Editorial comment

	Vol. 230 No.1
PERRY A. FISCHER, EDITOR

Klaatu Barack nikto, plus other odds and ends

Automotive bailout. I assume you’ve heard, wherever you are in the world, that US automakers are asking for (originally $35 billion) loans from the government. One of the terms of the loans is that executives’ compensation be “severely limited.” Not surprisingly, enthusiasm for the loans has dampened. Ford subsequently revealed that it had secured a $23.4 billion line of credit in 2006, so at most, it might need another $9 billion later in 2009, if then. GM and Chrysler still have their hand out. But Chrysler has a “sugar daddy” - its owners.

Chrysler is owned by the private firm Cerberus, which, with about 100 co-investors, bought 80.1% of Chrysler for $7.4 billion last year from the German carmaker Daimler. Cerberus reportedly only has about $2 billion actually invested in Chrysler, but it has billions that it could extend to Chrysler, or at least put up as collateral for loans. Why should it though, if it can get US taxpayers to do it instead? Chrysler wants $7 billion from the government.

In late 2006, Cerberus also bought a majority stake in GMAC, the finance arm of GM. Since then, Cerberus has been tightening credit lending while its competitors loosened their credit. Cerberus has been pressing to have Chrysler merge with GM, but GM has so far staved them off. If all of this weren’t smelly enough, GMAC - i.e., Cerberus - tried to morph itself into a “bank” in November in odor to (sic) qualify for the bank bailout package. As of mid-December, it was unclear whether that would happen.

If GM and Chrysler were to both get taxpayer bailout funds and then merge, Cerberus would be the big winner. So, just who is Cerberus? Well, it’s sort of the “who’s who” of extremely well-connected, super private, often ex-government “investors.” The quotes are there to underscore the fact that they have access to people and information that ordinary mortals do not. The firm’s chairman is John Snow, who was President Bush’s Secretary of the Treasury just before “King” Henry Paulson took over. Former US Vice President Dan Quayle is chairman of Global Investments, one of Cerberus’ international units. Lobbyists and paid Cerberus members include John Breaux, a former senator from Louisiana; David Hobbs, former assistant to President Bush for legislative affairs; Arnold I. Havens, general counsel, and Christopher Smith, former chief of staff, both at the US Treasury Department.

This smells worse than a fishmonger’s convention held in the middle of a pig farm. It has nothing to do with saving jobs - it’s about using influence to get taxpayers’ money.

Hopefully, Detroit automakers have learned that 20 years of playing catch-up to Japanese automakers really hurt their reputation. As did GM’s bet on lobbying for tax write-offs on its Hummer and other behemoths as Toyota went full steam with its Prius - the difference in reputation cost far more than the actual vehicles. If the automakers file for temporary bankruptcy, they just might be right about how much the stigma of bankruptcy could hurt their reputation. Also, these car companies complain that, since Japan and Europe have funded their respective automotive industries, the US government should help Detroit automakers, just to be fair.

More is the pity of all of this, because, first, the $15 billion(?) is a pittance compared to the $2 trillion “loaned” away so far. (Let’s hope that Bloomberg News is successful in its lawsuit to force King Henry to reveal whom the secret loans were made to and under what terms. See last month’s column.) And second, because these are loans with known terms that pay real interest - taxpayers stand a good chance of getting their money back and more.

Thirdly, the auto industry also supports the world’s largest military. I’m trying to imagine outsourcing US military equipment to ... well, wherever. If these firms fail, I’ll paint the political cartoon of the near future: Two US soldiers are standing beside a smoking jeep on some mountain trail in Afghanistan. One says to the other, “Gee, these Burmese-made jeeps sure do break down a lot!” Give the loan to GM with strong conditions. Maybe a distant promise to Ford. Tell Chrysler to “go fish.” Unfortunately, Chrysler will probably come out on top - it’s just too well connected to the White House and Congress to lose. Or maybe Bush will leave this one to Barack Obama to sort out?

It’s about time. Forgive me for “preaching to the choir,” but I have to give kudos when they are due. I love the PR that Chevron is putting out:

“The world is changing. And how we use energy today cannot be how we’ll use it tomorrow. There is no one solution. It’s not simply more oil, more renewables or being more efficient. It’s all of it. Our way of life depends on developing all forms of energy. And to use less of it. It’s time to put our differences aside.”

Would that every ideological and congressional discussion began with those succinct and unarguably true words.

Klaatu barada nikto. Few folks are old enough to remember (or perhaps nostalgic enough to care about) the 1951 movie, The Day the Earth Stood Still. Now Hollywood is about to release a new, jazzed-up version. Of course, it is not as good as the original, in part because the original dealt with trying to avoid nuclear Armageddon - something that we can all agree on - while the remake tries to avoid global warming.

It could never equal the original film, nor the electrifying presence or acting ability of the robot Gort, whose visor opened just a menacing touch, showing what appeared to be the sun or some other unfathomable power inside, as he prepared to vaporize the planet. (In the remake, Al Gore apparently plays the robot.) Three words that were told to Gort changed his mind: “Klaatu barada nikto.” (OK, so I altered one of them slightly in the title.)

While no one knows precisely what they mean, apparently, from the context of the film, they mean “Please do not destroy the Earth; use advanced technology to revive your near-dead leader, and then promote peace.”

Actually, that’s good advice anywhere, on any world.

Happy New Year!

Our Chinese friends will begin the year of the Ox. Let’s hope it brings the better kind of bull in 2009.