@ Supply Chain Management



For what it’s worth – Exactly what I predicted in previous posts… Geithner Unveils New Plan To Bail Out US Banks

House Democrats have been pushing for stronger lending conditions-as well a crackdown on executive pay-in the wake of criticism of former Treasury Secretary Henry Paulson’s administration of the TARP. That was seen as both too lenient on and too generous to financial firms, which critics allege were hoarding capital instead of lending it.

The new Treasury plan will “require banks to show how government assistance will expand lending and how they intend to use taxpayer dollars, which is similar in the tone and design of the House Democrat’s proposal.

Heh! The new Treasury plan will “require banks to show how government assistance will expand lending and how they intend to use taxpayer dollars… In other words, lend or bust. Now there will be two sets of bankers – one set who are cozying up with the government to swallow up the other set. But both are pondering, “If I’m forced to lend, I’ll go bust anyway. So what’s the point?”

To which any government official would reply, “And your point being?”

And that is how you and I become serfs. No matter what the actual creditworthiness of the recipient, the government intends to appropriate your future work to make bets on how the future should look like by saving house values, saving retirements, saving any and everything they see fit to save. Why do we allow them to do it? Well, that’s because we’re fully vested in our house value, in our retirement – in the way the world ought to be i.e for our benefit. Now, that is the root of entitlement.

In plain speak – no matter how “uninspired” your financial actions may have been, the government has got your back. And they intend to ride it for all that it’s worth to them. And then some.

For us in the supply chain, it means the following – The government is going to be a player in your supply chain (You don’t really see any graphic on any supply chain concept diagram that is titled – Govt., change it – now your task is how to coopt the government into your plans before the competition does) be it in the financial supply chain by guaranteeing letters of credit, imposing restrictions (either outright or through penalties) on types of materials or manufacturing processes you can use for the good of the planet/future etc, if it comes to protectionism then securing your channels through the layers of protectionism will be an imperative, price and wage controls to secure full employment, losing the investment in manufacturing assets overseas because of the governmental actions there – that would be called nationalization… the list is endless. It centers on the dynamics of currying governmental favor and how effective your firm or your industry’s organization is in making your voice heard.

But isn’t this just paranoia? Absolutely, completely true paranoia. If this is the way the government intends to play in finance, I am only looking ahead to see how it might play in the auto world for example (I hope we haven’t forgotten about that sorry set yet) because that is really where the template of governmental action in the supply chain will get its opening credits. We shall have to see.

Tags: The Bank Bailout, Directing the banks, Entitlements, The effect of government in the Supply Chain

Category: Finance, Government, Personal Observations


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February 2009