Bailout money to fund luxury jets

This story playing out in the US auto industry must be totally incomprehensible to most people.  It goes something like this.  The auto manufacturers are begging for a hand out. The three companies, GM, Ford and Chrysler don’t think they have enough cash to last past Christmas or more likely they will run out of credit.

Because of the severity of the crisis the companies send their big boys, with other words the CEO’s. The point of the trip is to ask for a multi billion bailout. And they send them in the company luxury jet, each in their own! Does anybody sane get this?

Then there is TV footage of a congressman asking one of the three big un’s whether it had ever occurred to him to use a commercial flight for $220 rather than spend $20 000 on a private plane trip. The CEO looked blank. It appeared as if it had never even crossed his mind.

When asked whether the CEO would in future consider that a $56 million private jet should possibly be sold and the running costs cut out of the budget the questioner was awarded with another blank look.

The only way one can put any reason to this absolutely bizarre situation is to guess that these heads of companies do not think that the loans the companies require have anything to do with them. Probably they feel that it’s not their fault that things have gone wrong.

Possibly, the incongruity of the situation doesn’t even cause a blip on their conscious thoughts at all. People who manage to get to the top of the tree could perceive themselves to be totally above the forest. With other words, the rules of the game don’t apply to them.

During the hearings into the Lehman Brothers demise Richard Fuld the CEO who lead the company into its bankruptcy was questioned as to the size of his huge salary package that he had taken home, even as the company was starting to fall apart. He also looked as if he could not understand why anybody would want to question this.

Could it be that these three ‘fat cats’ of the auto industry are also puzzled at the reaction of some of the people, whether the man in the street, the media or government who have said that Detroit should be left to collapse. Poor them, they do so need help, don’t they. How could anybody doubt this.

So what are the reasons for the bailout? It’s all about the worker, isn’t it. One can’t allow the little guy, the small to medium sized businesses who make their living via contracts to the auto manufacturers and the many involved in this industry to go bankrupt.

As much as one would totally agree with this sentiment and be all for the bailout for this reason, it could be that the three boys are not really on the same page here. Are they really there to ask for money to ensure that the workers still have jobs, that entrepreneurs still have their businesses?

It appears more appropriate to consider that in their mind it’s not about the little folk after all. It’s all about keeping those huge salaries, the perks such as private jets, the luxury cars and the extravagant lifestyles. After all Ferrari, Rolls and Maserati haven’t had a decline in vehicle sales so far. Makes one wonder!

And as a final rant at this outrageous situation, in a recent article it was stated that Henry Paulson was reconsidering the bailout loans to the financial institutions. It seems the money is being used in part to continue with excessive senior management pay packages and to pay out hefty dividends. All this, while the worker bees are getting retrenched.

It seems impossible to consider that the economies in the developed world will stabilise and recover. That is not until there has been a reality check. One could hope for one good thing to come out of this economic upheaval. That would be that senior management earn more reasonable salaries and the workers get to earn more. But then one can dream, can’t one?