Auto Industry to You: "Your Wallet or Your Life."

SAVE AS FAVORITE

VIEW FAVORITES

By Stephen Pizzo (about the author) Page 2 of 2 page(s)

opednews.com Permalink

What's afoot here is something I first learned about when investigating S&L failures in Texas. A major developer/borrower/defaulter down in that magic kingdom of Ooze was earning extra money giving how-to-get-rich lectures to other wanna be millionaires. His formula was simple and effective. He began with this rule of thumb:

“Borrow a hundred dollars from a bank and the bank owns you. Borrow $100 million from a bank, and you own the bank.”

His MO was to borrow hundreds of millions for condo projects he knew full well there was no demand for. Then in the middle of the project he'd go back to the bank, hat in hand, and tell them he was having financial difficulties and needed help. Otherwise he would default on all those loans. He'd shake the bank down, not only for additional loans, but for overly generous terms on his existing debt, including in some cases, debt forgiveness. Otherwise, he threatened, he would go out business and the bank would end up owning his entire herd of white elephants, thereby threatening the banks own survival.

It's extortion, pure and simple, and it too often works as those in charge are willing to do anything to assure that disaster does not strike on their watch – even if it means reinforcing bad behavior and making matters worse in the long run.

And it's exactly the game being played by the Big Three automakers today. It's pure and simply, “you're wallet, or your life.”

But wait a minute – it's not our lives, it's their lives. So the right response by congress should go something like this:

“Are you the guy in charge at GM? And you, you're the decider at FORD? Do you make the final model decisions at Chrysler? Are you the guys who decided to build gas guzzlers at the very time our troops were dying in oil regions of the Middle East? Do we have that right? Are you the ones who, as the polar icecaps melted, decided Hummers were a good idea? And the same guys who claimed no one wanted hybrid cars, then let Toyota and Honda grab that market share instead?

Huh? Are we talking to the same three guys responsible for all that?

“Yes. Okay, we see. We understand. So, will the Sargent at Arms please escort these three gentlemen back to Reagan National Airport, so they can fly back to Detroit on their private jets to submit their resignations. Once that's done we'll get back to thinking about it.”

1 | 2

Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a (more...)

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.