Category Archives: Banking

Guest Post: Bob says I ask you, Senator Specter–DID YOU KNOW?

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Arlen Specter (D-PA) is the correspondent’s senior United States Senator from Pennsylvania.

Dear Senator Specter:

I will make this as short as possible.

As of Monday, May 24, just 6 days ago, the federal government was supposed to get 50% of General Motors new stock, the UAW 39%, the bondholders 10% and the original stockholders the remaining 1%. (I bought GM stock based on that.)

This was sure never to fly as the bondholders would expect the courts to give them more so it was a “deal” designed to ensure bankruptcy.

On Friday, the deal suddenly changed. Now the UAW gets 17.5%, the Feds get 72.5%, and the bondholders still get only 10%, albeit with warrants to buy 15% more stock. Common stock becomes pure trash.

Why did the UAW ownership drop? Did the UAW agree because they thought that the additional money would go to the bondholders, potentially averting a bankruptcy that destroys the value of their own common stock?

I ask you, Senator Specter: DO YOU KNOW?

If you do not know. do you know anyone who does know? There hasn’t been a word breathed in the press, so I assume the media must not know (or doesn’t care since a bankruptcy would sell more copy. Even the Wall Street Journal thinks the government “sweetened the offer” to the bondholders (at the same time the government upped its own holding by almost a third, a little fact that keeps slipping through the cracks.)

If you do not know, why is this bankruptcy allowed to proceed without a timeout for hearings, so the executive branch can explain under oath what the hell they are doing to the American people?

A bankruptcy will insure that the GM stock in millions of 401Ks (actually already “201Ks” or even “101Ks” ) around the country can NEVER recover their value. Without a bankruptcy, they could eventually recover.

This government takeover leaves millions of people’s retirement prospects destroyed, including many who are already retired and unable to start over. That includes the UAW members who accepted a smaller share of the new company plus non-union GM employees, dealer employees, in addition to mutual funds that are held by people all over the country. A large number of Pennsylvania retirees and stockholders are your own constituents and voters.

I ask you, Senator Specter: What is the benefit to destroying the common stock? Why destroy business ownership if the deals in place let the GM stock in those 401Ks recover?

Is it the business of this government and the political party you joined to insure that people can never retire?

I ask you, Senator Specter: What will the impact of the bankruptcy be on the healthcare programs for GM employees and retirees? We are not just talking UAW line workers, but all GM employees, union, non-union, and professional. Is it the business of this government and the political party you joined to make sure people have poor healthcare?

Or is it the intention of this government and the political party you joined to build demand for nationalized healthcare!

I ask you, Senator Specter: Wouldn’t such an approach be fraudulent?

Ralph Nader, whom I historically have despised for the fraud he perpetrated with Unsafe at Any Speed, published an editorial in Wall Street Journal on Friday. I laud him for raising the issues and for pointing out that IT IS NOT TOO LATE TO AVOID THE BANKRUPTCY OF GENERAL MOTORS.

It will take more than that lone voice in the wilderness.

We need a major voice in the Senate to call for a time out and for hearings to that the American Public can understand what is being done in their name. YOU MUST DO THIS TODAY.

Thank you.

(signed)
Bob Post, registered voter

Footnote:
Arlen Specter (previously D-, then R-, and now D-PA) is the correspondent’s senior United States Senator from Pennsylvania. Senator Specter had been a member of the Democratic Party before switching to the Republicans to win a campaign for district attorney. Elected to the Senate in 1980, Specter rejoined the Democratic Party this year when he discovered he would lose his upcoming Republican primary.

Why Does Obama Want to Bankrupt Me?

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The pundits all expect that General Motors will file for bankruptcy protection on Monday.

Why?

We (used to) assume that people act to preserve their economic interests. Government acts to preserve the governors.

Given the horse puckey that has already gone on in the Wall Street-Pennsylvania Avenue continuum, I think I have it figured out why Barack Obama wants to bankrupt me:

  • 1. The Democrats need to generate demand for universal health care. Imagine that.
  • 2. Big bond holders bought credit swaps, the financial innovations that insure debt. Credit swaps pay off only in a formal default. Imagine that.
  • 3. Congress needs to shore up Social Security; all the calls to strip that pot of gold from their hands scared them silly. Imagine that.
  • 4. The Administration needs to be able to say, “See, this is what happens when you sell gas guzzlers; you go bankrupt.” They are already saying that about the Dodge Hemi. Imagine that.

1. One might think demand for universal health care would be, well, universal. Oddly it isn’t. That said, if half the country suddenly loses its benefits when the bankruptcy domino train rolls through, Democrats hope that changes. A GM bankruptcy almost guarantees that all those workers jump on the Medicare bandwagon.

2. Credit swaps pay off only in a formal default. Look at which Wall Street player whisper in President Obama’s ear to see how financial policy is formulated. A GM bankruptcy could guarantee the credit default.

3. Congress is not afraid that the Social Security will be bankrupt by 2050. Congress is afraid that the Social Security will become irrelevant within their elected terms. Congress absolutely cannot give up that “revenue” stream. A GM bankruptcy guarantees the Social Security revenue stream.

A GM bankruptcy means autoworkers now have 201Ks because the stock in their (former) 401Ks tanked. If GM shares are not wiped out and the company recovers, the autoworkers’ 401K’s will recover eventually. A GM bankruptcy means autoworkers and everyone else with GM stock in a retirement account is more than ever dependent on Social Security. I hope the UAW has finally discovered that a boughten politician doesn’t stay bought. And I hope that you, gentle reader, understand that bankrupting GM decimates my own personal retirement account.

4. Finally, the Administration needs to eliminate the popular gas guzzlers to push forward their Consumer’s Union vision of the perfect car: the 1985 Yugo. After all, it is not right to sell ten million popular cars and trucks. It is only right (should that be left?) to this Administration to sell about half a million Yugos. Or Fiats. A GM bankruptcy guarantees there won’t be anything else sold.

“Those cars are ugly,” Rufus said about the looming Chrysler-Fiat deal. “Americans may not remember all the problem cars Fiat made the last time they were sold here, but Americans don’t buy ugly.”

I dunno. The Democrats sold us first Al Gore and now Barack Obama so perhaps they can sell us Flea Flops, too. But I’ll betcha not one Congress Critter buys one. According to the Intert00b, Far Green darling, multi-millionaire Mr. Gore owns a giant 10 mpg Ford Expedition.

2008 Bail Out

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We’ve heard of the Year of the Rat. The ancient Chinese welcomed the Rat as their protector and source of material prosperity. 2008 was the Year of the Thieving Rats.

I don’t usually like to see a year end. I love sunsets because the sky colors light up my life at the end of the day but the end of 2008 just means I’m another year older and deeper in debt.

I started out the year with a Schwab One account and now have a Schwab .015 account.

Speaking of our financial institutions, we also started 2008 with a credit fiasco when some mope lifted Herself’s wallet in Philly; the credit card processing center kept sending substitute cards they wouldn’t let us activate.

“What are the last 4 digits on your card, Mr. Harper?”

5884.

“This looks like a replacement for a card that was lost. That’s your old card number.”

No, my old card ended in 3399.

“That’s not right. I show the old card as 5884 and the new card as 6091. Let me put you on hold.”
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“Thank you for holding. We value this opportunity to service your call. Please continue to hold for the next available advisor.”
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“The current hold time is approximately 8 minutes.”

At least they had a nice symphony playing as their hold music.

I found out later that, while I was on hold, the banks scored $700 Billion on my other credit card.

Start a spreadsheet. Right now. Immediately. List every credit or debit card you have. All of them. Include the card number, the institution name, the institution phone number, the full name in which it is issued. Include its expiration date. Make a column with every autopay you pay with each card. In a spreadsheet.

Did I mention to do it in a spreadsheet? Spreadsheets are cool.

Brett Favre, who is Herself’s favorite quarterback of all time, lost his last ever Championship hope with an illegal forward pass yesterday. On the other hand, the rest of the Jets did complete more lateral passes in a single play than anyone had seen in a professional football game this year. If they hadn’t been using their hands, we would have thought it was professional soccer.

I bought my first hard disk-based “Personal Video Recorder” this year so I could pause the news and Herself could pause fuhball.

Built in China, of course, so I did my best for the economy.

This may be the second most irritating product on the market. The operating system was designed to operate bulldozers instead of showstoppers and the remote control pretty much doesn’t. Despite that, I wanted to buy two of them and the seller shipped two of them but only one arrived. Somebody stole the second “in transit.” And now this brand is off the market. Maybe if I had ordered three or four…

Our neighbors decided a couple of years ago that my project to rebuild the North Puffin garage “disappointed” them so they sued us. In the process of beating on us with their lawyers they magically grew their postage stamp sized camp lot by a few feet to the South and a few more to the North.

We lost a few feet of land on our southern boundary and our other neighbors lost a couple of feet of land on their northern boundary but at least we have finished that episode and are done with them.

I bought General Motors stock earlier this year. Automakers and auto dealers immediately tanked. GM suspended its dividend; later Congress decided to suspend GM. I didn’t understand it then but I understand it now; I spent 100 hours and $200 selling a $1,700 used car for $1,400 this Fall.

Regular readers will recall that I had had a yen for a special plate and expected, when I bought this particular KeysCar, that I would get one. After all, DICK was available in Vermont.

Unfortunately, Vermont said I’m not a Dick.

I listed the car on the free craigslist classified advertising site. Three legitimate buyers called. I sold it to one of them for a stack of $100 bills. 15 Nigerians or Nigerian-trained operatives offered cashier’s checks. Every last one of those bounced.

Gasoline flirted with $5/gallon about 20 nanoseconds after I decided to start driving everywhere again. I have some small hope that the oil speculators who caused that spike (and have now taken it in the ear when oil dropped back to traditional levels) were the same financial wizards who robbed us in the mortgage markets.

Or maybe not. There was very little justice in 2008.

Denny Crane sure was something, though. All he asked for was my interest every week but he earned my respect and he got my vote.

The stories we Pollyannas tell ourselves are more optimistic than these. 2009 is going to better, right?

All One

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We who write editorials and particularly we who rant on blogs know in our hearts that we stand alone in the wilderness, baying at the moon. On the other hand one of my correspondents noted, “Six days and you have not opined via blog. You are a disgrace to the whole of blogdom.”

Alrighty, then. It is indeed Monday. Here it is.

Radio guy Josh Mothner ranted about one of my pet peeves this morning: our gummint in its infinite wisdom has decided to solve the credit crisis by … wait for it … borrowing money.

Sheesh.

I am not an economist. I do not even play one on television. It seems obvious to me, though, that our economists are a wee bit warped. The world economy is tanking because the American economy tanked. The American economy tanked because we lost faith in it. We lost faith in it because a bunch of bankers decided to rip us off. That bunch of bankers decided they could rip us off because we live on tomorrow. We live on tomorrow because we want that bright and shiny object right now. We want that bright and shiny object now because we’ve learned we don’t have to pay for it. We got into this mess by our own avarice.

When you borrow money against your house to pay off your credit card, sooner or later you have to sell your house.

$700 billion and climbing.

Not even Bill Gates and Warren Buffett together has that in their combined piggy bank. And we can’t just print it.

Oh. Wait. I know! We’ll issue more Treasury notes. We’ll borrow it!

Let’s see. The banks don’t have enough money to lend to their customers so their customers can buy more stuff from companies that depend on the banks to borrow money from.

So tell me again exactly where the $700 billion and climbing will come from?

Oh. Wait. I know! We’ll borrow it!

It is interesting that, in the middle of the borrowing fever, the number one radio advertiser on that morning radio show is … Rolex. Bright and shiny object anyone? Unfortunately nobody listens to Mr. Mothner, either.

I wish, Dick wrote plaintively, that someone other than the Man in the Moon took these brilliant analyses to heart. There is a chance for a curmudgeon like me, though. I found out today that I’m going to be Andy Rooney when I grow up. See, I’m already growing his eyebrows.

Toilet Paper

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The University of Vermont announced recently that it will “go green,” at least in the toilet paper department. The college has eschewed the once-beloved super puffy Charmin in favor of an unbleached, 100% recycled fiber product approved by the Forest Crimes Unit, a student group.

I have a long, personal history with toilet paper but not as long as my dad did. He went to work for Scott Paper Company right out of college, exactly one week before I was born. He toiled in Export Sales for Scott until 1968.

He was a company man through and through. We used ScotTissue and Scotties and even ScotTowels which are pretty bad paper towels. He once tore up a box of [Kleenex] he found in the home of a manufacturer’s rep who sold Scott products in Africa. Now, of course, Kimberly Clark owns Scott. Despite that, I still use ScotTissue because it is the most benign product for septic tanks. I like the price, too, although the size of the “squares” (they are actually rectangles now) gets smaller and smaller.

Scott Paper brought the first rolls of toilet paper to market. The company was founded in 1879 by brothers E. Irvin and Clarence Scott who specialized in producing paper for privies and later for toilets. At first they purchased paper and tissue from outside suppliers, then cut, rolled and packaged the paper.

Early Scott advertisements suggested that “over 65% of middle-aged men and women suffered from some sort of rectal disease.” Inferior toilet paper, the ads proclaimed, was responsible because “harsh toilet tissue may cause serious injury.”

Kids have no sense of history.

You, dear reader, may wonder why I wrote about toilet paper instead of the “bailout” this week. Simple. I thought I could avoid weighing in again on this (latest)(greatest) Congressional financial scam. After all, I’m not an economist. I’m not a national expert. I don’t even have a mortgage.

OK, that last is not entirely true but it is a small, fixed rate note with a good bank that is not in trouble. It has about 5 years left on its term.

One of the pundits said the Congress critters don’t want to “reward bad business behavior.”

Horse puckey. Congress critters do that all the time, for themselves and for anyone whose sphere of influence they inhabit. The bankers and other financial peeps lied, cheated, and stole. Period. Their actions–and this latest bailout–has put three generations of Harper magic in the crapper while said financiers walk off with the perfume. Writing about toilet paper makes more sense than anything else you see on teevee.

These kids have no sense of history, but I repeat myself.