Presidents Day: Government vacations, Islamists flourish, GM flounders

The “Big Lie” strategy works while government goes on vacation Photo: AP

NEW YORK, February 17, 2013 - The positive message that carried the 2012 national election for Barack Obama and Joe Biden was simple: “Osama bin Laden is dead and General Motors is alive”.

Now we know the slogan that swayed 65.4 million Obama-Biden voters is one part false premise, the other part whopping lie.

Events since September 11, 2012 prove that killing Bin Laden has not brought decisive victory in the War against Al Qaeda and allied adherents to militant Islam.

Moreover, preliminary disclosures made February 14, 2013 by General Motors show that America’s largest vehicle producer is far closer to bankruptcy courts than inexperienced investors and the wider public assume.

The Problem with False Premises

War against an ideologically driven opponent never ends with the death of one enemy leader, even a historically significant one. To forge a lasting peace, the victor must convince the defeated foe to reject tenets of the ideology that sparked the conflict itself.

Listening to most news analysts, few Americans hear that our country has long been in conflict with Islamic potentates. Richard Zacks and Joseph Wheelan separately remind us that America had trouble in Libya and Algeria during our birth as an independent nation.

Ted Sampley provided useful context concerning America’s first troubles in North Africa in 2007:

“In 1786 … Jefferson and Adams asked the Dey [of Algeria]’s ambassador why Muslims held so much hostility towards America, a nation with which they had no previous contacts.

In a later meeting with the American Congress, the two future presidents reported that Ambassador Sidi Haji Abdul Rahman Adja had answered that Islam “was founded on the Laws of their Prophet, that it was written in their Quran, that all nations who should not have acknowledged their authority were sinners, that it was their right and duty to make war upon them wherever they could be found, and to make slaves of all they could take as Prisoners, and that every …Muslim who should be slain in Battle was sure to go to Paradise.”

History in many places suggests a distinct possibility that secular democracy is incompatible with militant Islamist theocracy.

Moreover, the troubles for America so recently handed over by George W. Bush and Dick Cheney in January 2009 have deep roots in 20th century mistakes made in the region by hapless Jimmy Carter as well as war hero Dwight Eisenhower, not to mention the stumbling of other Presidents from 1981 forward.

Concerning the present, Charles Krauthammer was well ahead of the pack on October 1, 2012 when he correctly noted that events in Benghazi, across the Middle East and in Africa shamed all the pre-mature victory dances at bin Laden’s death.

Killing bin Laden was a welcome tactical advance, not a resounding and decisive strategic victory.

The threat posed by militant Islam is bigger than any man or shadowy organization. Like National Socialism, militant Islam continues to inspire too many human beings to commit too many violent acts.

Rescue Madness: GM Seems Headed Backwards to Bankruptcy

When I look through recent disclosures made by General Motors, I think of Monty Python’s John Cleese in the famous “dead parrot” sketch:

Looking at available “facts”, General Motors today is not technically “dead”—however, alarm bells are ringing off the hook.
In 2012, consolidated Automotive revenues grew by slightly less than 1 % from $ 148.9 billion to $ 150.3 billion. Automotive gross margin fell from a puny 12.4% in 2011 to 6.7%, in 2012. Operating income before goodwill impairment charges fell from $ 6.9 billion to an operating loss of $ 3.2 billion. Pretax income after all charges plummeted from $ 6.0 billion to a staggering loss of $ 30.3 billion. Moreover, these consolidated results were produced while the largest unit, GM North America, increased its capacity utilization rate from 95.6% to 97.5%.
No manufacturing business is viable at such levels for long and few American businesses have already been as coddled by various governments.

If you cannot sell/lease vehicles when money is essentially free, how can you hope to do so as rates correct back up as they have started to do since July 2012?
Analysis that is more complete will have to wait until the first week of March when GM releases its Annual Report on Form 10-K.

Rest assured that informed investors will not be celebrating even if entrenched unions, managers and politicians dare to gloat.

Bailing out a structurally challenged vehicle producer using borrowed taxpayer funds, without fully addressing competitive weaknesses has not restored the fortunes of General Motors.

The Big Lie Strategy at Work

So let us now return to holiday reverie. All is well. Peace is at hand, the private sector is doing fine, and government is taking a long vacation.

There is no spending problem. Paul Krugman says so and he won a Nobel Prize in economics.

Senator Harkin is iron clad sure that government spending is not America’s chief problem.

Minority Leader Pelosi dismisses the “false concern” over fiscal profligacy.

So that threat of sequester super cuts is not a “Sword of Damocles”, ready in less than two weeks to cut all of our heads off.

Mark Twain observed:  “A lie can travel halfway around the world while the truth is putting on its shoes.”

Small lies are a constant in the human condition. We expect politicians to lie.

Will the electorate ever rise up to fight against and undo these truly extravagant and big lies?

In Mein Kampf, Adolph Hitler offered appalling insight into use of the “Big Lie Strategy”:

“…in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted … and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods.”

Vladimir Lenin explained how the press can become a key tool in spreading lies: “The press should be not only a collective propagandist and a collective agitator, but also a collective organizer of the masses”.

What will it take for the mainstream press to get a grip and return to do its job? Where are the modern Woodwards and Bernsteins?

Perhaps we can take a modicum of comfort in that Federal Reserve Chairman Ben Bernanke finally seems to see economic headwinds that still blow hard.

Veteran investors are also taking to the airwaves and calling out the obvious hard, painful facts.

What happens when vacation from reality ends?

At least when our parents left us behind to cavort away from work, occasionally we got a souvenir.

If we get anything useful when Washington D.C. re-engages, it will likely be a lousy tee shirt with these words emblazoned upon it: “Democrats and Republicans spent $ 15.4 trillion since 2008 to “fix” America, and all I got was this threadbare garment, imported from Vietnam!”

I hope the only thing threatening us from the sky in coming weeks will be harmless meteors, and not missiles now being fashioned as we sleep, possibly with nuclear warheads.


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Charles Ortel

Charles Ortel became a lapsed member of the silent majority in August 2007 when he began alerting the public to dangers posed by structural changes in the global economy. Since then, Charles has appeared in the print, radio and television media with increasing frequency. Brass Tacks will attempt to offer non-partisan perspective on factors contributing to the unresolved, burgeoning crisis and discuss potential solutions. Graduated from Horace Mann School, Yale College and Harvard Business School, Charles tries to learn each day.  

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