Friday, December 19, 2008

Bailouts, Corporealness, Faith and The Pet Sematery

I gotta tell you, I go off to Facebook for a few weeks and everything I predicted happens. It's as if the people who run this country don't even read my blog.

Okay, it didn't happen quite the way I predicted. The GOP Senators led by Bob Corker, who heretofore has been a relatively silent backbencher, managed to insist on enough common-sense provisions in the Senate auto company bailout plan that it ultimately failed. The sticking point was the UAW having to pick a day in 2009 by which their wages would be reduced to those comparable to the wages paid at Toyota, Honda and other "transplant" auto companies. They were also going to have to take some of their pension and health care trust fund money in stock, and while they definitely want to get paid, nobody's crazy enough to take GM common stock right about now. The date that the UAW is thinking about is January 20 -- when the new President and the new Congress take over and things start swinging their way in earnest.

Like I said, there's no way a Democratic Congress and a Democratic Presidency aren't going to lead-block for organized labor. While this is a great opportunity for a Sister Souljah moment, the Democratic party has never stood up to the unions since the Great Depression, and given that we're on the brink of at least a Little Depression I don't see them doing that now. Heck, with "Card Check", the deceptively-named Employee Free Choice Act, it's not inconceivable that if the UAW waits long enough and twists enough arms at the transplant auto companies ("transplant" is the new term for foreign manufacturers who have set up here -- kind of like a transplanted kidney that is working when the native ones don't), they won't be lowering their pay and benefits to match the non-union shops, they'll be introducing the GM-Ford-Chrysler contract at all the new UAW Locals at the transplant factories. Disparity averted! Problem solved!

So now the White House feels the need to act, and here's where we get into the etymology of "corporation". Now, it seems funny to see the word corporation all by itself, without its constant companion word, "evil". For some reason, a group of people who are organized, like say, a community organization, is good, while a group of people in a corporation are practically destined to do fell deeds. One of the great realizations of my college education was that the words corporation, corporeal, encorporate and corpse all share the same Latin root: corpus, or body. A corporation is a legal fiction: it is in essence a brain-dead human being, forever at the age of majority, and as the officers of this corpus the Board of Directors has what amounts to power of attorney. While this body is never seen and doesn't act on its own, this particular corpse is agreed to exist by legal fiat. The assets of stockholders are shielded by this fictional being, who exists enough to own things and accept responsibility and blame, but not enough to have motive force. A corporation is a fictional person, nothing more and nothing less. The actions of a corporation are the actions of people -- good, bad or indifferent. People who fail to grasp that a corporation is simply an organizational tool and not a moral judgment are nonserious people.

So what we have are three corporations -- three now-very-old fictional people who used to be vibrant and healthy, and were active an vigorous as little as a decade ago. Now, they're functionally in the financial ICU, with multiple organ system failure and at Death's door, knocking loudly. The most recent knock was from Chrysler, who announced earlier this week that they were a bit overstocked on cars and would be shutting down operations for four weeks over Christmas and New Year's. This announcement was apparently made as a means of banging Chrysler's spoon on its high chair, the wallet of last resort (the White House) was insufficiently prompt with a bailout offer, and the owners of Chrysler were getting nervous.

As an aside here, the 80% owners of Chrysler are not Mom & Pop stockholders, it's Cerberus Capital Management, one of the largest private equity firms in the United States. Have you heard about how much money Cerberus is going to put into Chrysler? Yeah, me neither. Why innovate or invest or even manage when you can spend a fraction of that money lobbying for rents (the economic term) in Washington? Cerberus can go hang, I want to know what they're willing to do before my tax money goes to bail out people who make more in interest each week than I do in a year. But I digress...

So Chrysler gives a hint that it's going to take a nap and might not wake up, and the Bush White House folds like a lawn chair. They're scooping the dregs out of the first round of TARP funds (that program that was supposed to buy troubled assets, but didn't, and invested in bank equity to improve liquidity, which didn't work either, but hey) and have announced $13 trillon or so in low-interest loans for Chrysler and GM, to tide them over until February. If the Congress doesn't pull the brake lever on Round Two of the TARP funds (another $350 billion, or as we like to call it, about half of the cost of the War in Iraq -- remember when $350 billion was a lot of money?) in early 2009, there's another four-bil in it for them.

There are a couple of things to like, and this is looking very much on the brightest possible side. One, this is a loan, not a giveaway, though this is in itself a major technicality -- loaning money to your crackhead buddy when you know he's going to blow it and is unlikely to pay you back amounts to a giveaway. Two, to get the money the unions have to lower their wage scale to match the transplant auto companies' by 12/31/2009, among other things. That's it. Otherwise, your money is being used to perpetuate the life of a couple of corporate beings by another few months. They say end-of-life care is the most expensive, and if you needed any proof, well, there it is.

You see, there is an afterlife for corporations, these fictions of life that do our bidding. It's called bankruptcy. All that you have and all that you owe are tallied, and a judge makes a determination about how you'll spend the rest of your existence. There is a holy book that describes this process, the United States Code. It even has Chapters, Chapter 11 is the favorite of many. But to get to the afterlife, you have to have faith -- and faith is what we're missing.

George W. doesn't want to be the President who lets a whole economic sector die on his watch. He only has a few weeks left, and he's trying desperately to avoid becoming George "Hoover" Walker Bush -- his faith is being challenged. He has publicly stated that his purpose is to avoid a "chaotic" bankruptcy, because of the disruption down the supply chain and the further crisis in consumer confidence that would create, so he puts some quarters in the respirator and the corpus stays alive for a few more weeks.

Which brings us to Pet Sematary, a now decades-old novel by Stephen King, the functional lesson of which is that "Sometimes, dead is better". In the story a doctor loses his son and cannot bear the loss, so he buries his son's body in an old and exceptionally haunted Indian burial ground. What comes back from the burial ground looks like his son, but is clearly his son no longer. Eventually, the son-thing kills his wife, and having already lost everything, the now-quite-insane doctor buries his wife in the Pet Sematary and waits for her terrible reanimation. The clear parallel here is that Congress is the Pet Sematary, a magical force that will reanimate these fiscal corpii, though they won't really be alive.

Japan went through this same kind of real-estate fueled boom-and-bust cycle, and one of the lingering aftereffects were "zombie corporations", companies that were perpetually dependent on government handouts to stay alive. They were a further fiction atop the fiction of a corporation, unable to perform even the basic function of a corporation they were nevertheless kept functioning on the government dole to avoid the specter of unemployment. One imagines the Nikkei stock index as a tour of the storage chamber in Robin Cook's Coma. The fear of unemployment and the specter of deflation kept the Japanese government printing money, lowering interest rates and desperately propping up the economy, but there was essentially no economic growth in Japan for more than a decade -- almost the length of our own Great Depression, though without the high unemployment.

I can see Bush shambling toward the Pet Sematary, cradling the corpses of GM and Chrysler -- not because he loves them in particular, but because he fears loss and blame. It's really unfortunate that this and a shoe-throwing incident are the two last acts he'll probably be remembered for at least for the first round of histories. I believe he has faith in the bankruptcy afterlife for GM and Chrylser, but he doesn't want to pull the plug. He's kicking the can, and it's sad to watch.

The next Congressional session will be sadder. But when it comes to the bailout, I'm agin' it.

1 comment:

Anonymous said...