GENERAL MOTORS AND ZIPPER PEAS

I wanted to plant some zipper peas this year. They are a round, cream pea that is delicious and so easy to shell. Unfortunately, I could not find any seed.

About now, you are asking, just what does this have to do with General Motors.

We have just witnessed a very dangerous precedent being set. The president of the USA has forced the CEO of a company to resign. The justification for this action being twofold. First, the company is about to go under, and second, GM accepted public money to prop it up. I won’t go into the why of GM’s problem in the first placel

If this action is allowed to stand, then the same rationale can be used in the future against any company. If it gets public money, and the president or one of his appointees thinks it is failing, then government will essentially take control of that business. All for our good, of course.

Now think about this. What major industry has been accepting public money for many years now?

The answer I have in mind is agriculture.

Now suppose that a large agricultural corporation has a bad year or two. Based on what we have just seen, could we expect the government to step in and take control of that corporation? I think we could. After all, what is REALLY too big to fail if not a major producer of foodstuffs?

So we would have a government appointee managing food production. Never mind that he got the job because he is party hack with no farming experience.

In 1993 I was in Russia near Moscow and stayed for a few days at a commune. I learned some things there.

Those of you who can remember even recent history know that the USSR could never feed itself. It had to buy grain and other things regularly. Now that was not because Russia did not have good farm land. It was because those managing the communes were not appointed for their expertise, but because of their party connections.

The same government that had incompetent farm managers also ran the factories. What happened was that even when crops were planted and ready to harvest, many times machines broke down, and parts were not readily available. Those running the farms were also running the manufacture and distribution of replacement parts. Those crops rotted in the field.

What does all this have to do with zipper peas? The reason given to me is that so many farms have converted over to producing corn for ethanol, a subsidized crop, that not enough people are growing peas for seed..

Think about where all this wonderful change is headed.

John

Good point, Gal.

Worse, the "too big to fail" justification could be applied to just about any industry. The auto industry, the Banking industry, agriculture, computers, construction, telecom, etc. are all too big to fail. Any of them can be forced to take money from the government (as some banks were forced to do), and be taken over by the government.

The precedent is scary.

Elliot

The Soviet style market planners have their sights on much more than the agricultural industry .
The Obama administration decided they will no longer call the war against jihadistan the Global War on Terror or the Long War . They have changed the name to an "Overseas Contingency Operation."

Replacing the GWOT will be the GWOB... the Global War on Business. I suspect the G-20 meetings are to recruit a coalition of the willing .

The opening salvos of inciting a populist outrage against AIG and the firing of GM CEO Rick Wagoner ;the President mandating that Chrysler be sold to Fiat, are being followed up by the Bwaney Fwank Pay for Performance Act of 2009 which will
"prohibit unreasonable and excessive compensation and compensation not based on performance standards."

This represents a large escalation .Companies that made the mistake of going to Washington with their hands out will be subject to compensation restrictions the Biz~tzar Tim Geithner thinks they should be allowed to receive. He alone will decide what is "unreasonable" and "excessive" .
Does anyone believe that they will stop with these companies ?Well consider then that most companies start under federal small business loans ,and expand it from there . Wage controls are already in place to a degree in this country . They are about to be greatly expanded .

Workers of America Unite under our new national slogan :
“They pretend to pay us, and we pretend to work.”

Hello:

Yeah, bummer there's some adult supervision in Washington. Of course, you guys don't like it. As a matter of fact, the more you guys yell, the better he's doing.

excon

I really doubt this. I don't know what percentage of new business startups are funded by loans from the Federal Government, but I'll bet it's a tiny minority, certainly not "most".

Agreed.

Over the last 10 years, the Small Business Administration has been responsible for well over $100 billion in small business credit extensions, more than any single private lender.

Of course, as I'm sure you're aware, most SBA loans are made to established businesses, not startups.

Can you give an example of something... anything... that he's doing well? Especially in terms of helping the economy?

Hello again, El:

Uhhh, how about trying to save the world from the Bush Depression?

excon

I said "something he's doing WELL."

Quadrupaling the national deficit and increasing the national debt to $11 trillion doesn't qualify as doing it well.

And now GM is going make your car payment (I assume with our money) if you lose your job, and the Feds are going to back your warranty. I guess now would be the time to buy a new GM before you lose your job so you the Feds can use taxpayer money to make your car payment and take care of it when it's broken... and pay your extended unemployment, your house payment, your health coverage...

OG
The SBA does not lend directly but instead offers to guarantee private loans .The truth is almost all lenders shy away from startups because of the extremely high failure rates (80% is the number I most often hear) .An SBA guarantee makes the loan less risky for the bank.

Therefore an SBA backed loan would be a 1st choice option for a startup as the expressed purpose of the SBA is to help Americans start, build, and grow businesses... especially for business owners seeking loans who may not have the collateral required for typical commercial loans.

If you can provide stats that prove me wrong I'm willing to see them .

But this is just a diversion from my larger point.

Tell me what is to prevent the administration from placing all types of intolerable conditions on the use of any Federal funding ? As I mentioned in another posting ,Obama is telling GM what cars they must divest from their catalogue (including about 1/2 of their profitable lines).He has told Chrysler they must make a merger deal with a foreign auto company (Fiat ).

He is even telling GM and Chrysler they can no longer participate in an activity that has been an important marketing tool for them (NASCAR) .

This came under the recommedation of Obama's Auto Task force which has NO member in it with any auto industry experience.

Will it save either company ? Nope at best it will put them on temporary life support. With Wagoner directing them GM had a chance.

Monsanto is going to be the "ruling elite" when it comes to food, seeds or anything agriculture wise shortly. They already have the GM (genetically modified) seeds that literally rape the soil of any nutrients so other seeds cannot grow properly. The GM seeds cannot be used for another planting season and are only used once. The seeds are engineered to only grow one crop period. Interestingly all the seeds at the Seed Vault are GM seeds. How in the blue blazes are any survivors going to survive more than one growing season if they can't gather up viable seeds for a second or third or fourth growing season? Answer: They aren't. One growing season and then they starve. If people actually need these seeds to live on a.) how are they going to get to an island in the extreme far North and b) how are they going to have more than one growing season to survive? I don't know but I do know that Montsanto is on a roll all over the US and the globe pushing their GM seeds. Oh, and also I don't know if you realize that the GM food products are actually inferior to the "heritage" food products? The GM food products have very little nutritional value to them.

GM seeds and crops will feed the world one day.

Where's the golden rice?: A lifesaving grain is being held hostage by anti-science activists - Reason Magazine

If you can provide stats that prove you're right, I'm willing to see them.

Yes, with Wagoner directing them they did have a chance, and they blew it. They bet the Company that fuel would stay cheap and people would continue to buy large vehicles, and they lost that bet. If they had ANY alternative but bankruptcy do you thing they would humiliate themselves by begging for crumbs from the Government?

The pay scale for uniion workers at GM plants is out of proportion in relation to other manufacturers. I don't begrudge them of anything they can get but that made GM unable to compete.

The union will have to back down or they will all be out of work.

This may be a first Gal, but I agree with you 100%. A friend of mine used to say, "Greedy greedy makes a hungry puppy."

Ann Coulter made a good point (yes she is capable of that at times), "Apparently, it's OK for Obama to fire the head of General Motors, but Bush can't fire his own U.S. attorneys."

That was in 2006, and today Congress is still investigating, while Obama fires a CEO and vows to remake the Board of Directors in his image. Where's the outrage?

OG,

The SBA has a specific program, the 7A program, that is a loan-guarantee program for startups. The 7A program also provides counseling and advice for startup operators.

The 8A program is for existing small businesses.

The 504 program is for minority and women-owned businesses.

I have no idea what the actual breakdown of 7A vs. 8A vs. 504 loan guarantees is. And I'm willing to bet that you don't either.

And keep in mind that I'm a small business lender. I make SBA loans for a living... or rather as part of my job. If I don't have that data, I doubt that you do either.

Elliot