Here are high points of the Hearing I found interesting and some of my own thoughts. (Quotation marks are included where statements are actual quotes rather than the “sense” of what was said.)

BARNEY FRANK, Democrat & Financial Services Committee Chairman.   As major stockholders, the US Government should try to recoup $165 million in bonuses by filing  a lawsuit alleging “poor performance” on the part of  bonus recipients.  He also demanded the names of bonus recipients and updates when bonus recipients either return or refuse to return  bonus money. (Although New York’s Attorney General Andrew Cuomo is in receipt of these names, Liddy expressed a need to protect bonus recipients because of  deadly threats made against them and their families.)  (According to  the Center for Responsive Politics,  Frank received $202,548 in contributions from the Insurance Industry.)

OLYMPIA SNOW, (R) Maine.   Offered AIG bailout provisions which would have disallowed most of the oversized bonuses.  (Received $5,000, according to the Center for Responsive Politics.)

CHRISTOPHER  DODD, (D) Connecticut.  Snow’s amendment was (allegedly) struck by  Connecticut’s  Chris Dodd.  How he did it is unclear.  At first, he denied the act.  Subsequently,  he said  he received instructions from Treasury and/or The White House.  Regardless, striking the provision resulted in Congressional approval of bonus contracts entered into before February 11, 2009.  As a result,  165 million taxpayer dollars have been paid to architects of the debacle. Reportedly, Dodd received $852,556 from insurance lobbyists.  (Center for Responsive Politics)

STEPHEN LYNCH, Massachusetts:  “We amend  contracts all the time.  My auto workers were badgered and badgered….  These [AIG] guys lost billions of dollars  and still believe they’re entitled to these bonuses.” (Lynch  received $35,299 according to the Center for Responsive Politics)

PAUL KANJORSKI, Chairman, Financial Services Subcommittee on Capital Markets (D-PA).   Admitted to knowing about the incipient bonus payments  two months  ago and  “warned Liddy that  paying the bonuses would be a  big mistake.”  “You [CEO Edward Liddy] should have told the bonus recipients to ‘sue us.'”  (Kanjorksi did not mention warning anyone else and according to the Center for Responsive Politics, received $345,548 in donations from the insurance industry.)

Joel Ario,  State of Pennsylvania Insurance Commissioner and  Chairperson of the National Association of Insurance Commissioners.  Ario believes that AIG’s toxic holdings could be walled off from its healthy funds-at-large.   (NB:  Therefore, the company at-large could survive if its sick subsidiaries were permitted to fail.) (Also see: [Funny] Side of the [Wall] Street:  Obamanomics.)

Neither the Government Accountability Office (GAO) nor the federal Office of Thrift Supervision (OTS)  have investigated whether AIG fraudulently misrepresented its health and wealth at the time it was creating “retention” and other bonus contracts  “to the tune of $400 + million  with the division that was bleeding to the tune of $40 billion.”

Another committee member asserted, [“The distribution of these bonuses] borders on fraud and criminality.”

According to Scott Polakoff of OTS, his agency knew the risk of the credit default swaps  in 2004 and did nothing to avert the collapse.  OTS did not close AIG’s toxic financial products division even though “the agency had a complete picture and oversight authority” to do so.  Polakoff further stated that “OTS had sufficient  expertise and personnel” but in effect, since Congress didn’t instruct OTS to review the  bonus contracts before AIG’s bailout was approved, the agency didn’t do the research.

Rodney  Clark of Standard & Poor’s (S & P) rating agency was asked,  “How can we depend on you and were mistakes made?”  Clark answered, “Hindsight being 20-20…, our conclusions [of AIG’s solvent value]  changed rapidly once the market started to collapse.  Market values are important as a guideline.  We could not understand  how quickly the value of mortgage backed securities would decline….  (NB:  On what basis, then,  did S & P  justify its AA-  rating until  September 15, 2008 if ?)  S & P hedged its bets. Ratings are based on current value and  give prospective investors a factual basis for predicting future performance.)  Clark  went on to say,   “In 2008, excluding  investment losses,  AIG would’ve been profitable.”

Really?  Does that mean S&P didn’t see the looming  losses or didn’t consider them relevant to the total value of the company?  (See: Ratings Agencies falsify reports or search CSPAN’s  archives for quotes from ratings agents who knew full-well that the mortgage-backed securities were toxic but provided healthy ratings because…that was the outcome corporations paid them to obtain.  (See:  previously-cited statement from Joel Ario.)

Edward LIDDY,  AIG insurance Chairman & CEO (temporarily appointed  in 2008 to detoxify AIG).   Prior to Mr. Liddy  taking his witness  seat,  he was stopped by  “pink lady demonstrators” who questioned him (in part) about  consequences to returning war veterans whose savings were invested  with AIG.  If he answered, it wasn’t televised.

He did tell us that the risk to AIG was unacceptably high if we did not pay the $165 million in bonuses. “It was my determination,” he said, “that AIG-FP would unravel if employees weren’t retained to wind down the projects they were working on.  Which they did.  They’ve reduced $2.7 trillion in toxic assets to $1.6 trillion.  It’s my intention to reduce those debts, sell AIG’s insurance companies and strengthen the healthy portions of our business.  If we don’t pay our debts, that triggers bankruptcy. I’ve asked AIG-FP (financial product) employees to return a portion  of the bonuses.   Believe me, I wouldn’t have approved the contracts if I’d been CEO  at the time they were  created.”

Liddy further asserted that Federal Reserve Chairman Ben Bernanke acquiesced to the  payment of retention bonuses.

“We didn’t tell Congress because nobody told us to,” Liddy explained.  “We’re partners with the Federal Reserve. They participate in  activities leading up to board meetings and they attend board meetings. I asked if they had comments  or different points of view as far as bonuses and everything else.  The Federal Reserve  did  not  disagree with our assessment that AIG-FN was at risk of jeopardizing the monies already given if we didn’t pay the bonuses. We were told by our attorneys that the contracts were unbreakable.  I assumed they shared  with Treasury and Congress information they gained from us.  The Secretary of the treasury did not know we were going to make the [bonus] payments though the Federal Reserve did.  It’s  up to the Federal Reserve to  discuss”  salient issues with the Secretary of the Treasury.

Later,  Treasury Secretary Timothy Geithner said he didn’t know about the bonus contracts until two weeks ago.

Countering assertions of possible fraud, Liddy said he believes,  “AIG was solvent when the retention contracts were drawn.”   (On what factual basis did he develop this assessment?  Or,  is he just repeating assessments  from ratings agencies which regurgitated AIG’s own corporate projections?  Isn’t that the same self-quoting claptrap that got us into Iraq?)

Liddy  continued,  “AIG has problems besides the mortgage-backed securities. There’s oil accounts and other  utilities in trouble.” (This appears to contradict his assertions of fundamental solvency.)

ED PERLMUTTER, Committee Member.  “There’s a whole fraud concept that says ya’ can’t be handing out bonuses when you’re insolvent.  I don’t think these bonuses should have been paid.”

Some legal issues, AIG’s Employee Retention Plan and relevant case and statutory findings.

Currently, some members of Congress are promoting tax legislation which would target bonuses paid by corporations that received stipulated bailout funds. Their idea is to re-appropriate the funds already disbursed. (There is every reason to believe such targeting is unconstitutional.  Seeing as how Congress writes the laws and  has more than its fair share of attorneys,  you’d think they’d know that.)

AIG-FP 2008  Employee Retention Plan, effective December 1, 2007

(Importantly, there is no signing date on the Retention Plan although it specifically covers 2008 and 2009.)  According to CEO Liddy’s Executive Summary of the retention plan in which he discusses the bonuses,  “The plan was implemented because there was a significant risk  of departures among employees at AIGFP, and given the $2.7 trillion of derivative positions at AIGFP at that time, retention incentives appeared to be in the best interest of all of AIG’s stakeholders…. This resulted in a $313 million total for 2008 and a $327 million total for 2009… The 2008 awards range from $1,000 to slightly less that $6.5 million.  Only seven employees will receive more than $3 million…. The retention plan is governed by Connecticut Wage Act.  (Section 4.04)”   (NB:  The law provides for the recovery of double damages and attorneys’ fees when wages are improperly withheld and the employer’s refusal to pay wages lack a good faith basis. Conn. Gen. Stat  sections 31-72.)  “In addition,”  states Liddy, “individual managers who decide to withhold wages that are due are individually liable for violation of the Wage Act…We have been advised that the bonus provisions of the American Recovery  and Reinvestment Act of 2009 prohibiting certain bonuses specifically exclude bonuses paid pursuant to pre-February 11, 2009 employment contracts.”  (Apparently, this is the  alleged  “Dodd Provision.”)

NB: The definition of “executive employee”  rests largely on whether an employee is salaried, is required to exercise personal discretion in performance of duties,  earns in excess of certain dollar amounts and has (usually) some supervisory responsibilities.

According to the Connecticut Wage Statute (sec. 31-71(e).  “No employer may withhold or divert any portion of an employee’s wages unless (1) the employer is required or empowered to do so by state or federal law and  (i) “Wage” means compensation due to an employee by reason of his employment.  (Italics added for emphasis.)

Liddy’s  Executive Summary referenced Schoonmaker v Lawrence Brunoli, Inc. 828 A.2d64 (Conn.2003). Schoonmaker established that double damages could be paid when salaries are withheld for reasons of  “bad faith, arbitrariness or unreasonableness.”

The courts have also established that, “Punitive damages may be awarded in suits in which it is proven by clear and convincing evidence that the defendant’s [employer’s] actions showed willful misconduct, malice, fraud, wantonness, oppression or [lack of care] which would raise the presumption of conscious indifference to consequences. Under O.C.G.A. 51-12-5.1(b), it remains the rule that something more than the mere commission of a tort is always required for punitive damages. There must be certain circumstances of aggravation or of outrage.”

New York’s Attorney General Andrew Cuomo may attempt to use the Fraudulent Conveyance Act to recover the bonuses.

In order to pursue Fraud charges, “… the misrepresentation [or omission] must be made knowingly and intentionally, not as a result of mistake or accident; that is, that the person either knew or should have known of the falsity of the misrepresentation [or the false effect of the omission], or that he made the misrepresentation [or omission] in negligent disregard of its truth or falsity.

NB:  Under the Bankruptcy Code, insolvency exists when the sum of the debtor’s debts exceeds the fair value of the debtor’s property, with some exceptions. It is a balance sheet test. 11 USC § 101(32)

18 USC CHAPTER 47 § 1031 concerns  “major fraud against the United States”  and  is another  statute being considered by  New York State’s Attorney General Cuomo. It  provides  the following:

(a) Whoever knowingly executes, or attempts to execute, any scheme or artifice with the intent-

(1) to defraud the United States; or

(2) to obtain money or property by means of false or fraudulent pretenses, representations, or promises.

Therefore, the two most important facts to ascertain  are,  “What was AIG’s actual state of solvency when the bonuses were contracted and did its officers misrepresent that state?”

More Answers Needed:

Which Congress people  received campaign finances from AIG and other financial corporations?  How much did they receive? How did those congress people vote or speak on salient congressional  actions?  (You can find some of the answers at  the Center for Responsive Politics and RollCall.  Feel free to vote accordingly in upcoming elections.)

At the time of AIG’s bailout or request for a bailout, what was the corporation’s actual worth?

Was the United States coerced by fear and intimidation into awarding bailout funds?

Besides Christopher Dodd, who was involved in exempting bonuses agreed to before February 11, 2009?   To  what extent were Treasury and The White House involved?

As always, you can view the hearings at CSPAN.

Here are high points of the Hearing I found interesting and some of my own thoughts. (Quotation marks are included where statements are actual quotes rather than the “sense” of what was said.)

BARNEY FRANK, Democrat & Financial Services Committee Chairman.   As major stockholders, the US Government should try to recoup $165 million in bonuses by filing  a lawsuit alleging “poor performance” on the part of  bonus recipients.  He also demanded the names of bonus recipients and updates when bonus recipients either return or refuse to return  bonus money. (Although New York’s Attorney General Andrew Cuomo is in receipt of these names, Liddy expressed a need to protect bonus recipients because of  deadly threats made against them and their families.)  (According to  the Center for Responsive Politics,  Frank received $202,548 in contributions from the Insurance Industry.)

OLYMPIA SNOW, (R) Maine.   Offered AIG bailout provisions which would have disallowed most of the oversized bonuses.  (Received $5,000, according to the Center for Responsive Politics.)

CHRISTOPHER  DODD, (D) Connecticut.  Snow’s amendment was (allegedly) struck by  Connecticut’s  Chris Dodd.  How he did it is unclear.  At first, he denied the act.  Subsequently,  he said  he received instructions from Treasury and/or The White House.  Regardless, striking the provision resulted in Congressional approval of bonus contracts entered into before February 11, 2009.  As a result,  165 million taxpayer dollars have been paid to architects of the debacle. Reportedly, Dodd received $852,556 from insurance lobbyists.  (Center for Responsive Politics)

STEPHEN LYNCH, Massachusetts:  “We amend  contracts all the time.  My auto workers were badgered and badgered….  These [AIG] guys lost billions of dollars  and still believe they’re entitled to these bonuses.” (Lynch  received $35,299 according to the Center for Responsive Politics)

PAUL KANJORSKI, Chairman, Financial Services Subcommittee on Capital Markets (D-PA).   Admitted to knowing about the incipient bonus payments  two months  ago and  “warned Liddy that  paying the bonuses would be a  big mistake.”  “You [CEO Edward Liddy] should have told the bonus recipients to ‘sue us.'”  (Kanjorksi did not mention warning anyone else and according to the Center for Responsive Politics, received $345,548 in donations from the insurance industry.)

Joel Ario,  State of Pennsylvania Insurance Commissioner and  Chairperson of the National Association of Insurance Commissioners.  Ario believes that AIG’s toxic holdings could be walled off from its healthy funds-at-large.   (NB:  Therefore, the company at-large could survive if its sick subsidiaries were permitted to fail.) (Also see: [Funny] Side of the [Wall] Street:  Obamanomics.)

Neither the Government Accountability Office (GAO) nor the federal Office of Thrift Supervision (OTS)  have investigated whether AIG fraudulently misrepresented its health and wealth at the time it was creating “retention” and other bonus contracts  “to the tune of $400 + million  with the division that was bleeding to the tune of $40 billion.”

Another committee member asserted, [“The distribution of these bonuses] borders on fraud and criminality.”

According to Scott Polakoff of OTS, his agency knew the risk of the credit default swaps  in 2004 and did nothing to avert the collapse.  OTS did not close AIG’s toxic financial products division even though “the agency had a complete picture and oversight authority” to do so.  Polakoff further stated that “OTS had sufficient  expertise and personnel” but in effect, since Congress didn’t instruct OTS to review the  bonus contracts before AIG’s bailout was approved, the agency didn’t do the research.

Rodney  Clark of Standard & Poor’s (S & P) rating agency was asked,  “How can we depend on you and were mistakes made?”  Clark answered, “Hindsight being 20-20…, our conclusions [of AIG’s solvent value]  changed rapidly once the market started to collapse.  Market values are important as a guideline.  We could not understand  how quickly the value of mortgage backed securities would decline….  (NB:  On what basis, then,  did S & P  justify its AA-  rating until  September 15, 2008 if ?)  S & P hedged its bets. Ratings are based on current value and  give prospective investors a factual basis for predicting future performance.)  Clark  went on to say,   “In 2008, excluding  investment losses,  AIG would’ve been profitable.”

Really?  Does that mean S&P didn’t see the looming  losses or didn’t consider them relevant to the total value of the company?  (See: Ratings Agencies falsify reports or search CSPAN’s  archives for quotes from ratings agents who knew full-well that the mortgage-backed securities were toxic but provided healthy ratings because…that was the outcome corporations paid them to obtain.  (See:  previously-cited statement from Joel Ario.)

Edward LIDDY,  AIG insurance Chairman & CEO (temporarily appointed  in 2008 to detoxify AIG).   Prior to Mr. Liddy  taking his witness  seat,  he was stopped by  “pink lady demonstrators” who questioned him (in part) about  consequences to returning war veterans whose savings were invested  with AIG.  If he answered, it wasn’t televised.

He did tell us that the risk to AIG was unacceptably high if we did not pay the $165 million in bonuses. “It was my determination,” he said, “that AIG-FP would unravel if employees weren’t retained to wind down the projects they were working on.  Which they did.  They’ve reduced $2.7 trillion in toxic assets to $1.6 trillion.  It’s my intention to reduce those debts, sell AIG’s insurance companies and strengthen the healthy portions of our business.  If we don’t pay our debts, that triggers bankruptcy. I’ve asked AIG-FP (financial product) employees to return a portion  of the bonuses.   Believe me, I wouldn’t have approved the contracts if I’d been CEO  at the time they were  created.”

Liddy further asserted that Federal Reserve Chairman Ben Bernanke acquiesced to the  payment of retention bonuses.

“We didn’t tell Congress because nobody told us to,” Liddy explained.  “We’re partners with the Federal Reserve. They participate in  activities leading up to board meetings and they attend board meetings. I asked if they had comments  or different points of view as far as bonuses and everything else.  The Federal Reserve  did  not  disagree with our assessment that AIG-FN was at risk of jeopardizing the monies already given if we didn’t pay the bonuses. We were told by our attorneys that the contracts were unbreakable.  I assumed they shared  with Treasury and Congress information they gained from us.  The Secretary of the treasury did not know we were going to make the [bonus] payments though the Federal Reserve did.  It’s  up to the Federal Reserve to  discuss”  salient issues with the Secretary of the Treasury.

Later,  Treasury Secretary Timothy Geithner said he didn’t know about the bonus contracts until two weeks ago.

Countering assertions of possible fraud, Liddy said he believes,  “AIG was solvent when the retention contracts were drawn.”   (On what factual basis did he develop this assessment?  Or,  is he just repeating assessments  from ratings agencies which regurgitated AIG’s own corporate projections?  Isn’t that the same self-quoting claptrap that got us into Iraq?)

Liddy  continued,  “AIG has problems besides the mortgage-backed securities. There’s oil accounts and other  utilities in trouble.” (This appears to contradict his assertions of fundamental solvency.)

ED PERLMUTTER, Committee Member.  “There’s a whole fraud concept that says ya’ can’t be handing out bonuses when you’re insolvent.  I don’t think these bonuses should have been paid.”

Some legal issues, AIG’s Employee Retention Plan and relevant case and statutory findings.

Currently, some members of Congress are promoting tax legislation which would target bonuses paid by corporations that received stipulated bailout funds. Their idea is to re-appropriate the funds already disbursed. (There is every reason to believe such targeting is unconstitutional.  Seeing as how Congress writes the laws and  has more than its fair share of attorneys,  you’d think they’d know that.)

AIG-FP 2008  Employee Retention Plan, effective December 1, 2007

(Importantly, there is no signing date on the Retention Plan although it specifically covers 2008 and 2009.)  According to CEO Liddy’s Executive Summary of the retention plan in which he discusses the bonuses,  “The plan was implemented because there was a significant risk  of departures among employees at AIGFP, and given the $2.7 trillion of derivative positions at AIGFP at that time, retention incentives appeared to be in the best interest of all of AIG’s stakeholders…. This resulted in a $313 million total for 2008 and a $327 million total for 2009… The 2008 awards range from $1,000 to slightly less that $6.5 million.  Only seven employees will receive more than $3 million…. The retention plan is governed by Connecticut Wage Act.  (Section 4.04)”   (NB:  The law provides for the recovery of double damages and attorneys’ fees when wages are improperly withheld and the employer’s refusal to pay wages lack a good faith basis. Conn. Gen. Stat  sections 31-72.)  “In addition,”  states Liddy, “individual managers who decide to withhold wages that are due are individually liable for violation of the Wage Act…We have been advised that the bonus provisions of the American Recovery  and Reinvestment Act of 2009 prohibiting certain bonuses specifically exclude bonuses paid pursuant to pre-February 11, 2009 employment contracts.”  (Apparently, this is the  alleged  “Dodd Provision.”)

NB: The definition of “executive employee”  rests largely on whether an employee is salaried, is required to exercise personal discretion in performance of duties,  earns in excess of certain dollar amounts and has (usually) some supervisory responsibilities.

According to the Connecticut Wage Statute (sec. 31-71(e).  “No employer may withhold or divert any portion of an employee’s wages unless (1) the employer is required or empowered to do so by state or federal law and  (i) “Wage” means compensation due to an employee by reason of his employment.  (Italics added for emphasis.)

Liddy’s  Executive Summary referenced Schoonmaker v Lawrence Brunoli, Inc. 828 A.2d64 (Conn.2003). Schoonmaker established that double damages could be paid when salaries are withheld for reasons of  “bad faith, arbitrariness or unreasonableness.”

The courts have also established that, “Punitive damages may be awarded in suits in which it is proven by clear and convincing evidence that the defendant’s [employer’s] actions showed willful misconduct, malice, fraud, wantonness, oppression or [lack of care] which would raise the presumption of conscious indifference to consequences. Under O.C.G.A. 51-12-5.1(b), it remains the rule that something more than the mere commission of a tort is always required for punitive damages. There must be certain circumstances of aggravation or of outrage.”

New York’s Attorney General Andrew Cuomo may attempt to use the Fraudulent Conveyance Act to recover the bonuses.

In order to pursue Fraud charges, “… the misrepresentation [or omission] must be made knowingly and intentionally, not as a result of mistake or accident; that is, that the person either knew or should have known of the falsity of the misrepresentation [or the false effect of the omission], or that he made the misrepresentation [or omission] in negligent disregard of its truth or falsity.

NB:  Under the Bankruptcy Code, insolvency exists when the sum of the debtor’s debts exceeds the fair value of the debtor’s property, with some exceptions. It is a balance sheet test. 11 USC § 101(32)

18 USC CHAPTER 47 § 1031 concerns  “major fraud against the United States”  and  is another  statute being considered by  New York State’s Attorney General Cuomo. It  provides  the following:

(a) Whoever knowingly executes, or attempts to execute, any scheme or artifice with the intent-

(1) to defraud the United States; or

(2) to obtain money or property by means of false or fraudulent pretenses, representations, or promises.

Therefore, the two most important facts to ascertain  are,  “What was AIG’s actual state of solvency when the bonuses were contracted and did its officers misrepresent that state?”

More Answers Needed:

Which Congress people  received campaign finances from AIG and other financial corporations?  How much did they receive? How did those congress people vote or speak on salient congressional  actions?  (You can find some of the answers at  the Center for Responsive Politics and RollCall.  Feel free to vote accordingly in upcoming elections.)

At the time of AIG’s bailout or request for a bailout, what was the corporation’s actual worth?

Was the United States coerced by fear and intimidation into awarding bailout funds?

Besides Christopher Dodd, who was involved in exempting bonuses agreed to before February 11, 2009?   To  what extent were Treasury and The White House involved?

As always, you can view the hearings at CSPAN.

Imagine  you’re the on-duty emergency room (ER) nurse in a small country hospital.  Your resources are severely limited by high unemployment and a health insurance crisis.

A healthy snowboarder hobbles in with a broken leg and dislocated shoulder.

You start a prophylactic IV drip of normal saline, pain killers  and antibiotics to protect the snowboarder from dehydration, pain and infection.

In a corner of the emergency room is a bloated near-corpse in systemic organ failure. His liver’s shot.  His heart’s all but stopped.  The smell of his rot and disease are spreading out of the ER, down the corridors and into the rooms of recuperating patients.

Emergency room protocol requires you to infuse the snowboarder’s  IV solution through the bloated near-corpse middle man first, rather than  into the snowboarder’s arm directly.

Proponents of this bassackward policy say that if the gas in the bloated guy explodes, it’ll jeopardize everyone in the hospital so we have to treat him with the best of the drugs and hope enough benefit reaches the snowboarder to prevent her relatively minor injuries from becoming a systemic threat.  If you’re the cynical type, you might think  the nearly-dead guy’s membership on the hospital’s Board of Directors is significant, too.

Whatever the reason for  the policy, the outcome is assured:  the bloated near-corpse will drain  your few precious resources on its way to the morgue and the healthy patient will die of preventable consequences.

In the spirit of Jon Stewart,  “Let’s just cut out the middle man.”  Break with protocol and centuries of obsolete thinking. Infuse the snowboarder directly. She’s going into shock.  Microbes are chewing on her broken, exposed bone. It’s a matter of basic triage:  apply your resources where they will do the most good as you asses each situation  uniquely, dispassionately and quickly.

The snowboarder (like most of our  neighbors) will heal quickly and be ready to continue her education,  develop new products, create new markets  and in general, become the new economic engine.  She’ll be rebuilding our nation while the rotting AIG-Goldman Sachs-Citi-Bank of America-corpse that’s poisoning us all is buried quietly in the background.

Stimulate acutely-ill  borrowers with a direct infusion of debt-cancelling cash that can be paid by them  to their ORIGINATING lenders.   The funds will or won’t trickle UP to the bloated entities who bought and bundled the  stinky credit card and mortgage loans.  Those who are too-big-to-fail will collapse if the funds can’t  find their way through the maze of intermediaries.  But, by  excising the corpse and caring directly for our fundamentally healthy neighbors, we can mitigate the effects of this new shift in focus and purpose.

The “mortgage-crisis” isn’t the root of our problems.  And our continued reliance on a rotting corpse to rescue the future may not be the cause of our problems, but it’s certainly proximate.  If President Obama is serious about “changing how we do business,”  then he needs to roll out something better than his new version of  Reaganomics.

*     *     *     *

NEXT:  Tell-tale quotes from this week’s House Financial Services Subcommittee Hearing.

(First,  a correction to  Bipartisanship:  The Lowest Common Denominator.  I misleadingly referred to Obama’s restriction on  executive salaries as a restriction on executive compensation.   Though President Obama  has put his weight behind capping certain executive salaries at $500,000,   total executive compensation may be oodles more.  Oodles, billions or trillions?     The difference is…?)

*       *       *

On one hand,  Walt Disney accused the Screen Actors Guild of being a communist front bent on malevolently influencing Hollywood. On the other, he created  Donald Duck who quacked his way into popular culture  in  1934.  When Donald’s  nephews, Huey, Dewey & Louie came to stay for a day and never left, Donald was a de facto single dad with a  romantic companion he never  really married (Daisy).  In later years, he morphed into an adventurer who  dumped the kids on Uncle Scrooge.

Donald’s Hollywood foe, Mickey Mouse, was another Disney creation.  He met his main squeeze,  Minnie the Barmaid,  in a tavern and in their first short together,   Minnie parachuted out of a plane to escape Mickey’s pawings.  It was  the anthropomorphic mouse version of  John Wayne dragging  Maureen O’Hara around by her hair in one cinematic lust fest after another. (Not that I’ve watched The Quiet Man two billion times….)   Mickey & Minnie free float in each other’s lives–sometimes married, sometimes dating–but frequently together for  shared adventures.

In a time when Puritanism  and  Doris Day were slathering our cultural landscape with goo,  Disney understood that if a creature, character or person was cute  enough, he could sell us anything — even lifestyles we found offensive in 1950.

“Cute” and adorably irascible  have  sold us down the drain regularly.   George Bush and Laura Bush are almost as cute as   Ron Paul and he’s  even more adorable than  Barnie Frank, Diane Feinstein and Chris Dodd,  none of  whom hold a candle to the ETrade babies.  (Check out the E-Trade babies which front  for the much-maligned  E-Trade  online trading platform. )

Whether it was weapons of mass destruction or  financier- and congress-based  schemes to rip off credit cardholders,  we’ve  spectated at  our own screwing because so many of the salesman looked or spoke as disarming populists.

Bank of America did virtually no due diligence before it  bought  Merrill Lynch one weekend for $50 billion in stock.  Then, when BOA realized it had grossly underestimated Merrill Lynch’s toxic holdings, it “accepted”  a taxpayer bailout.

In this economy (brought to the point of collapse by financial institutions like Bank of America) what does  BOA do to taxpayer-customers who have BOA accounts and  own BOA’s debt?    They manipulated  “…customers’ account activity in order to trigger more fees for overdrawn accounts, returned checks, and similar infractions. Under the agreement, account holders who incurred overdraft fees from BofA between 2000 and 2007–or from any of the banks it took over during that period–may be entitled to up to a $78 payout. Although it may be a victory for the consumer, financial services advisory firm Bretton Woods says the restitution represents only a sliver of the $368 that the average U.S. household doles out each year for overdraft charges. Generating these and similar fees has become big business for banks and credit unions, which posted $37 billion-plus in such charges last year. As financial institutions try to compensate for losses on loan defaults and stiffer competition during the credit crisis, they are making it easier for customers–even those that carefully monitor their own activity–to trip the fee wire. Practices such as clearing the largest transactions in a single day from largest to smallest and posting deposits last of all makes it difficult for even the most diligent bank customers to avoid charges. In response, consumer advocates are counting on the Federal Reserve to take steps to protect the public from overdraft fees. While the issue failed to earn a place in new credit card rules approved by the agency last month, the central bank has signaled that it will raise the issue again–this time independently–sometime this year.  (See:  Center for Responsible Lending:  Bank of America)

We’re being raped by the people we saved and somehow,  Uncca Chris Dodd and “Populist” Barney Frank can’t get  legislation through Congress that would rescue us because of  push back from the financial lobby.

And then, there’s  Citigroup.

“… Citi began sending the notices at about the same time it was getting a $20 billion, taxpayer-financed government bailout.  No one at Citigroup would talk on camera to CNN about the matter. Instead, the company issued a written statement, which said: “To continue funding in this difficult credit and funding environment, Citi is repricing a group of customers.” Citi told CNN that anyone unhappy with the new [credit card] rates can opt out and continue paying the lower interest, but they must close their account when their card expires. It’s all in the fine print.  (See:  Cnn/Citigroup.)

Here’s Representative Carolyn Maloney’s  proposed legislation “Credit Cardholders’ Bill of Rights” which has been supported by The Center for Responsible Lending.

If you have a BOA  account, apply for your $78.00 and send a copy of the demand to your Congresspeople.

According to CNBC,  the  US Senate has pared Obama’s Stimulus Package  from $937 to  $780 billion.  A vote is expected Sunday because Congress needs to start its  recess ASAP. 

(Remember the expressed outrage when Iraq’s Congress took a vacation while its nation faced insurrection and bankruptcy?  Remember our Congress’  indignation that Iraq’s lawmakers had the chutzpah  to take a vacation while American taxpayers footed the bill?  Remember the purpled faces and bursting veins of our shining palladins?) 

Most economists  are pleading  for a Stimulus Package nearer  $1 trillion.   They’ve  tossed an  I Ching of  formulae  based on percentages of Gross National Product and investment/return ratios and are shrieking,  “The appropriation is  going backwardThe train is out of control!  The horses are stampeding!”   Not a catastrophic metaphor has been left in the box.  And yet,  Nero fiddles as Rome burns.

Additionally,  “Massachusetts Democrat John Kerry said the compromise price tag would be made up of 42 percent tax cuts with 58 percent in new spending.”  (CNBC)  

Most economists agree that tax cuts are anathema in times like these–like  a passenger trying to stop a run-away rollercoaster by dragging her feet on the track:  it’s a waste of time, it won’t work and the thing in need of  saving will get her legs broken.

Obama’s practice these past two years has been to watch his opponents crash of their own gravity.  He doesn’t participate substantially in that downfall.  (It’s a basic Gandhi/King principle; a kind of  Judo politic.) 

These past weeks,  President Obama has  hosted a bipartisan Super Bowl party and  two cocktail “parties.”  He’s  bearded the Conservative lion in its den down at Congress.   He offered a stimulus bill with enough tax cuts to raise brows in the pundit community and yet,  Senate Republicans and Conservative Democrats reduced the package  by another $150 billion.

Zero Republicans voted for the first compromise package.

Two or three are expected to vote for the Senate bill.

Has Obama sold our economic future down the tubes for the sake of a few bipartisan pieces of silver?  

Or, has he allowed knee-jerk naysayers with bankrupt economic policies to  dramatically and publicly shoot themselves in  both feet?

Obama’s slated to offer his Recovery Plan this coming Monday.   He wants the Senate to pass the Stimulus Package before that. 

If the Recovery Plan covers all the bases Candidate-Obama trumpeted the past two years, it will include more funds for health care, infrastructure, “greening”  and the consequent job production and training.  By the time the Recovery Plan is unveiled,  the “loyal  Conservative opposition”  will have been marginalized on  their own petards. 

If I sound like a True Believer, eschewing rebellion in the face of  Obama’s vows that, “Tomorrow, Tomorrow”  my reward will come tomorrow,  I apologize and propose this:

If  the Recovery Plan is more of the same  “bipartisan,”  lowest-common-denominator-political-toadying as offered by the Stimulus Package,  then every worker,  wannabe-worker, retiree, wannabe-retiree, student  and wannabe-student needs to march on Washington within the month.  We need to take our tents,  backpacks and firewood for cooking.  

And we must not accede to being penned like cattle behind officially-approved barriers.

According to CNBC,  the  US Senate has pared Obama’s Stimulus Package  from $937 to  $780 billion.  A vote is expected Sunday because Congress needs to start its  recess ASAP. 

(Remember the expressed outrage when Iraq’s Congress took a vacation while its nation faced insurrection and bankruptcy?  Remember our Congress’  indignation that Iraq’s lawmakers had the chutzpah  to take a vacation while American taxpayers footed the bill?  Remember the purpled faces and bursting veins of our shining palladins?) 

Most economists  are pleading  for a Stimulus Package nearer  $1 trillion.   They’ve  tossed an  I Ching of  formulae  based on percentages of Gross National Product and investment/return ratios and are shrieking,  “The appropriation is  going backwardThe train is out of control!  The horses are stampeding!”   Not a catastrophic metaphor has been left in the box.  And yet,  Nero fiddles as Rome burns.

Additionally,  “Massachusetts Democrat John Kerry said the compromise price tag would be made up of 42 percent tax cuts with 58 percent in new spending.”  (CNBC)  

Most economists agree that tax cuts are anathema in times like these–like  a passenger trying to stop a run-away rollercoaster by dragging her feet on the track:  it’s a waste of time, it won’t work and the thing in need of  saving will get her legs broken.

Obama’s practice these past two years has been to watch his opponents crash of their own gravity.  He doesn’t participate substantially in that downfall.  (It’s a basic Gandhi/King principle; a kind of  Judo politic.) 

These past weeks,  President Obama has  hosted a bipartisan Super Bowl party and  two cocktail “parties.”  He’s  bearded the Conservative lion in its den down at Congress.   He offered a stimulus bill with enough tax cuts to raise brows in the pundit community and yet,  Senate Republicans and Conservative Democrats reduced the package  by another $150 billion.

Zero Republicans voted for the first compromise package.

Two or three are expected to vote for the Senate bill.

Has Obama sold our economic future down the tubes for the sake of a few bipartisan pieces of silver?  

Or, has he allowed knee-jerk naysayers with bankrupt economic policies to  dramatically and publicly shoot themselves in  both feet?

Obama’s slated to offer his Recovery Plan this coming Monday.   He wants the Senate to pass the Stimulus Package before that. 

If the Recovery Plan covers all the bases Candidate-Obama trumpeted the past two years, it will include more funds for health care, infrastructure, “greening”  and the consequent job production and training.  By the time the Recovery Plan is unveiled,  the “loyal  Conservative opposition”  will have been marginalized on  their own petards. 

If I sound like a True Believer, eschewing rebellion in the face of  Obama’s vows that, “Tomorrow, Tomorrow”  my reward will come tomorrow,  I apologize and propose this:

If  the Recovery Plan is more of the same  “bipartisan,”  lowest-common-denominator-political-toadying as offered by the Stimulus Package,  then every worker,  wannabe-worker, retiree, wannabe-retiree, student  and wannabe-student needs to march on Washington within the month.  We need to take our tents,  backpacks and firewood for cooking.  

And we must not accede to being penned like cattle behind officially-approved barriers.

The magical art of economics makes sense to me  only in real-life analogies.  I know some of the jargon and find it nearly as fascinating as the art itself.  High practitioners possess a comprehensive, pragmatic and effective understanding of (1)  where we are in history;  (2)  what the future holds;  (3) what we’ll need to bridge the gap;  and (4)  what  the probability is  that particular events will effect  our forward outcomes.  The last one calculates a dizzying array of  data and impressions from climate change and famine to  sonograms and pancreatic cancer.  Economics is the Buddhism of  the Magical Arts.  In fact, this blog could have been entitled, “Breathing is Economics.”

If a patient’s heart stops,  it needs a big  jolt to act as if it’s  alive. That initial jolt is a pretense:  whether we’re re-starting a heart, a battery or an economy,  the initial stimulus is a  second chance, not a fix.  Without fuel  to keep the engine charged,  another shut down is  inevitable.  (If a mixed metaphor works, then what do we care? It’s the gestalt we’re getting at here.)

The current inside-the-bubble  discussion is about whether  Obama’s Stimulus  creates enough jobs  OR  if it’s a wish list of  forward-looking investments.  (This is the basis of the stock market which predicts which  products will get us from here to there.)  The real question should be:  does it create or save enough jobs to give us confidence in the future  AND  does it anticipate building the educational and technological bridges  that will support a recovery?  In other words and to reference an Obama quote,  “Can we walk and chew gum at the same time?”

The economic stimulus has to to be big enough to  convince us that an innovative, smart economy is  in the offing.  Of necessity,  an  economic growth package has to create  sustainable manufacturing and service sectors.  So, we must invest in education and the  body politic (arts, humanities, science and technology).  We must stimulate  new economies and continuing education that  green the planet,  generate  well-health care and build local communities.

Both the stimulus and growth plans must prove our commitment to ethics and  to a workforce that  values and can afford  to buy what it produces.  Our decision making and its process must  prove we’re commited to a republic not an oligarchy.

On my birthday (January 27th) Jon Stewart suggested a stimulus plan that would eradicate our consumer debt (including mortgages) and inject  lending institutions with capital.  The  simple beauty of his plan lacks details and leaves much  to  debate, but it pinpoints the vital starting point:  worker-consumers.  As long as we’re afraid that  debt and job losses are going to drag us  over a cliff, we’ll buy only  necessities.  Demand for products will continue to slide and it’s ridiculous to invest  in companies whose products won’t be bought.   Combined with very little credit to grease the gears,  the world economy is grinding to a halt.    While Jim Cramer waxed  poetic about recession-resistant stocks like Johnson & Johnson and Colgate Palmolive, we were buying generics at the dollar stores. Our real lives are moving  faster toward pragmatism than the stock market can anticipate or pundits in a bubble can predict. Luxury and impulse buying are gone.   We’re cleaning  our own houses, cutting our own hair, plowing our own drives, mowing our own lawns, making our own yogurt and bread,  fixing our own plumbing and  growing  our own veggies.   (See  the  Foxfire Books. A Foxfire Christmas is particularly cool, I think.)  We’ve wakened from our consumptive coma  and we’re haunting  second hand shops and  buying toilet paper for  Just-A-Buck.  (If you’re new to this, find an old hippy who still looks like an old hippy and find out where s/he got her/his clothes, food and that nifty snowblower.  Also,  check out  Freecycle.  It’s an astonishing source of  free stuff.)

Sorry.  Back to Jon Stewart’s economic stimulus.

He’s  proposed  a new place to begin and called the scheme  “trickle up.”   Months ago, I suggested a direct infusion of funds to   local employers in order to stem job losses.  Both that idea and Stewart’s  shore up  the foundation of the  pyramid and frankly, as long as we jolt the core and build from the foundation, I don’t much care how we do it.

There are a blizzard of details to sort through of which these are just a few:

Regulators and  people facing foreclosure may not know which caballic entity holds their mortgage debt today,  but  consumers know which bank and loan officer  approved it. Do we give the money to the originating bank who may have issued a lousy loan?  Remember, the patient’s heading for complete cardiac arrest.  We don’t  have time to worry about which arteries messed us up; we need to jump start the  heart.  Some greedy consumers and banks will be rewarded.   It’s an unfortunate consequence that common sense suggests we must swallow.

Would every consumer get $15,000 to pay down or eliminate non-mortgage debt?   Would we modify corporate debt?  Or,  would we  limit debt cancellation to  locally-owned and/or  -operated businesses  with healthy, symbiotic relationships to their workers and communities?  (Nirvana, that and probably  fraught with legal challenges.  Not to mention how few locally-owned and/or operated businesses are surviving the early carnage.)

Which mortgage debt do we wipe out?  Do we subsidize all properties that have lost  value since purchase  or only property holders  who’ve lost or are in danger of losing the property?  Do we include only the primary home or do  we help the  retiree who bought a vacation home as a retirement investment?  Do we consider residential and commercial mortgages?  Do we have time to look at the community-at-large?  Can we afford not to?

We don’t have time to re-value each mortgage and  credit card so we might  have to pick a pay-back  percentage  which all parties  accept as whole.  If  we  owe the credit card company  $10,000, the company has to agree that  $1,000 (10 cents on the dollar) makes them whole.  Then,  Linens & Things and  Circuit City (the bankrupt companies where we bought our towels and computers) have  to accept $5 for a $50 bed sheet and  $100 for the $1,000 computer  they sold.  (I’m not saying it’s a bad deal, but  part of the equation is that when franchise retailers go out of business,  we lose the  under-compensated jobs many of us have been “educated” to fill.)

It’s gnarly; but so is the idea of a trillion dollars going directly to banks in hopes they’ll get around to re-financing  our debt.  They won’t.  Not just because they’re greedily waiting to scoop up the weaklings, but because they’d  be crazy to lend money in a sliding economy without substantial government investment in the future.

Increasingly violent hurricanes, floods, crop destruction,  water pollution and  water wars are events that threaten our basic food supply  and our economic forecast.  They  demand  resources for fixing rather than prevention.

Our transportation and electric grids are so  unreliable  that year-round, millions of people are left for weeks without heat/air conditioning, electric and water  in the wake of  storms.  When our transportation arteries aren’t flooded, they’re rendered impassible by ice.  They’re pocked with axle-busting potholes and our bridges are crumbling.  “Bird strikes” pose a known and unpredictable threat to our air transport, for cryin’ out loud.

We’ve got plenty of work to do–plenty of valuable jobs to fill.  If  an economic plan includes a large enough jolt and forward-thinking investments,  then it stands a chance of  succeeding.  (See:  House Bill and Senate Bill at Thomas.gov.)

A small note on “Sin Taxes.” Many of  us can’t afford the pleasures of  vacations, monthly trips to the movies or fresh fruits & veggies,  so we cling to our cheap substitutes:  fast-fat-sweet-salty-food,  cigarettes,  dope and  beer).  It isn’t a pretty picture (especially for the children) but if we’re going to tax sin,  then we need to think of it in terms of  a population that can’t afford  regular trips to a therapist.

The magical art of economics makes sense to me  only in real-life analogies.  I know some of the jargon and find it nearly as fascinating as the art itself.  High practitioners possess a comprehensive, pragmatic and effective understanding of (1)  where we are in history;  (2)  what the future holds;  (3) what we’ll need to bridge the gap;  and (4)  what  the probability is  that particular events will effect  our forward outcomes.  The last one calculates a dizzying array of  data and impressions from climate change and famine to  sonograms and pancreatic cancer.  Economics is the Buddhism of  the Magical Arts.  In fact, this blog could have been entitled, “Breathing is Economics.”

If a patient’s heart stops,  it needs a big  jolt to act as if it’s  alive. That initial jolt is a pretense:  whether we’re re-starting a heart, a battery or an economy,  the initial stimulus is a  second chance, not a fix.  Without fuel  to keep the engine charged,  another shut down is  inevitable.  (If a mixed metaphor works, then what do we care? It’s the gestalt we’re getting at here.)

The current inside-the-bubble  discussion is about whether  Obama’s Stimulus  creates enough jobs  OR  if it’s a wish list of  forward-looking investments.  (This is the basis of the stock market which predicts which  products will get us from here to there.)  The real question should be:  does it create or save enough jobs to give us confidence in the future  AND  does it anticipate building the educational and technological bridges  that will support a recovery?  In other words and to reference an Obama quote,  “Can we walk and chew gum at the same time?”

The economic stimulus has to to be big enough to  convince us that an innovative, smart economy is  in the offing.  Of necessity,  an  economic growth package has to create  sustainable manufacturing and service sectors.  So, we must invest in education and the  body politic (arts, humanities, science and technology).  We must stimulate  new economies and continuing education that  green the planet,  generate  well-health care and build local communities.

Both the stimulus and growth plans must prove our commitment to ethics and  to a workforce that  values and can afford  to buy what it produces.  Our decision making and its process must  prove we’re commited to a republic not an oligarchy.

On my birthday (January 27th) Jon Stewart suggested a stimulus plan that would eradicate our consumer debt (including mortgages) and inject  lending institutions with capital.  The  simple beauty of his plan lacks details and leaves much  to  debate, but it pinpoints the vital starting point:  worker-consumers.  As long as we’re afraid that  debt and job losses are going to drag us  over a cliff, we’ll buy only  necessities.  Demand for products will continue to slide and it’s ridiculous to invest  in companies whose products won’t be bought.   Combined with very little credit to grease the gears,  the world economy is grinding to a halt.    While Jim Cramer waxed  poetic about recession-resistant stocks like Johnson & Johnson and Colgate Palmolive, we were buying generics at the dollar stores. Our real lives are moving  faster toward pragmatism than the stock market can anticipate or pundits in a bubble can predict. Luxury and impulse buying are gone.   We’re cleaning  our own houses, cutting our own hair, plowing our own drives, mowing our own lawns, making our own yogurt and bread,  fixing our own plumbing and  growing  our own veggies.   (See  the  Foxfire Books. A Foxfire Christmas is particularly cool, I think.)  We’ve wakened from our consumptive coma  and we’re haunting  second hand shops and  buying toilet paper for  Just-A-Buck.  (If you’re new to this, find an old hippy who still looks like an old hippy and find out where s/he got her/his clothes, food and that nifty snowblower.  Also,  check out  Freecycle.  It’s an astonishing source of  free stuff.)

Sorry.  Back to Jon Stewart’s economic stimulus.

He’s  proposed  a new place to begin and called the scheme  “trickle up.”   Months ago, I suggested a direct infusion of funds to   local employers in order to stem job losses.  Both that idea and Stewart’s  shore up  the foundation of the  pyramid and frankly, as long as we jolt the core and build from the foundation, I don’t much care how we do it.

There are a blizzard of details to sort through of which these are just a few:

Regulators and  people facing foreclosure may not know which caballic entity holds their mortgage debt today,  but  consumers know which bank and loan officer  approved it. Do we give the money to the originating bank who may have issued a lousy loan?  Remember, the patient’s heading for complete cardiac arrest.  We don’t  have time to worry about which arteries messed us up; we need to jump start the  heart.  Some greedy consumers and banks will be rewarded.   It’s an unfortunate consequence that common sense suggests we must swallow.

Would every consumer get $15,000 to pay down or eliminate non-mortgage debt?   Would we modify corporate debt?  Or,  would we  limit debt cancellation to  locally-owned and/or  -operated businesses  with healthy, symbiotic relationships to their workers and communities?  (Nirvana, that and probably  fraught with legal challenges.  Not to mention how few locally-owned and/or operated businesses are surviving the early carnage.)

Which mortgage debt do we wipe out?  Do we subsidize all properties that have lost  value since purchase  or only property holders  who’ve lost or are in danger of losing the property?  Do we include only the primary home or do  we help the  retiree who bought a vacation home as a retirement investment?  Do we consider residential and commercial mortgages?  Do we have time to look at the community-at-large?  Can we afford not to?

We don’t have time to re-value each mortgage and  credit card so we might  have to pick a pay-back  percentage  which all parties  accept as whole.  If  we  owe the credit card company  $10,000, the company has to agree that  $1,000 (10 cents on the dollar) makes them whole.  Then,  Linens & Things and  Circuit City (the bankrupt companies where we bought our towels and computers) have  to accept $5 for a $50 bed sheet and  $100 for the $1,000 computer  they sold.  (I’m not saying it’s a bad deal, but  part of the equation is that when franchise retailers go out of business,  we lose the  under-compensated jobs many of us have been “educated” to fill.)

It’s gnarly; but so is the idea of a trillion dollars going directly to banks in hopes they’ll get around to re-financing  our debt.  They won’t.  Not just because they’re greedily waiting to scoop up the weaklings, but because they’d  be crazy to lend money in a sliding economy without substantial government investment in the future.

Increasingly violent hurricanes, floods, crop destruction,  water pollution and  water wars are events that threaten our basic food supply  and our economic forecast.  They  demand  resources for fixing rather than prevention.

Our transportation and electric grids are so  unreliable  that year-round, millions of people are left for weeks without heat/air conditioning, electric and water  in the wake of  storms.  When our transportation arteries aren’t flooded, they’re rendered impassible by ice.  They’re pocked with axle-busting potholes and our bridges are crumbling.  “Bird strikes” pose a known and unpredictable threat to our air transport, for cryin’ out loud.

We’ve got plenty of work to do–plenty of valuable jobs to fill.  If  an economic plan includes a large enough jolt and forward-thinking investments,  then it stands a chance of  succeeding.  (See:  House Bill and Senate Bill at Thomas.gov.)

A small note on “Sin Taxes.” Many of  us can’t afford the pleasures of  vacations, monthly trips to the movies or fresh fruits & veggies,  so we cling to our cheap substitutes:  fast-fat-sweet-salty-food,  cigarettes,  dope and  beer).  It isn’t a pretty picture (especially for the children) but if we’re going to tax sin,  then we need to think of it in terms of  a population that can’t afford  regular trips to a therapist.

I’ve been listening since the election to the national  “discussion” of the automaker bailout and  I’m not the only one who’s noticed it sounds like the “discussion” we had before the Iraq invasion.  “Either-or,”  again and again.  It’s played out like this,  “If we don’t give the Big Three Automakers another $25 billion dollars, the United States will swirl down the drain.”   The other side counters with, “If we  give The Big Three another $25 billion, it will be the end of the Capitalist model.”

As near as I can tell, we need six pieces of unequivocal information which are not, apparently available:

:     are The Big Three “toxic”  and are they equally-toxic?

:     would  a loan of $50 billion dollars ensure that  The Big Three  are market-competitive in  five years?

:     what structural changes have to be made in their physical plants and business models to ensure they’re market-competitive in five years?

:     are there viable buyers and/or investors for The Big Three? If not, what makes Paulsen and the Treasury Department believe that We The People want to invest in a raggedy Wonderland?

:     how long will it take to create green manufacturing jobs for people clobbered with job losses?

And, just because we should be alarmed by  the increased vilification of the poor, working poor and middle classes:

:     how did workers’ wages and insurance premiums destroy The Big Three?  Workers were being paid to build products nobody wanted.  Successive generations of families worked  in the same plants forty years or more. It was one of the few corporate sectors where “trickle-down economics”  actually benefited workers as well as CEOs.  Auto workers set a standard for participating in our economic booms and after forty years of feeding the economy with the products they bought, the homes they built and the children they sent to college, they’ve earned better than bankruptcy when their employers “bail out” of their pension and health care contracts.  Our economy runs on the notion that “workers” will earn enough to have “expendable income” which they will use to  “consume and invest.”  How did we achieve a topsy-turvy understanding that blames worker/consumers when corporate profit margins for worthless products exceed all rational models?

Why isn’t  the information we need for good decision-making  available in  discussable form?  Economic journalists have morphed into “opinion” journalists.  I read Robert Reich, Thomas Friedman and Paul Krugman and for balance, I watch CNBC.  The analysts are just as frightened as the rest of us and I’m tired of hearing the same “mushroom cloud” analyses  we heard before the Iraq invasion. If I hear “economic Armageddon” or “world-wide meltdown”  one more time from trusted analysts….

Instead,  I want to hear from Buffett and Soros.  I want a team of their analysts to audit the automakers.  I want an analysis of each company’s future viability.  I want to know the conditions they need to meet in order to be market-competitive.  I also want to know what they’ve done with the first $25 billion they were given besides tuck it in their back pockets.  Why is that money collecting interest in their corporate accounts?  I want those interest dollars reimbursed to a Green Manufacturing  and Job Creation Fund.  (Relatedly, every single person whose job is threatened should be enrolled in all-expenses-paid educational programs today.  Let’s make sure every single community college and BOCES offers vocational training in computer- and green-based manufacturing because  there are other sectors on the brink of failure.  Hospitals, for instance, are in desperate straits and everyone knows we have a nursing shortage. One reason for that is the huge number of good nurses who’ve run screaming out of hospital work because the system is cruel and unusual to patients and workers.  Clean up the system and the “nursing crisis” will evaporate.)

Sorry for that sidetrack.

Structural changes to The Big Three’s physical plants and business models.  I want a full-blown analysis of both these areas for each of the Three. I don’t want another bundle of toxic assets. Is there a law of  magneto-physics that links the three inextricably?

The team of analysts who audit The Big Three should include representatives from  green manufacturing sectors, autoworkers and anyone who sold their patent rights to the automakers — anyone whose bright idea so threatened the automakers that they bought the patents and buried them under a pile of over-priced and poisonous vehicles.  Let this team of analysts examine the physical plants cooperatively. Let them tell us what’s possible.  I’ll bet there are hungry and innovative enterprises fully-capable of building a better mousetrap in abandoned car factories all over this country. All they need is the investment capital that, heretofore, was siphoned off by the companies at the top of the heap.  In fact, I’ll bet innovators are  already buzzing with  brilliant ideas as I type this. I’ll even  bet there are stymied Ford engineers and line workers with boxes of great ideas that have been trampled in the race to the mediocre bottom.  Maybe innovative employees could create a research, development and implementation  plan.  In the meantime, let the bean counters do their work.  When the chickens are counted, let’s invest in the demonstrably best bet.

Presumably, after offering its cost analysis,  this team of structural and financial experts would be able to provide business plans for retrofitting the abandoned factories for a variety of industrial purposes.   Hell.  I’ll bet there’d be investors all over the world lining up — anything to keep the US economy intelligently afloat.  (I wonder what the rest of the world will trust us with next.)

Plenty of respected economists  believe we don’t have time to do a thorough analysis of the companies’ financial prospects.  In point of fact, we don’t know our timeframe, do we?  We have claims and counter-claims without verifiable proofs.  Our distrust is  one price of being lied to for eight years.  It’s one price of all the dead and maimed in Iraq.  Regardless, if it’s too late for a thoughtful analysis, then it’s probably too late, period. Supporters of The Big Three Bailout cite their increased European profile and the fact that GM makes more 30+ MPG models than any other company. (Their sales lag but their production is up.)  I’m not convinced we should let them fade away.  I’m not convinced we’d be nuts to invest in The Big Three;  but  we do need to know if they  can be market-competitive in five years or if they’re hopelessly behind the eight ball.

Soon, there’ll be a lot of soldiers coming home.  Among the many things they’ll need,  fair-wage jobs have to be a priority.   Are the automakers — America’s industrial backbone — going to provide those jobs?

No?  Then perhaps we need to answer the question:  what are the viable alternatives? Should we throw good money after bad for, perhaps, the sake of egocentric nostalgia?   At our root, isn’t this more a referendum on what it means to be American?  Aren’t we afraid of what we’ll see in the mirror (or what else we’ll cede)  if we admit publicly  that we don’t make cars anymore?  Don’t we need a stronger backbone for our US economy than what’s been provided by The Big Three?

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Related questions:

How did teachers, plumbers, farmers and nurses outwit  bankers, lawyers and their maze of legal documents  to create the mortgage meltdown?

Why aren’t AIG’s hyenas in jail instead of lolling poolside with  private masseuses and standing in front of Congress with their hands still out?

Why aren’t rating agency employees (Moody’s,  Standards & Poors, Fitch) who colluded to award falsely high grades to toxic bundled assets in jail?