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Quick thread about the "college bailout" guised in good symbols, entreaties and threats... as every proper robbery should have. Flashback to the bank and auto bail out.But we gotta start before then ..
the military bail out we called Iraq
"... Iraq has a growing fleet of manned and unmanned aerial vehicles that could be used to disperse chemical and biological weapons across broad areas. We're concerned that Iraq is exploring ways of using these UAVs for missions targeting the United States." GWBush October 2002
The Iraq War lasted (officially) from 2003 to 2011, and cost $1.06 trillion. Beyond that is hundreds of billions more for our continued presence.
Banks wanted money too!
The speculation and lack of effective regulation eventually led to the crash of 2007 and The Great Recession
The speculation and lack of effective regulation eventually led to the crash of 2007 and The Great Recession
September 2008, Hank Paulson, formerly CEO of Goldman Sachs and at that the Treasury Secretary, told Congress that $5.5 trillion in wealth would disappear by 2 p.m. that day unless the government took immediate action, and that the world economy would collapse “within 24 hours.”
$700 billion was immedaiatly approved to save the banks during the financial crash in September of 2008. But the bailout is still ongoing. It was a total commitment of government is $16.8 trillion dollars with the $4.6 trillion already paid out.
After the original $700 billion bailout, the ongoing bailout was kept secret as the Fed Chairman, also a former Goldman Sachs CEO argued disclosing details would stigmatize banks.
$8t more of secret lending was revealed when Congress forced an audit in 2011…
The money had no requirements, it could use it for any purpose. Including bonuses. In 2007/8 alone...
The auto companies of Detroit saw an open spigot of money and rushed towards it.
In 2006, none of Consumer Reports Top 10 cars was made by U.S. based automaker.
2008, sales had fallen by 400k autos in a year = two factories' annual output
The CEOs of Ford, Chrysler and GM appealed to Congress for a bridge loan, they arrived via corporate jet.
in Dec 2008, Bush tapped TARP funds (Wall St bailout) for 1st round of money to go to Detroit, enough to stay operational for the first several months of the Obama presidency.
GM owed $6b to secured creditors, $30b to unsecured creditors.
C owed $7b to first-lien secured creditors, $2b to second-lien secured creditors, $5b to unsecured trade creditors & billions more in obligations to dealers/warranties.
The United Auto Workers (UAW) had also created significant liabilities for Detroit.
In 2006, GM paid its unionized workers $70 per hour in wages & benefits. C paid $76 an hour. substantially more than foreign companies with US Auto employees were paying.
Who is the UAW
Who is the UAW?
UAW membership was 700,000 in 2001, in 2008 it had 355,000 active members & 600,000 retirees.
Staff of more than 2,000.
in 2008 the UAW brought in $211 million and spent more than $268 million.
Half of union’s $ outflow was staff, another $20 million was travel conferences.
UAW ees at GM & C can collect pensions in their 50s. The automakers also provided UAW retirees with full health coverage until they became eligible for Medicare after which UAW retirees in 2006 had maximum out-of-pocket expenses of +/- $200
UAW held $1b in stocks/bonds, $38m in land, DC mansion, and... an 18-hole golf course 4 hours away from its autoworkers in Detroit.
In 2008, the UAW-PAC spent $13.1m on Dem political races, another $4.88 million in independent expenditures, $4m in support of Obama
Obama took office. With the Detroit CEO's and UAW execs and its on the street vocal forces, appropriated the language of the Iraq war'rs and the bank bailout'rs, if they didn't get money, the world might end and we would have to fight for our meals in the Thunderdome
Auto companies wanted bankruptcy to allow them to (re)negotiate their enormous accrued obligations, and to force unions to new rounds of collective bargaining over their wages, benefits and pensions.
The Obama administration commandeered the bankruptcy process to reward the UAW, at the expense of auto investors, the credit markets and the future.
It gave C secured creditors, who would have had priority in a normal bankruptcy, 29 cents on the dollar.
UAW got more than 40 cents on the dollar, even though they are equivalent to low-priority lenders.
UAW retirees got 100% of their pension/retirement benefits.
21,000 NONunion, employees lost up to 70 percent of their pensions, and all of their life and health insurance.
The new auto co's that resulted from Obama coerced bankruptcies did not resolve labor costs & still had most of their legacy costs
GM & C were't reorged to compete for tomorrow
The bailout wasn't auto, it was UAW. And it cost Taxpayers well over 10b
Health care co's saw the spigot opened, they rushed in…
and that was the beginning of the greatest wealth transfer since Alexander took Persepolis
and that was the beginning of the greatest wealth transfer since Alexander took Persepolis
