Who Will Prosecute this Government?

Update - May 18, 2010

Fifteen days ago, we posted the essay below--which proves that if you read Brushfires of Freedom, you'll be ahead of the thought-curve. The Powerline guys--long recognized (and rightly) as 'big daddies' in the blogosphere--have just posted comments on the GM situation that are virtually identical to our own. Consider:

"General Motors chairman and chief executive officer Edward Whitacre took to the pages of the Wall Street Journal last month to make an important announcement: "The GM bailout: Paid back in full.". Whitacre asserted that GM had paid back all the funds it borrowed from the United States in full with interest.

Whitacre omitted two facts that rendered his column highly misleading. They are the kind of omissions that constitute securities fraud when made by a company in connection with the purchase or sale of a security or when a company reports its financial results. ...

Whitacre's Wall Street Journal column was, in short, a fraud. But it was a fraud of a special kind. It was a fraud committed with the assistance and probably at the urging of the Obama administration."

So you're ahead of the curve at Brushfires; now if only we were clever enough to do this kind of video (click here, then scroll down).

The securities fraud GM and the Department of the Treasury are committing is astounding

Let’s suppose you run a public company that makes widgets and sells them all over the world. Let’s suppose are a lousy executive; the company is losing money hand-over-fist, and you are facing bankruptcy. But lucky you—you have a rich uncle who has always considered you the favorite nephew. Your rich uncle invests $50B in your widget company to backstop the ongoing losses, and loans you another $10B to help you work your way through the problems.

Your widgets still aren’t selling anywhere near as well as your competitors’; you’re not really earning any money from the sale of widgets; the company is still wobbly at best. But then, your rich uncle has an idea to help you raise the company’s profile in the marketplace and create a positive impression about your widgets. He’ll give you another $10B+ to allow you to pay back the $10B loan and tell the public you’ve turned the corner and are paying off all your debt and are effectively out of the $60B mess you created just a few months ago. All you have to do is hide the fact that your rich uncle is giving you the extra $10B+.

Present this story as a hypothetical law exam question, and you’ll likely get 10 out of 10 exam-takers to tell you that what you are doing is stone-cold, black-and-white securities fraud. You are presenting a materially misleading and incomplete picture of the health of your widget company; you haven’t turned any corner at all; and the notion that you are out of the $60B hole is just preposterous.

Present this story in real life, and be prepared to be prosecuted by the SEC, sued by shareholders, and told by your white shoe and suspenders law firm to retain a criminal defense attorney. You are heading to jail.

Yet this is exactly what GM and the Obama administration have done, deliberately and in a coordinated fashion. As thoroughly chronicled here, GM recently announced an early, full payoff of a $6.7B TARP loan, and the Obama Treasury Department jumped in with official press release level congratulations. The unmistakable intent was to create the picture of GM as fully turned around, with cars selling like hotcakes, and the American taxpayers preparing for a huge windfall as the $50B bailout money is returned in full.

But it turns out the $6.7B loan payoff didn’t and couldn’t come from GM earnings because there still aren’t any. The payoff came from other government funds—or rich Uncle Sam, if you prefer. From one slush fund to another, and the people are told everything’s hunky-dory.

What contempt this government and its GM shills continue to show for the American people. The American people are largely turned completely off of GM vehicles precisely because they resented the heavy-handed and blatant pro-union bias so evident in the GM and Chrysler bailouts. This is why Ford—the only company not to get involved in the bailout fiasco—is recording major sales and earnings increases. People are consciously deciding to favor the US automaker that stayed free of this gangster regime.

Despite this evidence of the American people’s intelligence and awareness of exactly what is going on, the elitists in Washington and the gutless GM executive team that is doing the government’s bidding have convinced themselves that this kind of transparent lying will fool the American people and is in the best interests of the American people, of GM and of the government.

Lying like this never serves the interests of anything good; it just begets more and bigger lying. And rather than fooling the American people, it destroys whatever shred of trust they might have in government. It fosters cynicism, and tempts more than a few to decide the rules of life really have changed, and it’s time to get with the program and start your own lying.

What a fraud, what an egregious cancer this administration has become to the American heart and soul. They must be removed from office; every single one of them.

Who will prosecute this government? The answer is the American people. Step one is coming in November.

Paul Gable

May 3, 2010