Returning to the bank

General Motors CorporationImage via Wikipedia

Everyday we read about another company returning to Washington with their hands out, once more.  Please give us some more money as we haven't figured out how to run our companies yet but we know the Government will give us money to stay afloat so why bother changing.

There are a million reasons to do it and there are a million reasons not do.  I keep thinking about this situation in terms of my own life.  We have put Jessica on a budget, clearly stated the amount and the time line.  If Jessica returns to the bank ( the bank being us ) because she blew her wad without thinking it through then by just giving her more cash, we have enabled her to not grow up and take responsibility for herself.  Kids that are enabled by their parents generally never grow up….why bother. 

Certainly each situation is different from AIG to Citibank to GM but how do any of these companies stop using the Government as their comfort zone knowing that if they don't change the way they do business and make the tough decisions, then there is always a pool of cash to return to.

To see an add on the bottom front page of the New York Times on Sunday morning is not Citibank attempting to take a hard look at how they are spending their resources.  How much business do you think, based on the economy at large, that Citibank is going to generate off that ad?  My guess is none and the branding opportunities are more negative than positive.  AIG made some really bad choices down long the line.  Why they don't take the loss and move on but don't have the Government float your mistakes.  Insurance, particularly health, is a disgusting business and more money probably goes to the cost of the employees and paperwork than actual medical costs.  I realize AIG isn't all health care but coming back to the well four times should make everyone evaluate the decision to give them another dime.  Last but certainly not least is GM.  As I see it, GM has continued to be in business the last ten years just to pay for the salaries, the retirement plans and the health costs of the people who work for them now and in the past.  The cars are irrelevant.  I would liquid GM, put all that money into some type of bond and the dividends would pay the retirement funds, the health care and the cost of employees until they find another job for a limited amount of time.  Not a dime would go to the Executives who ran GM into the ground.  Their desire to put all their money into lobbying the Government over the years so they did not have to be think long term or Globally is why GM is pretty much bankrupt. 

Obama should really think this through.  Let these companies go.  Let the assets that they have be liquidated and pay to train their workforce to do something else.  We are in a Global age.  If you can't think about what a company is going to look like in 2 years, 5 years, 10 years or even 15 years from now and make moves based on those plans, not the plans of returning to the Government to keep you afloat to continue business as usual, then let these companies go.  That is a pure capitalistic society. 

My guess is if Sasha came back to Barak after blowing her entire allowance for the month, 2 weeks in, he'd tell her, lesson learned.  You will have to wait 2 more weeks for the next installment unless you come up with another way to make cash over the next 2 weeks and I highly recommend you take a look at your mistakes this past month that got you to this place and make sure it never happens again.  The money lasts for one month, make it last or figure how to generate more cash in other ways to provide for your life style because you can't come back to the well. 

Obama might consider the same lesson with companies of old ( I highlight old ) who saw the train wreck coming and did absolutely nothing to change its course.  He is attempting to change the entire way the Government does business in less than 2 months in office which is the equivalent of turning around a cruise ship.  He should apply the same tenor to the companies begging for more cash.  I am not sure giving them cash is going to change the inevitable place that they will end up, closed.

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