Navistar is a ten billion dollar a year company in financial trouble, it's stock has dropped by half in the last year. According to Fidelity Investments, Navistar rates a weighted average rating among analysts of 1.2, that is to say very bearish, as in sell the stock, get rid of it, run away from it as an investment. This company is such a loser insiders have unloaded 16 million shares in the last six months.
Therefore, the Ex Im Bank is obliging taxpayers to go on the hook for $360 million to bail this company out. A Canadian bank will make some serious no-risk fees on handling the $360 million dollars.
The stock price has been falling dramatically from $70 to $35 in the last year, so let's say the insiders have sold at an average of $50 (it does not much matter, when you see my point). So, 16 million shares times $50 or so, is $800 million dollars. So insiders have taken $800 million out of the company, and the EX IM Bank guarantees the taxpayers are on the hook for $360 million. How come the insiders are not willing to put the same $800 million cash they just took out of the company into the company they run? If the very people who run the company think the company is a dog, why does Ex Im Bank think it is ok to burden the taxpayer with it?
Ex Im Bank is claiming this is to help small businesses. Yes, Boeing is made up of 3000 subcontractors, yes, Navistar depends on small businesses for many of its parts. So this money, net of political contributions, is to pay off small businesses who see no chance of getting paid by Navistar. Now, if the failed Navistar was to actually go out of business, many talented people would be released into the economy to be snapped up by companies that are actually well run. With Navistar gone, an opportunity to open a well run new business to serve Navistar's 10 billion dollar customer base, and pick up those unemployed who would be freed up by Navistar going under. As it is now, zombie Navistar will manage to keep prices higher because it is taxpayer subsidized. When Navistar eventually dies, these subcontractors will suffer anyway. The can is being kicked down the road. And Ex Im Bank is breaking records passing out money like this, trying to buy friends. This is why I predict we will see a wave of Ex Im Bank funded entities to go Solyndra after the elections.
And how does Ex Im Bank square bailing out a domestic truck maker and its domestic suppliers as backing international trade? Well, see, these small businesses may not be involved in exporting, but they have "exportable" products. So it is a version of pre-emptive strike, it is pre-emptive finance: you might be able to export, so we will react first. It is astonishing to watch the Bush criminal ideal of pre-emptive strike, work its way through every thread of the state, under Obama.
This company has competitors in USA, for example Paccar. Paccar is well run and does not need to be bailed out. But see, when politicians come to Paccar and say "give us campaign contributions!" Paccar will say "How come?" When politicians come to Navistar and say give us campaign contributions, Navistar will say "Yes, thank you." Since politicians gave the insiders at Navistar $360 million to play with, the insiders bundle up payback for the politicians. The Navistar, Inc Good Government Committee (I am not making that name up) political action committee gave $130,000 last election cycle, and is up to $100,000 so far this time around. So taxpayers are paying for Navistar to claim that good government is when taxpayers pay Navistar to claim that good government is when taxpayers pay Navistar.. o dear...is there ever an end to this? This $360 million bailout comes just in time for this election cycle.
This is how come your gas and food is expensive and your home is under water. Money is misallocated and malinvested, and we all have to pay for this from our pockets. It is the capitalist system, and it is very harmful. What we need instead is the free market.
If we cannot even get rid of the Ex Im Bank, then we cannot get rid of anything.
Feel free to forward this by email to three of your friends.
Therefore, the Ex Im Bank is obliging taxpayers to go on the hook for $360 million to bail this company out. A Canadian bank will make some serious no-risk fees on handling the $360 million dollars.
The stock price has been falling dramatically from $70 to $35 in the last year, so let's say the insiders have sold at an average of $50 (it does not much matter, when you see my point). So, 16 million shares times $50 or so, is $800 million dollars. So insiders have taken $800 million out of the company, and the EX IM Bank guarantees the taxpayers are on the hook for $360 million. How come the insiders are not willing to put the same $800 million cash they just took out of the company into the company they run? If the very people who run the company think the company is a dog, why does Ex Im Bank think it is ok to burden the taxpayer with it?
Ex Im Bank is claiming this is to help small businesses. Yes, Boeing is made up of 3000 subcontractors, yes, Navistar depends on small businesses for many of its parts. So this money, net of political contributions, is to pay off small businesses who see no chance of getting paid by Navistar. Now, if the failed Navistar was to actually go out of business, many talented people would be released into the economy to be snapped up by companies that are actually well run. With Navistar gone, an opportunity to open a well run new business to serve Navistar's 10 billion dollar customer base, and pick up those unemployed who would be freed up by Navistar going under. As it is now, zombie Navistar will manage to keep prices higher because it is taxpayer subsidized. When Navistar eventually dies, these subcontractors will suffer anyway. The can is being kicked down the road. And Ex Im Bank is breaking records passing out money like this, trying to buy friends. This is why I predict we will see a wave of Ex Im Bank funded entities to go Solyndra after the elections.
And how does Ex Im Bank square bailing out a domestic truck maker and its domestic suppliers as backing international trade? Well, see, these small businesses may not be involved in exporting, but they have "exportable" products. So it is a version of pre-emptive strike, it is pre-emptive finance: you might be able to export, so we will react first. It is astonishing to watch the Bush criminal ideal of pre-emptive strike, work its way through every thread of the state, under Obama.
This company has competitors in USA, for example Paccar. Paccar is well run and does not need to be bailed out. But see, when politicians come to Paccar and say "give us campaign contributions!" Paccar will say "How come?" When politicians come to Navistar and say give us campaign contributions, Navistar will say "Yes, thank you." Since politicians gave the insiders at Navistar $360 million to play with, the insiders bundle up payback for the politicians. The Navistar, Inc Good Government Committee (I am not making that name up) political action committee gave $130,000 last election cycle, and is up to $100,000 so far this time around. So taxpayers are paying for Navistar to claim that good government is when taxpayers pay Navistar to claim that good government is when taxpayers pay Navistar.. o dear...is there ever an end to this? This $360 million bailout comes just in time for this election cycle.
This is how come your gas and food is expensive and your home is under water. Money is misallocated and malinvested, and we all have to pay for this from our pockets. It is the capitalist system, and it is very harmful. What we need instead is the free market.
If we cannot even get rid of the Ex Im Bank, then we cannot get rid of anything.
Feel free to forward this by email to three of your friends.
1 comments:
Based on your same logic Chrysler should never have been bailed out way back, after its share price nose-dived and they had their rating cut. When share price goes down, the money is not actually taken "out of the company", but instead comes out of the market as a vote of lower confidence. Guys like Icahn and others have made zillions buying on bad news and market softness. To say that $130k in campaign contributions drives $360M in loan guarantees is fantasy and whild accusation. These guarantees are for financing through Navistar to 1,000+ smaller supplier firms, not money that is going to Navistar, it is cash flow to Suppliers (small businesses) in better payment terms while protecting the working capital of Navistar. Are you sure you know how this works? Doesn't sound like it. In fact, this whole blog sounds like a political rant instead of financial logic. You've been OUTED, you GOP extremist!
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