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

By       Message Stephen Pizzo       (Page 1 of 2 pages)     Permalink    (# of views)   6 comments

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View Ratings | Rate It Headlined to H2 11/19/08

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That old Jack Benny gag has recently been popping up in my head. It's the one where the legendary tightwad is confronted on the street by an armed robber who demands, “Your wallet or your life.”

Benny doesn't respond and the robber yells, “Your wallet or your life. Hurry up!”

Un-flapped, Benny responds, “Don't rush me. I'm thinking.”

The spark that reignited that old memory came yesterday. I spent much of the day watching the three CEO's of GM, Ford and Chrysler on C-Span rattling their tin cups in front of Congress. (I know, I need to get a life)

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The three over-paid CEOs were playing the role of robbers and members of the panel were channeling Jack Benny.

The case being made by the three auto giants – the same ones that brought us the SUV and the Hummer -- was that if taxpayers didn't fork over $50 billion immediately, they would go out of business and take 3 million American workers down with them. (That was the “your life” part of the threat.)

The members on the panel were still “thinking” about that when an email from my son, Chris, popped into my inbox. It simply had a link to this YouTube video.  You can watch it later. Briefly, the video was by some guy in Detroit showing a page from that Sunday's newspaper. It was a page filled, top to bottom, with foreclosure notices in small type. It filled the page like a giant grey cloud, listing home after home after home being taken over by lenders.

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Then the fellow turned the page exposing another full page of the same -- then another, and another.. In all (are you sitting down?) 137 metro-size pages of homes in just Detroit, being foreclosed upon.

My attention was drawn back to C-Span, and the three Motor City CEOs were still at it, worrying, whining  and, when that didn't get the desired result, threatening.

Another instance of life imitating art popped into my head. It was that scene from Blazing Saddles where the new black sheriff of a redneck town, surrounded by angry whites pull his six shooter from its holster and points it at his head threatening,  “One move and the sheriff gets it.”

It seems congress has been paralyzed by these threats, so let me help them out.

First, I'd tell those guys, “Go ahead. Make our day.”  Losing the three guys who ran America's largest remaining  manufacturing base into the ground would be a gain, not a loss. Besides, for the kind of money they were demanding from taxpayers we could employ all auto workers and cover existing retirement obligations for as long as needed to reorganize bankrupt automakers in bankruptcy. And in the process, those government jobs would help avoid adding pages 138 and on to that list of foreclosures. Whereas a govenment bailout of the Big Three would only avoid those three extortion artists having to explain to shareholders why they drove their companies into bankruptcy.

(BTW, the same goes for the United Auto Workers Union top executives.  And if you need to ask why, then you simply have not been paying attention.)

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Harsh? Tell it to the ordinary folks in Detroit who are the faces and families behind those 137-pages of foreclosure notices. None of them get a hearing before the House and Senate. In fact if any one of them did and tried to extort money out of congress he/she would be unceremoniously escorted off the premises by armed guards.

Yet congress continues “thinking about” giving the no-longer-so-big, Big Three our national wallet. They already gave our wallet to the other “bigs” –  the “too-big-to-fail” banks and “too-big-to-fail” AIG.

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:

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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...)

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