Or, how I learned to stop worrying and love my debt
24 November 2010
I used to wake up in the middle of the night, here in Istanbul, wondering how I’d pay my bills. As I’ve noted in City Journal, the demand for foreign news is shrinking. The wire services provide coverage from Turkey at low operating costs. To be honest, I also spend a lot of money on things I can’t afford, like my cleaning lady. She’s been working for me for five years and has three kids, so I can’t fire her. If I go down, she’ll go down, and so will my landlord, the guy who sells cleaning supplies to my cleaning lady, and the Iranian refugee who does my odd jobs. The ripple effect on the local economy, in other words, would be calamitous.
Then I saw the great news about GM’s success and I stopped worrying. Because GM and I are in the same position, and things seem to be working out splendidly for them.
You see, about a month ago, I asked my mother to bail me out. I knew she’d do it. She’s done it before. She sent me money she’s been saving toward my retirement. I resolved to stop spending money on stupid things. (There was really no excuse for that lamp, Mom, I know. Sorry! In my defense, I was sure there was a genie in it.)
With my mom paying my rent, I’ve been able to charge less for what I write and stay in the black. Voilà, I’m selling a cheaper product (for now) than Reuters and AP. That will teach them where to stuff their “good investment decisions” and their “economies of scale.” I fired the guy who does my odd jobs—it was painful, but it had to be done. So, congratulations to me! I’m making it in this tough business climate, with a little help from Mom. America’s back! And if I’m broke again in a year, I’ll hit her up again. (Don’t forget, Mom, that you really have no choice: no matter what you do, I’m still going to be a huge financial drag on you. If I fail, I’ll end up coming home with all my cats. You don’t want me sleeping on your couch, do you? And you sure don’t want to see what my cats would do to that couch. Antique, I believe it is?)
All of this is, alas, a perfectly accurate description of my financial life. The reader may wonder about my mom’s wisdom in going along with this plan. That’s between me and her—she loves me, and it’s her money, not yours. The money that went to GM was yours, however. And I suppose you must love GM as if it’s your profligate kid, because surely you could not be so credulous as to believe these reports about the spectacular success of the bailout.
There was a rush to buy GM shares last Thursday, when the company, which emerged from bankruptcy restructuring last summer, held an IPO. The company has been drowned in taxpayer cash. It’s going to be fine in the short term. No one should be surprised by this. Anyone—and any company—can get back in the black in the short term if someone gives it a ton of money. And who wouldn’t want to invest in a company that everyone knows won’t be allowed to go down? All the merchants in my neighborhood would lend me money, too, if I asked, confident that their loan would be repaid. A “generous American mom” sounds pretty good to them.
Of course, GM is paying back its new loans, though this doesn’t help investors who hold old GM stock; that’s worthless. By the way, I’m also considering stiffing my creditors. The GM example proves that it will result in an immediate improvement of my balance sheet. GM’s production numbers have been increasing, and mine have, too: it’s a lot easier to write when you’ve got peace of mind. Whether anyone will buy the stuff I’m writing, God knows, but my word count is definitely up, and that, apparently, is the number that matters.
Note that GM is still producing those gas-guzzling pickups and SUVs that no one seemed to want before. Great news for me: I’ll just keep writing about the arcana of Turkish constitutional politics. It’s what the market should want. Turkish politics are fascinating. I don’t know what’s wrong with Americans. If they understood what was good for them, they’d want to be better informed about Turkey. (They’d want that Volt electric car, too. I hear it’s much better for the environment.)
Naturally, I’ll pay my mother back. Here’s how: I’m going to have her put a small percentage of all the money she’s given me in an escrow account, which I’ll call a “working capital” account. Then I’ll transfer the rest of my assets to her. (Good news, Mom: you own seven cats and seven litter boxes.) Then I’m going to use the money from that escrow account to pay her back at an interest rate no one but my own mother would give me. As soon as I empty the escrow account, I’ll declare the loans repaid. What do you mean, that makes no sense? That’s just what the U.S. government did for GM, and no one finds that problematic, do they? Never mind that the cash part of the loan has been repaid from TARP, or that this in fact represents only about 15 percent of the total bailout, or that the rest remains tied up in the automotive equivalent of cats and litter boxes. By the way, I’m thinking of bundling all my liabilities into a separate company, just like GM. I’ll call the company “Some other Claire who can deal with the creditors, never heard of that Claire.”
The excited trade in GM’s stock seems to be making everyone in America feel good. “This is great news not just for GM, but it’s great news for Michigan and great news for the country,” Democratic governor Jennifer Granholm said. “The bottom line for us is we’re climbing out of this very, very deep hole that we were in. This is a very important rung on that ladder out.” That’s just how I feel, thanks to my mother: no more sleepless nights. At least, we’re told, the stock is back in private hands. Thank God for that, since only the government would be stupid enough to buy stock at $43.84 a share, sell it at $33, and call it a triumph. (My mother isn’t stupid—she just loves me. Mind you, the boundary there’s a bit blurry.)
“Even if taxpayers ultimately take a loss on the GM investment,” notes the Washington Post cheerfully, “administration officials and other supporters noted this week that the U.S. auto industry has added more than 77,000 jobs since GM and Chrysler emerged from bankruptcy protection, vehicle exports are up well beyond 2009 levels, and the nation’s Big Three car companies posted operating profits for the first three quarters of this year.” Yes, I reckon I’ll take a leaf out of GM’s book now and start hiring like crazy—I’ve got my mother’s money to do it. Among other things, I’m going to need a bodyguard, because my Turkish creditors might not take it well when I tell them that from now on, we’re on the GM model.
“Sixteen months ago, we were pretty much flat on our backs,” Dan Akerson, chief executive, told a crowd assembled for a big party to celebrate GM’s return to the stock market. “But we picked ourselves up and got back in the game.” Another excellent idea. Let’s not say Mom picked me up: that’s demoralizing. Attention, friends: I’ve picked myself up! Party on Saturday night to celebrate. Let’s send the bill to my mom.
I do have a nagging concern about all of this. My mom has five kids. I’m probably the worst at managing my finances, but my brothers and sister are definitely going to figure out what happened here. They might feel entitled to the same treatment. If they get themselves in trouble, too, they’ll know Mom’s a soft touch. I hope this doesn’t make them think they should try something stupid like moving to Istanbul to be a foreign correspondent, or whatever it is they’d rather do than keep those responsible jobs they have. Because frankly, if we all do it, so much, eventually, for my mom’s retirement. I’m sure not going to be able to help her at this rate. So, Mom, I strongly advise you not to give any money to my brother, Mischa “Ford” Berlinski. His books seem to be more popular anyway, so really, there’s no need. The bonus here is that now I can sell books at a price that doesn’t reflect the real cost of producing them. (Fire sale on Claire Berlinski novels, reading public!) Mischa doesn’t have the “Mom loves me best” advantage, so his books will cost more. A few more years of this and I could drive him right out of the market—and then there will be no more competition, solving both my financial problems and my sibling-rivalry issues in one stroke. As you always said when we were growing up, Mom, sometimes life’s not fair.
Now, don’t get me wrong. GM may succeed, in the long run. Like me, it has done well in the past, and like me, it has cut its spending and gone overseas. Car journals seem to like some of its new products. Its pension plans are still underfunded by more than $27 billion, which would worry me if I were good at financial planning, but clearly I’m not, so no need to think about that too closely.
I may pull through, too. But the difference between GM and me is that I’m not really going to pretend this bailout hasn’t come at a huge cost to my family, that anyone but my own mother would consider sinking more money into me a wise investment decision, or that the short-term infusion of cash she’s provided really means I’ve succeeded. One more important difference: my mother’s money is hers, and no one forced her to give it to me. The government’s money is yours, and they forced you to give it to GM. Other than that, same happy story.