Rick Wagoner Makes History: First CEO to be Fired by a Sitting President!

"I don't believe we have the luxury of a lot of time," GM CEO Rick Wagoner told a House hearing. And boy was he right. From the New Zealand Herald: "Rick Wagoner never saw the axe coming. When the ousted boss of General Motors arrived at the US Treasury Department for a meeting with the Obama Aministration's task force, he was a 32-year GM veteran and a CEO carrying the weight of the company's wrenching restructuring on his 1.95m frame. But Wagoner's plan for a GM turnaround and a US$16 billion bailout was rejected in the meeting and the company where he spent his entire professional life fell off his shoulders. Wagoner stepped into the afternoon air jobless. "In the course of that meeting, they requested that I step aside as CEO of GM, and so I have," Wagoner said in a message posted on the carmaker's website. A majority of GM's board will also be replaced."

And this can't be the kind of news that makes the rest of corporate America happy, but when your industry is in so much debt that you have nowhere else to go but to Uncle Sam for cash all of a sudden it makes the government your largest shareholder and therefore most powerful.

In a move reminiscent of Vladmir Putin when he had Mikhail Khodorkovsky arrested in 2003, when he was CEO of the Yukos oil company and the wealthiest man in Russia, Barack Obama has sent a powerful signal to the corporate elite who can't seem to run a business. Change, baby, change - or I'll change you.

I recall running my own company in Korea in 1999 during the Asian financial crisis when then President Kim Dae-jung allowed Daewoo corporation to fail, instead of bailing the company out with government money, taking with it Kim Woo-jung, its enigmatic founder who had just years before penned a best-seller entitled "Every Street Is Paved With Gold". All of a sudden, Korea woke up - and the watershed of entrepreneurial successes that have made it the number one Internet country in the world was born. That this could happen in America now may be the rebirth the country has been in such desperate need of. I hope it does. Because if it's one thing we do well in America, better than almost anyone else, is come back from a lickin' ten times stronger. Remember, Pearl Harbor? It does now seem that we had that opportunity after 911 as well but we dropped the ball. We focused on the negative instead of the positive, went after the wrong enemy and ended up, well, here today. Now is the time for new beginnings. Now is the time to pick ourselves up, dust ourselves off and get back to business - and business is about making money, not loosing it. Goodbye Rick Wagoner. It's time to move on. I'm ready to rock!


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"A billion here, a billion there. Pretty soon it adds up to real money"

Happy Birthday to me! Happy Birthday to me! Happy birthday dear Wild Wild East Dailies! Happy Birthday to me!

It's my 100th post and what more fitting a way to celebrate 100 that to look to the sky and just contemplate a billion for a few minutes. Wow, a billion. Seems not so long ago, in the mid 1960s, Senator Everitt Dirkson of Illinois mused the title to this post and in fewer than 50 years we've taken to regarding a billion as just a bunch of zeros on paper. How many billion for Iraq? And how many billion for the "mother of all bailouts" and how many billion for Katrina? And how many, many billion can the Chinese lend us? The following two stories put an interesting spin on what billions mean, the first from the Huffington Post and the second, sent to me by Tom Nelson in Minneapolis, in one of those usually-annoying-but-not-this-time chain emails.

From the Huffington Post: http://www.huffingtonpost.com/2008/09/22/dirty-secret-of-the-bailo_n_128294.html

A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives.

All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privile

ge as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.

Is this starting to sound familiar? Robert Kuttner cuts through much of the gloss in an article in today's American Prospect:

The deal proposed by Paulson is nothing short of outrageous. It includes no oversight of his own closed-door operations

. It merely gives congressional blessing and funding to what he has already been doing, ad hoc. He plans to retain Wall Street firms as advisors to decide just how to cut deals to value and mop up Wall Street's dubious paper. There are to be no limits on executive compensation for the firms that get relief, and no equity share for the government in exchange for this massive infusion of capital. Both Obama and McCain have opposed the provision denying any judicial review of decisions made by Paulson -- a provision that evokes the Bush administration's suspension of normal constitutional safeguards in its conduct of foreign policy and national security.

The differences between this proposed bailout and the three closest historical equivalents are immense. When the Reconstruction Finance Corporation of the 1930s pumped a total of $35 billion into corporations and financial institutions, there was close government supervision and quid pro quos at every step of the way. Much of the time, the RFC became a preferred shareholder, and often appointed board members. The Home Owners Loan Corporation, which eventually refinanced one in five mortgage loans, did not operate to bail out banks but to save homeowners. And the Resolution Trust Corporation of the 1980s, created to mop up the damage of the first speculative mortgage meltdown, the S&L collapse, did not pump in money to rescue bad investments; it sorted out good assets from bad after the fact, and made sure to purge bad executives as well as bad loans. And all three of these historic cases of public recapitalization were done without suspending judicial review.

Kuttner's opposition here is perhaps the strongest language I've seen used, pushing back on this piece of legislation, in any publication of repute, and even here, Section 8 is not cited by name or by content. McClatchy Newspapers also alludes to Section 8 with concern, citing the "unfettered authority" that Paulson would be granted, and noting that the "law also would preclude court review of steps Paulson might take, something Joshua Rosner, managing director of economic researcher Graham Fisher & Co. in New York, said could be used to mask previous illegal activity." Jack Balkin also gives the matter the sort of attention it deserves on his blog,Balkinization.

But elsewhere, the conversation is muted. The debate over whether Congress is going to pass the Paulson bailout package, or pass the Paulson bailout package really hard seems to have boiled down to a discussion of time and concessions. The White House has made it clear that they want this package passed yesterday. Congressional Democrats seem to be of different minds on the matter, with some pushing back hard, and others content to demand a small dollop of turd polish.

But if we make it through this week with nobody in the press specifically informing the public about the implications of this single sentence - in the middle of a complicated bill, in the middle of a complicated time - then right there, you have the single largest media failure of this year.

What's a Billion?

A billion is a difficult number to comprehend, but here are some interesting ways to consider it:

A. A billion seconds ago it was 1959.
B. A billion minutes ago Jesus was alive.
C. A billion hours ago our ancestors were living in the Stone Age.
D. A billion days ago no-one walked on the earth on two feet.
E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

Looks like I tagged the real value of this deal months ago right here on these pages!