Vultures Circling on US Auto Makers

Ref: 0811-016 of 2008/11/23

 

Wall Street and Private Equity vultures are at it again. They are aided and abetted by Republican senators and its sponsoring media with well orchestrated campaign to cause the death of the United States’ biggest employer – General Motors, Ford and Chrysler.

The vultures are interested in causing deliberate bankruptcies so that all the equity and options owned by United Auto Workers in their respective companies be turned worthless, the pension fund liabilities avoided partly or altogether, the health and insurance benefits to retirees reduced to zero, termination benefits also reduced substantially for want of funds, and the companies so stripped off its statutory liabilities be bought over in Bankruptcy Court for a song.

 

The officials from FED, Treasury, Office of the President, and hosts of senators mainly from Republican Party want to rehearse the events of United Airlines, WorldCom, Bethlehem Steel and lately Lehman Brothers, all of whom were allowed to go bankrupt to the detriment of all its workers and employees

 

Destroy the United Auto Workers…

REASON, all these companies were partly or majority owned by the Employees or Workers, which acted as “eyesore” to the brokers on the Wall Street and predators- Private
Equity firms.

 

The Courts of United States also favor the predators. They also award the companies to those vultures by refusing to let the company liquidated compulsorily, but handing over to bond or debenture holders by allowing writing off the entire equity of the company, so that the employees are not left with any power without money.

 

The whole system sucks – from monetary (FED & Treasury) to Political (Senators and Representatives), to Executive (President) to Judiciary arm (Courts) – all are corrupted by the wily suckers on the Wall Street who use its orchestrated media – in print or television. Day in and out, you tune in to CNBC, NBC, Fox News, CNN or CBS or read Wall Street Journal, Barron’s, Business Week, Forbes who all praise such actions in the name of saving the company and enforcing cost savings.

Even today, the questions are asked – why Lehman Brothers were allowed to fail. Why not Merrill Lynch, Bear Stearns, Morgan Stanley, or even Goldman Sachs?

 

What is so common in rest of four and unique in Lehman Brothers? The answer is LHB was majority owned by employees. The employees or workers are treated like disposable diapers in United States, whatever is the outer façade to describe them.

 

It happened to United Airlines only in recent past…

Why United Airlines was allowed to fail and thrown into bankruptcy court – because it was majority owned by employees. All of their shareholdings were reduced to ZERO by the bankruptcy court and awarded the company to the debt holders who deliberately bought debts to exercise the control. The life time savings of all employees were lost in a flash like homes destroyed in Californian wild fires.

 

The debt holders were given the new equity at most favorable terms and reducing all past equities (majority owned by workers or employees) to Zero value. If the company was still worth, the question arises why UA was not placed by the court on auction block with open and transparent public tender or why was it not sold part by part to realize the best value? The stocks owned by employees were reduced to zero and the new stocks awarded to debt holders in exchange of debt soared to as high as $ 49 from just under few cents.

 

All have been accomplished in the name of free enterprise, freedom, capitalism, efficiency of the capital market, and similar nouns and adjectives. They invent new names, phrases or synonyms from Roget’s Thesaurus.

 

Wall Street Brokers Cheers and Jeers at the Loss of Other People’s Jobs

Whenever a company merges or taken over by a predator, announcements are made to dismiss the thousands of employees in the name of cost cutting exercise and boosting the profits. Wall Street Brokers from Goldman Sachs, Morgan Stanley, Smith Barney, Merrill Lynch, UBS and all down the line, applaud such moves and start recommending the respective stocks by shooting them up by 10% to 50% in a few days.

 

While the thousands of laid off employees live sleepless nights, sobbing until dawn how to meet the mortgages or tuition fees of their kids, the irresponsible brokers and investment bankers on the Wall Street go on celebrating in high profile parties hitting wine or champagne glasses with the shouts of “cheers”. They are interviewed on popular channels like CNBC or Bloomberg by Anchors with glee on their faces.

 

There could not have been better shameless spectacle. Read every take over in the past or mega merger, you will find the same gimmicks all the time.

 

Consign the Wall Street Brokers and Investment Bankers to Guantanamo Bay…

It is therefore highly a celebration event that finally the Wall Street brokers saw what they deserved most. Thousands of Wall Street brokers are now being laid off in worst ever crisis which was their own making. They now realize how it feels like losing a job – celebrating with wine glass or with full glass of tears of their loved ones.

 

There should be no sympathy for all these bankers, Investment bankers and brokers – they should be condemned and consigned to Guantanamo Bay Detention Camp. Osama Bin Laden may have caused pain only once – on 911. But these Wall Street brokers, banks and investment banks are the biggest financial terrorists who cause pains every day to every family in United States.

 

$ 218 Billions charity by Paulson to AIG to help them pay Goldman Sachs, his former company?

And look at the perfidy of Hank Paulson, Treasury Secretary and Ben Bernanke (FED Chief) who have been pouring the billions, even trillions of dollars, into bankrupt banks and brokers for the losses of their offshore arms who never contributed any taxes or employment to the local American Tax Payers.

 

They never asked or justified why the off shore obligations of banks have suddenly become the liability of domestic Americans who have nothing to do with independent off shore operations of those defunct companies.

 

And why does Paulson pays $ 89 billions +$ 129 billions to AIG? Is it because AIG could repay its dues to Goldman Sachs (wild guess is $ 20 billions to $70 billions), a firm of whom he was the President before joining Bush Administration? Yet, the President Bush is so blind and complacent that he can not see the naked truth.

 

Devils’ Donation to Tax Dodgers and Denial to Domestic Tax Paying Corporations.

They are giving hundreds of billions of dollars to “Asset Void Banks with no possibility of Repayment” for the obligations of their off shore operations, the tax dodgers. Same gang is refusing to pay $25 billions to 3 Auto makers – General Motors, Ford, and Chrysler who have been paying billions of dollars of taxes for over 60 years, who have created over 2 million jobs, who have solid assets, who developed thousands of townships, who became the backbone of the American Industrial expansion.

 

United Auto Workers may come out in full force to demand full justice and ensure that all the excesses of the past defeating the cause of labor are put to rest. It is now or never for them.

 

NO, this stubborn Paulson and Bernanke say. And the Republican Senators join them – Do not give them $ 25 billions – they are inefficient. As if AIG, Citigroup, JP Morgan Chase, Bank of America who are recipient of over $300 billions were efficient.

 

If these 3 auto makers fail, and 3 million affected Americans are laid off, it will cost $12 Billions per month towards “unemployment allowances” that is over $144 Billions annually, if we consider the recent extension granted by the President Bush. Simple arithmetic – lose $ 25 billions now with full guarantee of repayment or lose $144 billion in a year without any possibility of repayment towards the unemployment allowance alone, loss of tax income if they were gainfully employed is not even counted.

What would you do, if you were the President of United States? 

 

The country is on steep decline. There could be unrest, strong protests, riots, loots, murders, real blood bath on the main streets of United States, if no actions were taken to blunt the attack of the Wall Streeters on the Main Street participants. Can you imagine what happens when 52000 employees of Citi Group and over 2 million direct or indirect employees of 3 Auto makers are suddenly thrown out on the street in just under 7 days? Blue collar workers are normally less tolerant of job losses than white collar employees.

 

It just defies my common sense – how come these VIPs in the White House are pouring hundreds of billions of dollars into bankrupt off shore operations in the form of 100% unsecured advance while denying relatively small but fully secured $25 billions to America’s biggest industry at home – Auto Makers?

 

The present administration has gone absolutely mad, just mad.

 

Kalidas, Hong Kong

Ref: 0811-016 Vultures preying on US Auto Makers