Do not look behind the curtain; you may not like what you see.

It took a lot of searching, and that should say a great deal about what this blog contains. President Obama fired the inspector general who was investigating a former Phoenix Suns player and now the mayor of Sacramento Kevin Johnson, for misappropriating funds. This would be news anytime, but the fact that the president fired Gerald Walpin while one of his friends and political ally was under investigation. Mr. Walpin is not going quietly into the good night and is firing back. Regardless of what you think is happening here, the fact that the Chief Executive fired an investigator at all is not standard procedure and I guess the president has not learned to keep his hands clean when doing dirty work. It is also interesting that this story is difficult to find except on blogs with the exception of fox news. Let’s face it, if the investigation turned up that Mr. Johnson was guilty, he would have done some jail time and lost his job. But the investigation has been stopped. Where is the replacement Inspector General? This seems to confirm rather than allay Mr. Johnson’s guilt. Who is watching the watch dog, is becoming more a concern than ever. To whom can we turn when the government is not accountable to anyone?

If the government is providing us our information, our health care, our wealth, then whom do we turn to when “they” decide to cut benefits, offer substandard service? All competition is being eliminated, we cannot get better healthcare because the government will decide what is sufficient and necessary. Where will you go if you disagree? Will you leave the country like so many Canadians are forced to do today? But where will you go Mexico? What happens when you are taxed by the number of miles you drive your gas powered car? What if it turns out that the mercury laden light bulbs cause a greater environmental hazard than the old incandescent bulbs that are no longer able to be manufactured here in the US, because they use more electricity? Who is watching those making the rules? When an IG is fired (for whatever reason), a follow-up investigation should be conducted of those involved to ensure a lack of impartiality. We have no accountability and that makes our problems larger.

The Fed finally figures out how to take the money back

If you have been following the story of the TARP money, and the government’s quandary as to how to take their money back, then you will be gratified to know that after 4 months and several large interest payments later, our government figured out how to take money back. Ironic, as taking money from others is their primary business. It is interesting that the 10 big banks given approval to return $68 billion in bailout money had to get permission to pay back the money. Most of those banks will welcome the lack of restrictions on salaries, bonuses and other payment structures that the executives missed very much. It is good that the executives from these banks have been exposed to the bad lending practices they practiced. It is also good to see them make the same mistakes that we all make in assuming that we can quickly repay a loan and not get in over our heads. I also found it ironic that it took the treasury 4 months to figure out how to take back the TARP funds, all the while charging interest. I guess the incentive just wasn’t there.

We have a systemic problem of many people who mean well, but have a profound lack of understanding. Mr. Guithner is optimistic that we have turned the corner, while expecting over 1/3 more banks failed thus far this year than all of last year. Without revenues, the banks will not be able to function and businesses will continue to fail. The Small Business Association (SBA) has many programs but they do not control the lending. They merely “facilitate” and provide the rules for guaranteeing loans from banks. As of June 10, 2009, Bank of America has not issued a single SBA loan, while being listed as a preferred lender. The government is not able to help because the rules dictate that they cannot force someone to lend, nor can they show preference, however, they can set the rules for lending. So having a great government program is only in the imagination of the legislature. The problem lies, as always, in the execution. Not enough details are provided in the program design and there is no incentive to move quickly or efficiently to bring these programs to the public. Who would we complain to anyway, the government? Which department has oversight to government abuse and corruption other than our press who has historically been biased and unable to perform even the most basic analysis of the information they provide? When non-government organizations are irresponsible we have remedies such as litigation and regulation. Who regulates the regulators? This is why government providing services is usually a bad idea. If the government wants to save money by cutting administrators of a program and no one returns calls to those trying to access a program offered, who wins? Who would we the people turn to, and how would we find help? When the wolves have become the shepherds, it is not a good time to be a sheep.

Why bankruptcy alone will not save GM or Chrysler

GM has finally declared bankruptcy, unfortunately not before it was nationalized. We have now nationalized our financial service industry and our manufacturing sectors. Welcome to the new socialist world. Read the GM White House fact sheet. The government has repeatedly declared that they do not want to run the company, except that they are dictating that more fuel efficient vehicles be made and the government of Canada is also a part owner. Congratulations, the rules have changed. I have discussed this in past entries, but I think this is the best illustration of rule changes that we have to date. The company’s bond holders have been relegated to last in line, while the common stock holders who “get a greater return because they assume a greater risk” have now been moved to the head of the line. Why? The government who “does not want to have an equity position in a company” now has one, and under the guise of shared sacrifice, appeals to our short term vision and will only extend our pain in the long term. There is no company too large to fail, and it should be painful. These lessons teach us that failure is not the end, but it does hurt and you have to be resilient enough to endure. It seems we have lost the ability to live with failure. We do not hold student’s back, because no child should be left behind. With failure comes lessons and as Henry Ford said after the first assembly line failed “Failure is the opportunity to begin again, more intelligently.” We are failing to learn from the lessons of California, GM, and a host of other examples, because there is no pain. The failure of GM is a psychological failure on a personal and organizational basis. The Unions forgot their missions to keep the company from overstepping reasonable bounds. They took out the reasonable part and went after everything they could get, and were very successful.

Why will bankruptcy not fix GM? The psychology has not changed. Frank Durant the founder of GM decided to go into the car business after his buggy business failed because of Ford. Ironic. This is why we need history. We need the destructive process to create something better. Who knows the best industry creating idea could be just waiting for enough pain to get started, but by supporting a failed company, we reward failure and suppress the very things that make success rewarding. If you look at any story worthwhile, the hero is always terrified, always an inch from death. Do you think the hero or heroine is enjoying themselves through most of the story? Is there a bailout, just in case they don’t make it? As a zen master would say it is the journey that is the reward. Unless we undertake these scary, painful and testing journeys how will we know what we are destined to accomplish? The hero of the story never really plans to go out and be terrified, but in spite of everything they keep trying and have faith they will succeed. You can only fail when you stop trying.

Growing up my father pounded the “don’t work, don’t eat” motto into my head. It has kept me going through some very tough times. Because I know I don’t have it in me to grovel enough to get the government handouts. I don’t and won’t tell a sad enough story. We have choices in life, and the government has become the great enabler of our addiction and has learned to play on our fears and sympathies. This is how our officials are elected, and why we struggle to solve problems like social security and Medicare. We are no longer willing to make the true sacrifices necessary to solve the problems. Until we fix our psychology we will always be victims and you will continue to see more GM stories. The social drama we see playing out is an example for most of our individual lives as well. We must have faith not fear and focus on what we want to accomplish and then never give up.