Truth in Lending: “Opportunity Capital”

Corporate capitalism’s babysitters, that charming, marketing-oriented group known as “politicians,” continue to equate giving free public money to banking corporations with doing something to redress (rather than exacerbate) the economic crisis that has emerged from a generation of pretending that the rich can’t can’t too rich.

Well, for your general use and enjoyment, here are some rare, behind-the-scenes admissions from the executives running the banks taking the handouts, as relayed in Saturday’s edition of The New York Times, in a story titled “Bailout Is a Windfall to Banks, if Not to Borrowers”:

♦“Make more loans?  We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans…We see TARP as an insurance policy,” he said. “That when all this stuff is finally over, no matter how bad it gets, we’re going to be one of the remaining banks.” – John C. Hope III, the chairman of Whitney National Bank in New Orleans

♦Speaking at the FBR Capital Markets conference in New York in December, Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury.  “With that capital in hand, not only do we feel comfortable that we can ride out the recession,” he said, “but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out.”

♦For City National Bank in Los Angeles, the Treasury money “really doesn’t change our perspective about doing things,” said Christopher J. Carey, the bank’s chief financial officer, addressing the BancAnalysts Association of Boston Conference in November. He said that his bank would like to use it for lending and acquisitions but that the decision would depend on the economy.  “Adding $400 million in capital gives us a chance to really have a totally fortressed balance sheet in case things get a lot worse than we think,” Mr. Carey said. “And if they don’t, we may end up just paying it back a little bit earlier.”

♦Among the others, PlainsCapital Bank of Dallas announced in November, not long after the bailout program began, that it planned to merge with a healthy investment bank, First Southwest. PlainsCapital received $88 million from the Treasury on Dec. 19, and the all-stock merger was completed two weeks later. PlainsCapital’s chairman, Alan B. White, insisted in an interview that the two events were not connected. He said the bank had not yet decided what to do with its bailout money, which he called “opportunity capital.” Increased lending would be a priority, said Mr. White, who did not rule out using it for other acquisitions, adding that when regulators invited PlainsCapital to apply for federal dollars, there were no conditions attached.  “They didn’t tell me I had to do anything particular with it,” he said.

♦At the Sandler O’Neill East Coast Financial Services Conference in Florida, bankers mingled with investment analysts at an ocean-front luxury hotel, where the agenda featured evening cocktails by the pool and a golf outing at a nearby country club. During his presentation, John R. Buran, the chief executive of Flushing Financial in New York, said the government money was a way to up the “ante for acquisitions” of other companies. “We can get $70 million in capital,” he said. “So, I would say the price of poker, so to speak, has gone up.”

All the while, the Elmer Fudds continue to pretend they’re really hunting the wabbits.

The Treasury secretary, Henry M. Paulson Jr., said in October that banks should “deploy, not hoard” the money to build confidence and increase lending. He added: “We expect all participating banks to continue to strengthen their efforts to help struggling homeowners who can afford their homes avoid foreclosure.”

The truth? “The [TARP] program does not dictate what banks should do with the money.”

Transparency, My Butt

“It’s our intention to be transparent as we execute our plan and we will provide you regular updates on our progress.”  So lied the General Motors corporation’s Dissembler-in-Chief, Rick Wagoner, as he accepted a direct public handout in this, the land where the idea of public health insurance remains out-of-bounds.

Of course, the place where the real record of actual corporate intentions, methods, and plans resides is in the marketing papers.  Those, of course, are never going to be sought or revealed in this latest farcical capitalist boondoggle.  That would be real transparency (think back to the importance of the tobacco marketing papers).  It would also be the end of the line for the overclass, so it’s not happening.

If the underlying marketing documents were ever released, the public would learn some pretty fascinating things about the real strategy behind the current “better cars” charade.  Consider, for instance, the way The Wall Street Journal describes that phenomenon:

If GM isn’t able to build the Flint factory in time for the 2010 launch, the 1.4-liter [gasoline] engine to be used in the Volt could be sourced from overseas factories that are already building the engine.

Much is riding on GM’s ability to fulfill its promise to deliver the Volt, a plug-in electric car with a small [gasoline] engine onboard that would kick in when the battery runs down.

GM is looking to the much-hyped Chevy to do what the Prius hybrid did for Toyota — give the auto maker a must-have technology while cultivating a green image.

See?  That “alternative” power source is what they call a “marketing stimulus,” a product attribute whose main function is to boost sales.  That’s corporate marketing 101, folks.  And it’s there, even if it’s not encompassed in the “transparency” show.

If we had serious transparency in this market-totalitarian society, we’d be getting our hands on those marketing records and admitting the truth, which is that the automobile is a blatantly unsustainable, outdated technology, and is known as such to its pushers, who are simply trying to milk their investments dry before parking their capital in the Caymans.  The Earth simply does not have the energy to permit us to roll around in 2,000-pound boxes for our every trip about town.

We should be nationalizing the auto industry, and turning its assets to production of rail, bicycle, and pedestrian equipment and infrastructure.

The Trickle-Down Bailout

As Dr. King wrote from Birmingham City Jail, “We know through painful experience that freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed.”

That’s as strong a sociological law as there is.

Despite protestations to the contrary by the powerful and their political and media lapdogs, it applies in spades to the phenomenon currently being called “the bailout.”

Read moreThe Trickle-Down Bailout

More Blood for Autos?

{Source: American Physical Society*}

Click on the graphic at left.  When you do, you’ll see one of the car capitalists’ dirty little open secrets:  If and when they do finally start to sell more fuel efficient cars, the rate of death on US highways is going to rise beyond its present clip of 40,000+ annual snuff-outs.

That’s because, as the figure shows, the car-makers have been using the increasing efficiency of modern engines to make heavier cars that get about the same MPG as prior generations of lighter cars.  So, there has already been some decent progress in making more fuel-efficient gas engines.  But the increase has gone almost entirely into making heavier, safer cars, rather than lighter, better-MPG, but substantially deadlier cars.  Vehicle mass, you see, is one of the main factors in the survivability of the frequent high-force collisions that inhere in autos-über alles transportation.

In the abstract, of course, some of the heightened danger that would come from making cars lighter and more MPG-efficient could be reduced by having everybody change to smaller, lighter cars all at once.  But that isn’t going to happen, because, since it would undoubtedly require strong governmental rules and actions,  it would do the one thing the car capitalists fear the most: legitimize autos-über alles as a central topic of popular democratic politics.  And, if that ever happens, people might start to ask what alternatives exist.  For the overlords of big business, that’s the slipperiest of slopes.  Hence, it’s verboten — a topic no responsible, serious “leader” can raise.

What we’re pretty clearly going to get instead is a “bailout” that compels whatever car corporations remain to start using engine efficiency gains for higher MPG results.  That will mean a swath of much smaller, lighter vehicles will be on the road, running alongside all the SUVs and heavier current vehicles.

Here’s my prediction:  When that change comes online, in the next 5 years or so, the annual death toll on US roads will eclipse 1979’s record of 51,103 killed.

[And note the similarity there in the background circumstances:  The worst years on record were the oil crisis years of the late 1970s and early 1980s…]

Change you can die for!


* The American Physical Society’s new energy-efficiency report is well worth studying.

The Chevy Volt: ROFLMAO!

After years of breathless pre-advertising, here’s what “the backbone of our economy” is disclosing about its “cutting-edge” new “green” automobile, coming (maybe) next year:

G.M. says the car, which is scheduled to arrive in showrooms two years from now, will be able to travel 40 miles on a charge, but it will also have a small gas engine to extend the range to as much as 640 miles using both the battery and gasoline (the 1.4 liter, four-cylinder engine is intended to run a generator that will power the car and recharge the batteries once they are depleted). It is expected to cost about $40,000.

A 40-mile range! After billions spent over years!

As I keep saying, you know what complete excrement you’re getting when industry insiders and The New York Times are mentioning it:

“If you’re the affluent individual who wants to make a statement, it’s one thing,” said Ron Pinelli, president of, an industry analysis firm. “If you’re Joe the Commuter, you’re not going to spend $40,000 on an electric car. It’s insane.”

You see there the wishful thinking behind all this late, late, late capitalism. Behind the scenes, the overclass must be mired in quiet desperation, despite its unchanging public face.

And then there’s the supposedly democratic public response: The coming public sponsorship, via the Tweedle-D Party and its program of “change” you can choke on (a.k.a. the re-packaging of the usual capitalist boondoggles), of this suicidal greenwashing charade. If shamelessness and corruption were combustible, there’d be no energy crisis for many centuries:

Executives at General Motors, the largest and apparently the most imperiled of the three American car companies, are using the Volt as the centerpiece of their case to a skeptical Congress that their business plan for a turnaround is strong, and that a federal bailout would be a good investment in G.M.’s future.

Rest assured, nobody on Capitol Hill or in 1600 Pennsylvania Avenue is going to connect these dots…Quite the opposite.

Mad Max, here we come.

Exactly What Are We Bailing Out?

The Tweedledums gave away a trillion dollars to the vultures in charge of juggling the great growing wodges of surplus capital* the overclass can’t find a place to invest productively.

A day or two after his victory, the Tweedle-D’s new President-elect revealed that his idea of “helping the middle class” is another give-away — this time, to the U.S.-based automobile corporations!

Now, Tweedle-D Party Radio, a.k.a. “Air America Radio,” has its stable of parrots squawking about what a grand, populist, commoner-helping thing this is “bailout” would be.

And, even as I type, the CEOs who pay themselves king’s ransoms to destroy the planet, squander its finite supply of energy, and murder 40,000 of their countrymen every year are up on Capitol Hill, begging bowls out and solemn professions of socio-economic concern/threat on their caviared lips.

What a freaking crock! Let’s take a quick peek at what’s actually being proposed here, shall we?

A Hybrid Mega-Turd
A "Hybrid" Mega-Turd

The monstrosity depicted at left is the sort of “cutting edge” new technology that is the supposed point and promise of a post-bailout Detroit. It is, you see, a “hybrid” Cadillac Escalade! It has an electric motor to complement its conventional V8! Dare we dream of such a gloriously transformed future? I swoon.

No, wait, I’m outraged.

Even the “car enthusiast” motorheads who write automobile reviews for The New York Times can spot this portentous scam:

You can coax the Escalade Hybrid into electric-only mode, same as a Prius, but if you need to accelerate at all, or go up the slightest hill, or go faster than 30 miles an hour, you awaken the 332-horsepower V-8 under the hood.

Therein lies the dilemma of this truck: its mileage is great compared with a regular Escalade’s, but that’s like saying the American economy is great compared with Zimbabwe’s.

I managed to eke out 22.3 miles a gallon on one highway-biased trip, and about 20 m.p.g. over all. The hybrid system’s benefit is most pronounced in urban driving, where Cadillac claims a 50 percent improvement in fuel economy. (The gas-only Escalade is rated 12 m.p.g. in town, 18 on the highway, with all-wheel drive.)

Bizarrely, the Environmental Protection Agency does not provide mileage estimates for the four-wheel-drive Escalade Hybrid because its weight vaults it into the category of heavy-duty trucks, which need not be rated.

To create the Escalade Hybrid and its full-size Chevrolet and GMC siblings, G.M. cooperated with BMW and the former DaimlerChrysler to develop a mind-boggling hybrid transmission that can deploy two 60-kilowatt electric motors in tandem with a gas engine, operating either in continuously variable mode or through four fixed gears.

The system also captures regenerative braking energy and uses an auto-stop feature to minimize idling. Using this technology, G.M. can wring more than 20 m.p.g. out of its full-size S.U.V.’s.

But we’re still talking about a three-ton truck. Mercedes boasts that a 200-pound man can sit atop a C-Class door without damaging the hinges; with the Escalade, it feels as if the 200-pound-man is already inside the door.

What if, instead of all the hybrid trickery, you simply subtracted 1,000 pounds of weight, using unibody construction and a direct-injection V-6 engine paired with a conventional six-speed automatic? Couldn’t you have an equally posh and enormous three-row interior with all-wheel-drive and 20 m.p.g. economy? You certainly could, because I just described the Buick Enclave, a vehicle in G.M.’s own portfolio that underscores the Escalade Hybrid’s Rube Goldberg approach to efficiency.

Of course, what the Times‘ auto critic is never going to tell you is that automobiles — all automobiles — are Rube Goldberg machines. With a few exceptions like ambulances and fire trucks, using them to accomplish mundane trips around town is like using a chainsaw to slice and butter your morning toast. It is the ultimate capitalist boondoggle: Selling the schlemiels two (or more) tons of unnecessary shit instead of a bike or a tennis shoe or a subway ticket! What a great gig! Accumulate, accumulate — that is Moses and the Prophets!

And you also see here what a fucking joke things like “hybrid” engines are going to be in the hands of private industry. Slap that label on the thing, and the schlemiels stop asking questions! A great marketing tool!

What we need to do, of course, is to nationalize the automobile corporations, and use their assets to manufacture rail stock and other equipment needed for rebuilding our towns to favor walking, bicycling, and rail travel. As a stopgap, we should also manufacture and distribute very simple automobiles that get 40 MPG or better, and tax the hell out of both gasoline and gas-guzzlers.


* In case you’re interested in these kinds of things, Keynes used the term “surplus capital” in The Economic Consequences of the Peace.  Of course, “surplus capital” is also “surplus surplus,” since capital is society’s savings, its fund for repairing and transforming itself.