The Great Depression Online




Great Depression Online Archive Issue:

The Death Knell of an American Icon

Great Depression Online
Long Beach, CA
May 15, 2009

Inside This Issue You Will Discover…

*** Panhandling the Feds to Make Payroll
*** The Anatomy of a Mulish Ogre
*** The Wrath of Jimmy
*** And More

The Death Knell of an American Icon

Way back on November 18, 2008, we reflected on the United Auto Workers (UAW) success at leeching the blood from their host – Detroit’s Big Three – and pondered the quid pro quo they’d receive for helping then President-elect Barack Obama win the White House.

This week we got an answer.

In what must be, without a doubt, a most disgusting form of reverse capitalism…we learned the deal in the works to save General Motors would raid bondholder and transfer their losses to the UAW.  Here are the particulars, as reported on Tuesday by AP…

“GM has offered bondholders 10 percent of the company’s equity in exchange for wiping out $27 billion in debt.  The company also is negotiating with the U.S. government for a potential 50 percent share of GM stock, and with the UAW to take 39 percent in exchange for half of the $20 billion that the company owes the trust fund.

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“The remaining 1 percent would go to those who hold the company's current 611 million outstanding shares.

In short, compared to UAW, GM bondholders would write-off nearly 3-times what they’re owed for only a quarter of the stock UAW would receive.  Or, conversely, UAW would receive 4 times the stock for a little more than a third of the price of GM bondholders.  What’s more, should the U.S. government take over 50 percent of its stock, GM would effectively be nationalized.

As word of the potential deal hit Wall Street on Tuesday, GM stock dropped over 22 percent to $1.09 – nearly penny stock status – and its lowest level since April 28, 1933.

Here we pause to hang our head…listen…and observe the death knell of this once great American icon…that will soon be nearly 90 percent owned by the government and the auto workers union.  And today, to offer some insight and instruction as to just how the heck we got here, we’ve republished the November 18, 2008 GDO, titled “The Wrath of Jimmy.”  Enjoy!

---

The Wrath of Jimmy

Panhandling the Feds to Make Payroll

The pursuit of ignominy is nondiscriminatory.  For it’s with equal opportunity that each individual is granted the occasion to act a buffoon.  Most rare is the man who heeds the calling, ascends to the highest ranks of public office, and preserves his dignity.  More often, he takes his cue, steps center stage, and behaves like an utter jackass.

If you’re not familiar with California politics, it’s a wacky and zany place.  Several years ago – much like today – the state was broke.  So second term Governor Gray Davis proposed a solution to cover the budget gap…tripling the vehicle licensing fee.

In short, it was political suicide.  The public went berserk and a special recall election was organized.  Davis was terminated.

The new Governator strutted around like a peacock on the walk, boasting how he was going to reign in spending in Sacramento.  He talked tough, parroted his old action hero movie script, puffed out his chest…then went for a pedicure and wimped out before the wrath of the California Teacher’s Union that’s garroting the state’s finances.

Suddenly, the Governator was reading from a new script.  It called for ballot initiatives, bond measures, and big public spending projects.  Now, scarcely five years later, the state’s broke again.  And the Governator’s panhandling the Feds to make payroll while the teacher’s union swills sumptuously from the gravy train.

The Anatomy of a Mulish Ogre

James Riddle (Jimmy) Hoffa grew up a two bit hood rat, slumming the back alleyways of Detroit’s ragged west side.  He dropped out of school in the 9th grade to get on with ‘it’.  But the problem for Jimmy was he hadn’t a clue what ‘it’ he should get on with.

He also suffered from several grave disorders…namely he was a mulish ogre.  Jimmy greeted a punch to the face like a kiss from a goddess.  Also completing his character trifecta was an early strain of a debilitating mental syndrome that has since become a national epidemic…the entitlement syndrome.

So it was with the disposition of a loaded gun that Jimmy showed up for work at the Kroger Grocery and Baking Company warehouse one night in the spring of 1931.  There, as the gods would have it, a severe resentment with his boss set his life’s purpose in motion with the relentless fury of a runaway steamroller. 

Jimmy was too much a brute to not see that which was not directly before his very eyes…

…that his job was not a right. 

…that if he didn’t like it he could go work elsewhere. 

…that if he didn’t want to work for someone he could start his own business. 

In fact, the world was a much freer place back then.  Barriers to entry were minimal…no business license, no city permit, no state sales permit, no county fictitious business name filing.  All Jimmy had to do was save up a couple days pay, buy a basket of strawberries, and go door to door…earning a little profit for his enterprise.  He could’ve been in business for himself by weeks end.

Instead, the mulish ogre steamrolled forward, bullied his coworkers, and called for a work stoppage just as a truck loaded with perishable Florida strawberries pulled into the warehouse.  Several days later Jimmy had a union contract.

Soon after his career with Kroger ended.  For the money as a union shill was too good to pass up.  Jimmy bullied his way to a fulltime job with the International Brotherhood of Teamsters, ultimately becoming its president.  There, through fear and intimidation, Jimmy organized worker strikes and boycotts…and leveraged mob connections to racketeer employers and bend them to meet his will.

Jimmy was finally busted for attempting to bribe a grand juror and was sentenced to 15 years in prison.  But Tricky Dick Nixon later commuted his sentence and Jimmy was again stirring up worker strife by late 1971.  By 1975 he had double crossed one too many, and disappeared from the face of the earth.

The Wrath of Jimmy

Though Jimmy never got his greedy paws around the collar of the automobile industry, he didn’t have to.  For the United Auto Workers (UAW) already had their scuffed up work boot firmly stomped down across its neck.  And they were successful at executing the worker strike tactics that Jimmy had devised to extract ever larger helpings of the proceeds from Detroit’s Big Three.

The UAW’s been so successful at leeching the blood from its host that it’s now ailing on its deathbed.  It’s no secret the combination of labor extortion and poor product quality has brought the U.S. auto industry to ruin…they’ve been one recession away from extinction for 20 years.

This week the fate of the Detroit automakers and the UAW will be investigated by Congress.  It’s gearing up to be quite a spectacle…with the main performances today and Wednesday.

UAW President Ron Gettelfinger specified his union’s position over the weekend, “…workers will not make any more concessions,” reported AP. 

Nonetheless, The Big Three are soliciting the Federal Government to keep the lights on…

“The companies [The Big Three] are seeking $25 billion from the financial industry bailout for emergency loans.”  And “GM has warned it might not survive through year’s end without a government lifeline.”

On Sunday, Senators Richard Shelby of Alabama and Jon Kyl of Arizona voiced their opposition to the bailout.

“‘Companies fail everyday and others take their place.  I think this is a road we should not go down,’ said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee. ‘They don't innovate.  They’re a dinosaur in a sense.”’

“‘Just giving them $25 billion doesn't change anything.  It just puts off for six months or so the day of reckoning’” added Kyl, the Senate’s second-ranking Republican.

On the contrary, “House Speaker Nancy Pelosi, D-Calif., said over the weekend the House would aid the ailing industry, though she did not put a price on her plan.”

And Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee, added that “The House is ready to do it.”

If no bailout’s agreed to before the end of Bush’s lame duck Presidency, President-elect Barack Obama will be put to the task.  With no hesitation, the labor unions that helped Obama win the White House will be looking for some payback.

Could a Greek play write have come up with a more amusing comedy…or tragedy?

From his exclusive corner carved out in the depths of hell, it’s no doubt, Jimmy looks up at the spectacle with a grin and a titter…appreciating the wrath he bestowed upon the world.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  According to the Center for Responsive Politics, during the run-up to the 2008 presidential election, the UAW donated $5 million in independent expenditures to the Obama campaign.  It looks like, for them, they made a wise investment.  For the rest of us, we’ll foot the bill for propping up a zombie GM for years to come.  But don’t get mad.  Get even.  Better yet, get filthy rich.  Here’s one way to go about it: Unlock the Money Vault

 

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