unfortunately for Mr. Obama, he's surrounded himself with agenda oriented people, who don't seem to care about the results, as long as they include their agenda item.

I was lucky to have people who would tell me to check my rudder, and mind my helm when I started drifting. Mr. Obama seems to have people that don't really care how far he swings the ship, as long as they hit their course eventually.

I do, however, understand the politics of what they are doing. There is a reason that a 3.6 trillion dollar budget was tossed out their for this year. Trying to push his expansion of government next year, with primaries for everyone in the House and a third of the Senate wouldn't work. They'd get eaten alive. So do it now, while you can. And, because once a social program is started it's nearly impossible to kill, better to try starting them when you have the best chance.

I will say this, I never had enough balls to tell the Officer of the Deck my rudder was at 15 degrees when it was at 25. Why? He had a repeater in front of him and could see what I was doing. The American people have one too, the press, the CBO, OMB, and they've all said we will be running huge deficits, TRILLION DOLLAR plus deficits most of the next 10 years. Yet Mr. Obama had the balls to tell us all on TV and in his online chat today that his budget gets us back to fiscal responsibility. When? Sorry, Mr. President, you are a bald faced liar, your own 10 year budget plan proves it.

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Thursday, March 19, 2009

Amateur Hour Now Four Years Long!

Used to be that "Amateur Hour" was only an hour (actually, 30 minutes, except one season). Now, two months into the Obama administration, we can see that it will be lasting a lot longer this time.

Whether it's the slew of cabinet nominees having to withdrawl because of tax problems, investigations or stupid comments, or the reversal of his own lobbyist bans to get people into positions he wants, Mr. Obama has proven that he and his staff weren't ready for the big stage quite yet.

Many folks on the right asked last year "what has this guy done to prove he's a leader", and were drown out by shouts of "hope and change". Now it's becoming evident to just about everyone the answer was nothing, and that he's not up to the task of leading.

Hell, he's proven that he's not even up to the task of making comments with a foriegn leader if the teleprompter isn't running correctly. In fact, he just reads what ever they put on the thing, as though he has no idea what he's supposed to be talking about. Wouldn't it be a hoot if one of the guys operating it decided to put up Mary Had A Little Lamb instead of a speech. I wonder how long he'd be reciting it before he realized what was up?

While many of us laughed during the Clinton years about the tail wagging the dog, I can't remember articles in the NY Times about Wednesday night meetings to discuss polls and how to shape the message around them.

Say what you will about the last administration, but one thing was always true for eight years, press conferences were treated as serious discussions of issues, and many time even uncomfortable for them. Contrast this with the new administration, where they seem to be an outlet for Robert Gibbs to display his sarcasm instead of a grasp of issues. The more I see of Gibbs the more I believe he got a lot of wedgies as a kid, and is using his press secretary position to make up for it.

Then of course we get the AIG debacle. No one is happy to see 165 million in bonuses paid out to a company getting hundreds of billions in taxpayer backing. At the same time the outrage of Congressional leaders and the White House now seems funny.

Now that we know that Harry Reid and Nancy Pelosi had language to prevent them removed from the stimulus bill, and Christopher Dodd (largest congressional AIG donation recipient) wrote language into the bill that made them legal their fake indigation and suprise is laughable.

And that the President (#2 AIG donation recipient) knew about them; and the legal ramifications of not paying them; before they hit the press makes his outrage just as laughable.

Obama, Harry Reid and Nancy Pelosi have about 5 months until the 2010 election season starts heating up. In that time they have to stop looking so much like Moe Larry and Curly or they may find out what the GOP did in 2006, that the electorate doesn't like gridlock, but they like incompetent single party leadership even less.

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Sunday, March 08, 2009

I Am Alive

Just thought I'd let everyone know I'm still alive. Political burnout, a cool grandkid, and a horrible work schedule have conspired to keep me from blogging. However, they haven't killed me. In fact, the grandson is probably why I'm still sane.
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