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Congress roasts auto executives over bailouts

by Theo Lipschitz, Unknown News       Nov. 21, 2008

I watched a few minutes of the second day of hearings in Congress about bailing out the auto companies. There were two funny moments.

Walter Jones of N.C. began by holding up one picture of a US car, "Made in China" he said. Next picture, "Made in China". Next, "Made in Mexico". ... "Made in Germany."

Most of these companies, B of A, Citibank, car companies, drug companies, computer companies, etc.... most of them have profitable overseas subsidiaries.



So my feeling is, if they need money now they should sell off their overseas stuff -- or else... to paraphrase the Congress-Critter,

"You are a global company. Have you asked the globe for a bailout?"
Then, "I have one question for you..." And his question was about jobs for Americans... but I was so enthralled by his prefatory comments I was excitedly hoping he would just say, "I have one thing to say to you, GO F*CK YOURSELVES."

Another congress-critter asked, "Have you asked China for a bailout?" The auto exec replied that their China operations were profitable. "Have you asked Mexico for a bailout?" Our Mexican business is OK...

Funny. These companies invested heavily overseas and have great wealth amassed abroad. Now they want more money from us, in exchange for nothing. Like asking a rape victim to pay for the rape test kit!

Most of these companies, B of A, Citibank, car companies, drug companies, computer companies, etc.... most of them have profitable overseas subsidiaries. So my feeling is, if they need money now they should sell off their overseas stuff -- or else... to paraphrase the Congress-Critter, "You are a global company. Have you asked the globe for a bailout?"

The other interesting thing was seeing a fleet of private jets parked at an airport. Supposedly these jets were flown to D.C. by the auto execs. They didn't want to fly commercial, but decided to go in luxury. Probably ate filet mignon, had BJ's and Bloody Mary's, and then headed to the golf course after the hearings on the Hill.

In my opinion, this is a farce. It is beyond tragedy now to see these clowns pretending to be serious leaders of too-big-to-fail corporations. They must have attended GW Bush's business school! The sooner these guys are forced into retirement the better. Let the workers own the means of production!

© by the author.

Comment:   (11/24/2008)   Maybe the automakers overseas operations are profitable or maybe it is all an accounting gimmick. It can be done quite easily. Lets say the American subsidiary buys parts from the Mexican sub. If you want to make it look as though the Mexican sub is doing well, the American sub pays an inflated price for the parts. Mexico makes a profit. A profit which by happy coincidence equals the loss in America. The effect is zero for the whole company.

If you wanted to do the opposite, i.e. to make the American sub look good, it pays a very low price for the parts from Mexico. From the perspective of the whole company, it matters not whether the intracompany prices are high or low. It's a wash. The only thing which changes from one country to another is the tax structure. The incentive is to put the profits where they are taxed the least.

Because not all transactions are intracompany, the ability to shift profit to a chosen subsidiary is limited.

I'll take the automakers statement that they are making profits abroad but not here at face value, but wonder if there is more to the statement than meets the eye.   SirJ      PERMANENT LINK 

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