Nationalism – Banks, Cars, Energy, Healthcare….and your credit card?

Bumped and Updated (and a bit reformatted):

And even more:  Doug (in the comment section0 brings up the AIG contract issue; like it or not, they were legally executed contracts before taxpayer money was given to AIG.  So Mike, once again we see a politically oriented Government trying to bully the idea of contracts as we see here with a politically correct Attorney General from CT but can’t cite the law:

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A comment (edited due to family content) from one of my favorite reporters (Michael Kitch, who I believe is wrong most of the time, but it is fun to tweak from time to time):

"I can’t resist: without government, there would be no f*****g MARKET. What is it about contracts you don’t understand?"

First markets developed BEFORE there was government – it was called barter!  Crude, with no use of money, laws or contracts – but it worked:  "Hey, I’ll trade some of this animal meat for some new arrowheads.  oh, here’s some beer for a stool.  Anybody got some cured animal skins?". 

Crude – but the definition of a marketplace is simply a series of transactions between individuals offering a product or service and individuals offering remuneration of some sort.  Early on – barter  but typically currency is used as an intermediary.  With more complex transactions, contracts outline the details. Although many proceed upon one’s honor but enforced by Government via laws and regulations to make sure the terms of contracts are carried out.

Problem is, Michael has a big problem – what happens when Government is the one that is ignoring long standing contracts and is politically "muscling" the transaction partipants in order to do social engineering and produce an economic outcome that it wants?  Larry Kudlow’s observation:

What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.

Huh?  Government being even-handed or politically motivated???  Look what happened WITH Government?

UAW              $10 Billion – 40% ownership

Bondholders   $27 Billion – 10% ownership

US                 $26 Billion – 50% ownership

What happened to the contracts underlying these transactions? Only in a socialist / Marxist leaning Government can those debt ownership ratios result in outright ownership percentages.  I am just waiting for the bondholders to start the lawsuits, as Obama is screwing them badly.

Such is the even-handed process by the Obama government that Michael believes is the savior to society at large – the "capitalists" that kept GM going for a long time before our taxpayer money did just got a huge haircut -> down to their noses.  Given the current clime, it is fair to say that the means of production is effectively owned by the Government and the workers.  Given that unions are such boot-on-ground supporters of all Democrats, and Dems for unions, it may be one in the same.

Since Bob Bestani, now writing updates for the ‘Grok, more experience in this than I in this area, I will ask him to pontificate.  I’ll even given Michael a chance to be a bit more cogent as well – guest post is yours if you want it, Mike!

Oh, GM’s take on this?  From their Presser:

"As a result of its ownership of GM common stock, the U.S. Treasury will be able to elect all of our directors and to control the vote on substantially all matters brought for a stockholder vote. In addition, through its stockholder voting rights and election of directors, and its role as a significant lender to us, the U.S. Treasury will be able to exercise significant influence and control over our business if it elects to do so."

Socialism - when the units of production are owned by the Government.  Marxism - when the units of production are owned by the workers. Capitalism - when the units of production are owned by private entities

Meatloaf: "Two out of three ain’t bad" (if you are Obama)

To paraphrase Ben Franklin ("A republic, if you can keep it): make a profit, if you earn it.

Tigerhawk adds this:

“The federal government and the workers will own one of our largest and most storied industrial companies. That has never really happened before. In other words, the governmental restructuring of General Motors is a social experiment that will shortly teach us two things: Whether businesses can be managed to a profit when in the hands of bureaucrats and union officials, and whether American consumers will trust such people to stand by the products that they make. I, for one, am eager to learn the answer, because it will tell us what we should and should not do about health care.”

Me?  I own a GMC Suburban (10 years old) and a Saab 9-5 (4 years old).  They will be the last GM vehicles I will ever purchase.

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This has fraud written ALL over it – but the comment there is PRICELESS!

We can cue up the countdown to Glenn Beck musing something along the lines of:

• "Obama: He’s everywhere you don’t want him to be," or
• "There are some things in life you can’t buy. For everything else, there’s Obama."  (Dibs on those, GB.)

Let’s add:

• "Don’t leave home without him!"  
• "Use him at the grocery store and the gas station; all the little things in life".
• "Who’s in YOUR wallet?
• "And give cash back(to the Fed) with every purchase!"

 

Oy vay!  Yeah, I am talking about this:

Since apparently everything in America is going into the toilet except the public’s faith in Barack Obama, it seems that the way to fix everything in America is to entrust it to Barack Obama.  The issues on the table for greater government involvement include: student lending, the car companies, car warranties, pensions, health care, banks, etc — the list goes on. I mean, really, what’s the White House going to back next, your credit card? Maybe, says Slate’s Chris Beam.

Entrust it to Barack Obama? 

Are you kidding me?  As much as I like Reagan, there is no way I’d entrust ANYTHING like this to the President of the United States.  Giving out credit cards being a proper role of government?  They can’t even manage the ones they give to government employees!

On the list of villains of the economic crisis, credit card companies are rising faster than their own rates. So after President Obama met Thursday with CEOs from Visa, Mastercard, and American Express, he stated his disapproval loud and clear. "The days of any-time, any-reason rate hikes and late-fee traps have to end," he said. Meanwhile, the House passed a "Credit Cardholders’ Bill of Rights" that would limit unfair lending practices. The Senate version is even harsher—it would prohibit interest rate hikes for no reason and would put restrictions on marketing cards to people under 21. There may even be a provision for hanging CEOs by their thumbs.

Yes sir, the Nagger -in-Chief nags again!  Look, what right does government have in yelling at these companies.

And for all of you out there ready to treat me to the "what about the poor consumer" bit, remember this:  a pair of scissors, trash, phone, "goodbye!" If somebody CONTINUES to use a credit card BEYOND what they can afford, what’s wrong in demanding responsibility from that person?

Look, I keep hearing about people having medical emergencies and maxing out cards; been there, done that.  That doesn’t take away that it is the responsibility of person holding the card to make a decision: yes or no.  Yes, one can Hope that the future allows one to play catch up.  That said, it is NOT the responsibility of government to do this!

Wait, what are we saying? Surely we don’t want the government lending directly to individuals. That way lies socialism. …

 

OK, this is good – a recognition that something may be amiss with what has made this country great BEFORE we all decided that our problems, financial and otherwise, are the responsibility of someone else.  Before we all decided that instead of the more intellectually and spiritual demanding process of demanding more from ourselves, we just chuck it all over to Big Government.  After all, Obama, he seems to be such a nice fellow….

…and he did promise that somebody else was going to pay my mortgage (still waiting on that check, but he said it, so I’m waiting…..what’s that about "promises come with expiration dates?".

…One way to attract borrowers would be to link the credit cards to a cause—like an affinity program, but for government. Every time you buy something, a small percentage would go to wind-farm construction, say, or clean-coal research, or school computers. The government could also do something creative like dipping into the Social Security money pool. If it lent that money to creditworthy Americans, it could make a killing.

Can I make my affinity an A1-A2 Abrams Battle Tank?   No so hot on the mileage, but I hear that nobody goes "road rage" on you when you’re in the driver’s seat – or the gunner’s seat!  A couple of HE rounds and no more traffic too!

There is a risk that a public credit card would undercut the competition. It would by definition have a triple-A rating, since the government could guarantee its own loans, while other lenders would be in the low single-As at best.

Really?  What makes you think that Obama doesn’t want to do that – after all, that is the aim with his Universal Healthcare system….that pesky capitalistic system; such a nuisance…

The state therefore couldn’t be too cavalier about wooing customers from other companies. It would also have to avoid freeloaders who don’t intend to pay back their government-backed loans.

But a little competition would be a good thing, since it would force companies to re-examine their lending practices. And instead of straight regulation, this would be—you listening, Newt?—a market-based solution.

Like many hairbrained journalists, this guy has to go back to EC 101 – once government enters a market, it is, by definition, no longer free.  Besides, this comment from the article says it all – priceless:

How long would it be until Barney Frank began pressuring for a rewrite of the credit scoring methodology so that more people could qualify for the card?

Now you want to talk about this being a "free market" solution?  Only to those in goverment that also work for Obama – you know, the ones that keep forgetting to pay their taxes?  Betcha they’ll conveniently forget to pay the monthly statements too….