In a sure sign that times are tough all over, Santa Claus managed to get through this year's Christmas deliveries, but cannot promise he'll be stopping by anyone's home in 2009 or beyond now that Treasury officials–egged on by Scrooge-like members of Congress–denied him a bailout loan to keep his North Pole enterprise from going under.
Full credit for this sad report goes to my fellow blogger, Kenneth L. Tepper, CEO of ARKequity, a Radnor, Pa.-based private equity firm. While the full report runs on Ken's blog (click here), his synopsis appears below.
Read it and weep!
Years of excessive pay to elves, the production of too many poor quality toys that no one wanted, and the legacy costs associated with pension and healthcare benefits for retired reindeer and elves left Santas North Pole operations in shambles and facing bankruptcy.
Intense lobbying leading up to Christmas gave Santa a decent shot at getting a bridge loan under the TARP program. Santa had skillfully played down the notion that it was a bailout, but rather the preservation of a dream held by millions of children and a way of life.
Opposition flared, however.
Mitt Romney said, Without that bailout, Santa will need to drastically restructure how he does things. With it, he will stay the course–the suicidal course of declining market share, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses for elves. Santa needs a turnaround, not a check.
Sen. Richard Shelby, a Republican from Alabama, wondered aloud about the existential nature of the proposed funding: Will it be used to improve Santas business model–which has been a failure–or is this just life support?
Treasury Secretary Henry M. Paulson Jr. implored lawmakers to oppose using any of the $700 billion financial bailout for Santa, which he said would set a dangerous precedent. We cant support someone who lives in a bubble, is completely disconnected from Main Street, and has used has used Byzantine methods which no one quite understands to amplify the risk imbedded in his operations.
Ultimately, it was Santa himself who dashed any hopes for TARP funding when he arrived in Washington via his own personal sleigh. Lawmakers were quick to denounce Santa, suggesting that he should have ridden in one of the Big Wheels tricycles that are produced right in his North Pole factory.
“There is a delicious irony in seeing a private sleigh flying into Washington and Santa coming off with a tin cup in his hand, saying that hes going to be trimming down his operation,” said Rep. Gary Ackerman, a Democrat from New York.
“I'm not an opponent of private sleighs by any means, said Rep. Patrick T. McHenry, a Republican from North Carolina. But the fact that you flew in on your own private sleigh to Washington is a bit arrogant before you ask the American taxpayers for money.”
My contacts tell me that everyone on the Hill knew it was over the moment that those hooves hit the tarmac at Ronald Regan International, Mr. Tepper reported. Lawmakers were distracted by the problems facing automakers and banks, and although they gave the big guy with the funny hat and beard some time and a good public scolding, he walked away with his sack–usually reserved for toys–rather empty.
Can Santa be saved? Perhaps he could buy a thrift and apply to become a bank holding company, like many life insurers are doing. Or perhaps Santa could go public, or raise funds via private equity–although that might be dicey in this tight capital market.
What do you folks think? Would Santa make a sound investment?
On a related note, there was a terrific cartoon in the Sept. 29 edition of The New Yorker, showing two little boys on the floor, with one just having broken open his piggy bank with a hammer. “Now we just have to sit back and wait for the Fed to bail us out,” he says!
In any case, let's hope for an economic turnaround in 2009!
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