October 10, 2011

Bloomberg Columnist: Obama Was ‘Conciliator,’ OWS May Provide ‘Inoculation’ Against Bad Economy

Yesterday, in a different post about long-term unemployment, I wrote: “Of all the reality-denying aspects of Obama administration press coverage, the usually implicit but occasionally explicit assertion that he and his people are just helpless bystanders in an economic calamiity is easily among the most annoying.”

Bloomberg’s Mike Dorning triggered the annoyance meter today with an “analysis” contending that President Obama’s move from being a “conciliator” (quoting an alleged “expert”) to supporting “populist causes” and sympathizing with the anti-capitalist Occupy Wall Street assemblage “may provide some inoculation” against the continuing bad economy — as if Obama, Nancy Pelosi, Harry Reid, and the their party bear no conceivable responsibility for current economic conditions. Here are the first seven paragraphs of Dorning’s dreck (bolds and numbered tags are mine):

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Rahm’s Rip at Romney Reveals Deception — And a Detroit News Reporter’s Ignorance

government_motorsChicago Mayor and former Obama chief of staff Rahm Emanuel went after GOP presidential contender Mitt Romney yesterday over the 2008-2009 state of the auto industry. Emanuel, as paraphrased by the Associated Press, believes that “had Republican candidate Mitt Romney been president the nation would no longer have an auto industry” — though last time I checked, Ford Motor Company, which did not accept federal government bailout money, is still headquartered in Dearborn, Michigan, which is still in the USA.

In his coverage of Emanuel’s comments, the Detroit News’s Dave Shepardson — who infamously and falsely claimed in February 2010 that Toyota executives “bragged” and “boasted” about saving money on safety recalls when Japanese culture deeply frowns on the practice to the point of shunning people who engage in it — headlined Emanuel’s “no industry” howler, and committed several factual errors. In addition, he missed a quite relevant and critical March 2009 episode of support from Romney — for better or worse (readers can decide) — when President Obama engineered the ouster of General Motors’ CEO. Here are excerpts from Shepardson’s shilling:

Chicago mayor: No auto industry if Romney had been president

In an interview with NBC’s “Meet the Press,” Emanuel, a former Chicago congressman who served as President Obama’s first chief of staff, criticized former Massachusetts Gov. Mitt Romney’s approach to the auto industry.

“There would not be an auto industry if Mitt Romney was president. He would have said, ‘Let it go bankrupt,’” Emanuel said, arguing the nation is a “stronger country” after the turnaround of the U.S. auto industry.

President George W. Bush gave General Motors Co., Chrysler Group LLC and their finance companies a $25 billion bailout.

The Obama administration added another $60 billion to the auto industry bailout and put GM and Chrysler through government-sponsored bankruptcies in mid-2009 and put the companies under new management.

Emanuel touted Obama’s restructuring of the auto industry. “He entered a financial situation that had frozen up to the point where it was near collapse and an auto industry on the door of bankruptcy,” Emanuel said. “At every level, the auto industry that was first started here in the United States, is stronger and better and more prepared for the future than it was when he was in office.”

… The Romney campaign rejected Emanuel’s comments.

“Mitt Romney argued that instead of a bailout, we should let the car companies go through a restructuring under the protection of the bankruptcy laws. This is the course the Obama administration eventually followed. If they had done it sooner, as Mitt Romney suggested, the taxpayers would have saved a lot of money,” Romney spokesman Ryan Williams said Sunday.

Romney told The Detroit News last month that he was right to call for managed bankruptcy filings of GM and Chrysler in late 2008 — and he pledged a speedy sell off of the government’s remaining stakes in GM and Ally Financial Inc.

… In August, the Treasury upped its estimate of predicted losses on the $85 billion auto bailout to $14.3 billion. Since then, GM’s stock has fallen sharply — and the government could lose $15 billion or more on its GM bailout.

Shepardson’s three key errors are as follows:

  1. His $25 billion figure for Bush bailouts includes $17.4 billion which went to General Motors and Chrysler, another $6 billion for GMAC, and, apparently, some generous upward rounding. But GMAC got TARP bailout money because “it became a key player in subprime mortgage lending and other risky finance that fueled the financial crisis.” An Inspector General’s reported hotly disputed the notion that the GMAC bailout had any the auto industry at all, claiming, in Fox News’s words, that “there was no evidence that GMAC’s failure would upend the financial system, or that it was ‘too big to fail.’”
  2. The government “aid” to GM and Chrysler also included what probably amounted to several billion in “free capital” delivered to the post-bankruptcy versions of each company via the ripping off of certain secured creditors in Chrysler’s case, and unsecured bondholders in GM’s case.
  3. While overstating the Bush element of the bailout money, Shepardson understated the current estimated losses to the government in the GM bailout. It was $14.3 billion as of June 30, but since then (through Friday’s close), GM’s stock has lost over $8 per share, falling from over $30 to about $22. That’s less than two-thirds of its November 2010 initial public offering debut closing price of $34.19. The government, which still owns 500 million GM shares, has lost about $4 billion more since June 30, bring the current estimated loss to $18.3 billion — about 20% “more” than Shepardson’s “$15 billion or more.”

Emanuel conveniently ignored — but Shepardson shouldn’t have — the fact that when Barack Obama engineered the boardroom coup which ousted CEO Rick Wagoner in March 2009, Mitt Romney forcefully spoke out on CNN in favor of Obama’s actions. The video is no longer available, but here is a saved picture of CNN’s summary of what transpired:

RomneyPraisesBHOonGM0309

But of course, reporting Romney’s support for Obama’s actions would have undermined Emanuel’s core contention that Mitt Romney wasn’t interested in seeing action taken to “save” General Motors. It’s to be expected that craven politicians like Emanuel would try to get away with saying that, but it’s inexcusable that David Shepardson let him.

Cross-posted at NewsBusters.org.

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BizzyBlog Update: A transcript of Romney’s remarks to CNN in March 2009 is here.

WSJ: ‘The Solyndra Economy’

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 9:14 am

My Sunday Pajamas Media column on Solyndra dealt with the need for a full-bore forensic audit, the importance of holding those involved accountable, and the general principle that lending money to start-up and early-stage companies is something banks don’t do — or at least wouldn’t do without loan guarantees from the government backing them up.

Because there’s only so much you can cover in one column, I steered clear of the fundamental and pervasive problem with government involvement in investment decisions, namely that personal and political decisions inevitably end up trumping financial sense. This is the essence of “crony capitalism.” Capital is (mis)allocated not to companies with the best chances of success (always subjective but still able to be evaluated by largely objective and mostly measurable standards), but to those with the right political connections, or whose enterprises happen to fit a current political agenda.

The Wall Street Journal went after this administration’s especially aggressive and problematic strain of crony capitalism in its lead editorial today (bolds are mine):

The Solyndra Economy
Administration emails reveal the reality of politicized investing.

(This is) America’s Solyndra economy, as the White House understands it: Washington allocates capital, and taxpayers pick up the tab if those choices go bust. Through this political lens, the August bankruptcy of the Fremont, Calif. company was a necessary casualty in the greater campaign to steer the U.S. economy toward Mr. Obama’s noble goals. Private competition that winnows out losers is so yesterday.

As it happens, we’re getting a look at what this world of political investment entails thanks to Administration emails released last week by House Democrats on the Subcommittee on Oversight and Investigations and the White House. Democrats say the emails reveal a “vigorous internal debate” about the Solyndra deal and dispel accusations of crony capitalism.

The opposite is closer to reality. Solyndra received federal help in 2009 and never turned a profit. In March 2010, PriceWaterhouseCoopers raised questions about the company’s solvency. The next month, a White House Office of Management and Budget staffer worried that the Department of Energy “has one loan to monitor and they seem completely oblivious.” Another said it was “terrifying” to consider that some of DOE’s next projects would make Solyndra look “better.”

Insiders raised alarms, too. …

… Here’s more “reality.” On August 20, 2009, a DOE staffer asked “how can we advance a project . . . that generates a working capital shortfall of $50 [million] when working capital assumptions are entered into the model?,” adding “it also simply won’t stand up to review by oversight bodies.” Solyndra’s federal loan guarantee closed the following month.

Then there are the still-hazy insider dealings, another inevitable feature of government-led investment. An Obama fundraiser, Steven Spinner, took an advisory role at DOE and pushed for the loan to proceed, even as his wife’s law firm advised on the same deal. (DOE and the couple deny any undue influence.) Earlier this year, DOE reworked the Solyndra loan guarantee as the company floundered and put private creditors ahead of taxpayers. This newspaper reported Friday that Treasury raised alarms about the legality of such a move, although it’s unclear when that happened.

Brad Jones of Redpoint Ventures got to the heart of the Solyndra economy in a December 2009 email to then-National Economic Council director Larry Summers: “The allocation of spending to clean energy is haphazard; the government is just not well equipped to decide which companies should get the money and how much . . . One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”

Which is precisely the point. The emerging sophisticated defense of Solyndra is Mr. Obama’s suggestion that if China subsidizes its industries “of the future,” then we must too. But in a free-market economy, which America used to be, private investors decide which industries will succeed in the future, and bet their own money on it. The proper role for government is to support basic research, not commercial ventures that become exercises in taxpayer risk but private reward.

When government takes $535 million and invests in a loser, it not only wastes taxpayer money but it also denies that capital to some other project in the private economy that might have succeeded. The Solyndra emails show how ill-equipped government is to predict the industries of the present, much less the future.

With government picking the winners and losers, the winning percentage is much lower, the “wins” aren’t as big when they do happen, and the losers, well, they’re real humdingers.

There’s an additional negative factor which may be at least as if not more important when government takes over capital allocation: Entrepreneurs don’t get the benefit of the expertise many private investors bring to bear. If private and government investment is involved, entrepreneurs are less likely to heed the private experts. Think about how venture capitalists assisted Steve Jobs and Steve Wozniak, especially during Apple’s very early years (which both readily acknowledged). Now imagine if Apple had been largely funded by government “investment.” Would headstrong guys like Jobs and Wozniak have still listened to the VCs’ counsel? Of course we don’t know, but given the mercurial personalities of many of history’s greatest entrepreneurs, many of them wouldn’t, to their ultimate detriment.

Or worse, would government apparatchiks have steered Apple differently — to name one possibility, to a low-cost, low-price strategy to compete directly with Microsoft instead of concentrating on being “insanely great”?

When government ineffectively picks winners and losers — as it inevitably and always will in comparison to the private sector — the economy doesn’t grow as fast. Sort of like now. I don’t believe that any of the smarties in this administration, the Democratic Party in general, or the RINO element of the Republican Party (think Ohio’s Third Frontier) will ever make the correlation — which is why they all must be marginalized out of political power.

Monday Off-Topic (Moderated) Open Thread (101011)

Filed under: Lucid Links — Tom @ 8:25 am

Rules are here. Possible comment fodder will follow shortly. Other topics are also fair game.

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“Arab Spring” Update, via Spengler at Pajamas Media“Egypt descends into chaos.” Nobody saw this coming (/sarc).

Michael Walsh at the New York Post (HT Instapundit) — “(Herman) Cain’s strengths? His simple “9-9-9” economic platform (a 9 percent business tax, income tax and national sales tax), an affability that coats an unmistakable inner strength and a sunny disposition that projects self-confidence without arrogance.” In other words, it’s like he’s the anti-Obama. And yes, even if Cain doesn’t get the nomination, he is “forcing his rivals to get better.” That’s what healthy competition does.

Ridiculous assertion (is there any other kind?) by Paul Krugman (HT NewsBusters): “… there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.” Definitive counterpoint (in addition to pics at the NB post) from Doug Ross: “15 Photos from #OccupyWallStreet you’ll never see in legacy media.”

Not that yours truly considers him a paragon of business practices (see here), but interesting nonetheless, via Larry Kudlow: “Jack Welch: I Want to Take This Administration Out.” I don’t think he means “for a drink.”

At the New York Times (yeah, I’m surprised too) — “An Ugly Forecast That’s Been Right Before.” Specifically, “Are we heading into another recession now? Again, the consensus says we’re not. But at least one organization with an exceptionally good track record says another recession may already be here.”

Belladonna Rogers at the PJ Tatler: “Noted Scholar Asks (about) Yemeni Nobel Peace Laureate & Al Qaeda Links”

One example of why fellow TIB broadcaster and Weapons of Mass Discussion blogger Matt Hurley is not a big fan (that’s understating it) of straw polls: “In a press conference following the announcement of the straw poll results at the annual Washington gathering of social conservatives, Family Research Council President Tony Perkins all but dismissed the results as irrelevant, citing 600 people who registered Saturday morning and, he said, ‘left after Ron Paul spoke.’” Given that only about 1,900 straw ballots were cast, Paul, who “won” with 37%, would have polled in single digits if it weren’t for the Saturday show-ups.

One example of why I still like straw polls as long as they deliver results favorable to people I like (:–>): “Cain tops MLC (Midwestern Leadership Conference) straw poll with more than 50%.” Bachman, Perry, and Romney, and Paul barely broke double digits. Rick Perry had 4%. No evidence of Paul-like straw ballot-stuffing has been noted.

Positivity: At 102, therapist is too busy to stop working

Filed under: Positivity — Tom @ 5:56 am

From Brentwood, California (HT Daryn Kagan):

Hedda Bolgar thrives with grace, beauty and, just maybe, a little magic

October 2, 2011

Lately I’ve been wading into streams of mail from readers approaching death. Some are fighting it, some are afraid, some are ready to go.

And then I heard from two readers with an update on Hedda Bolgar. I wrote about the Brentwood therapist three Septembers ago, when she was 99 and still seeing clients. Bolgar, now 102 and still on the job, was just honored in Washington, D.C., where she received one of two Outstanding Oldest Worker Awards given this year by the organization Experience Works. She shared the spotlight with a 101-year-old man who’s a custodian at a Maryland post office.

When I called Bolgar’s home number, she picked up right away, sounding fresh as a daisy even though she’d just gotten home from D.C. Her calendar was a bit busy, with clients coming in four days a week. And Bolgar is preparing a spring course she’ll teach on the trauma of forced migration, an issue she believes the psychoanalytic community has failed to adequately address.

But she managed to fit me into a small hole in her calendar.

Bolgar, who fled Europe when Hitler entered Austria, was dressed smartly and looked beautiful, and not a day older than she did on my visit in 2008. Back then, she told me matter-of-factly, “I’ve lived through revolutions, famine, war. Things like that.” She also said she was “put on this earth to accomplish certain things” and “I’m so far behind, I can never die.”

Not much has changed. …

Go here for the rest of the story.