Friday, November 16, 2012

Where's The Hostess Twinkie Bailout?

Twinkies, Cupcakes and Ding-Dongs...All Gone
Hostess, the baker maker of such great American iconic foods as Twinkies, Cupcakes and Ding-Dongs, as well as the relatively more healthy Wonder breads, has decided to file for bankruptcy after a prolonged strike by its workers eventually exhausted its remaining resources.

Here's our question of the day:

'When will the federal government and the Obama Administration propose a bailout for Hostess and their 18,000 union workers?

Why the heck not?  What makes the union workers who work for Hostess any different from the union workers who worked for GM or Chrysler in 2009 when things were falling apart at the seams for them?

Are the jobs of the people who make (fattening, artery-clogging) food any less important than the workers who make hurtling assemblages of metal and computers that carry us around on the nation's highways and byways?

18,000 people.  That is a lot of people.  That is about the number of people who can sit in the Dean Dome at Chapel Hill for a college basketball game.

Guess we will see how the new Obama health care exchanges will work now that they won't have the union health care plan paid for probably in total by the management of Hostess over the years.

Just to push at the comparison with the GM bailout for a moment, here's what we don't get:

  1. At what point is a government bailout 'ok'?
  2. If the Obama Administration does not propose a bailout for Hostess and their 18,000 workers, then who would be 'eligible' for any future federal bailout?
  3. Why not ask the union to buy the assets of Hostess and make them 'owners' of the company just like the Obama Administration installed the unions as major owners of GM?
  4. If the unions can run GM from a plurality of stock ownership position, can't they run a bakery?

Now is the chance for everyone to see how a 'managed bankruptcy' with Hostess would have worked for GM, Chrysler and even Wall Street investment banking firms and major banks in 2008.  The company would file for bankruptcy protection under the law; current stockholders equity would be wiped out; the creditors would get in line and get paid something, maybe 10 cents on the dollar of debt exposure they had with Hostess....and then the unions could negotiate with themselves to come up with a wage formula and benefit package plan that would allow Hostess to stay in business and keep 18,000 people employed.

Isn't that what American free enterprise is all about?  Take a risk, hope you succeed.  If not, file for bankruptcy and try again with another plan.

That is what the Obama Administration failed to allow happen in the case of GM and Wall Street and the 'Too Big To Fail' (TBTF) banks.  Operations could have still proceeded all during 2008 and 2009 and 2010 as these companies were rearranged, even with some short-term bridge-funded input of federal bailout assistance.  Most of the workers could have been retained during this transition period and employed, albeit with some major concessions to the gravity of the marketplace.

If something costs too much to make and sell, you can't make a profit and stay in business.  That is Business Economics 101.  But there is some level at which costs can be lowered that allow that product or service to be sold and make a profit.  That is what management of any enterprise has to decide as part of the reason why they 'get paid the big bucks'.

We are as sad as anyone to see a truly American icon such as Twinkies bite the proverbial dust. It feels like when the Beatles broke up, UCLA stopped winning NCAA basketball championships or you found out that Santa Claus just might not really fit in the chimney everyone said he came down out of every Christmas.

However, on the other hand, now perhaps even Mayor Bloomberg of New York City will be happy since no one will be able to be tempted by the empty high calories of Twinkies, Ding-Dongs and Ho-Ho's ever again.  
  • The body fat of Americans might drop in half just because of the unfortunate demise of Hostess.
  • Their body weight should start to return to some sort of 'normal' weight once again.  
  • Blood pressures will drop. 
  • Heart attacks and strokes will diminish substantially.  
  • People will not have to have expensive open heart surgery or transplants later in life now that their tickers won't be destroyed by the chemical compounds and fat content of Twinkies, Cupcakes, Ring-Dings and Sno-Balls for 65 years...if they make it that long.
  • Heck!  We are willing to bet that health care costs drop overnight by 50% or more simply because people will not be able to stuff boxes of Hostess products into their mouths while sitting on the couch watching tv when they should be walking, playing tennis or working out.
And then, guess what will happen?  We won't need Obamacare any more, or so many big bad health insurance companies or even so many gyms, diet plans or Spanx for Women (and now Men, from what we hear...bring out the 'Bro' from Kramer on 'Seinfield)

So maybe the bankruptcy of Hostess Twinkies is a 'good thing' for the American Republic!



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3 comments:

  1. I am going to start stockpiling! Look out Lil Debbie!

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  2. obama was elected to govern not to govern buisness with reguard to gm his interference has cost us the tax payer so his goverence has a poor bating average.
    obamacare is in the same boat, his foriegn policy is not exactly above board.
    so let hostess take its legal course and maybe the former employees will think before acting

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  3. 'Let them eat Twinkies!' seems to be President Obama's mantra now that he has been re-elected.

    Hostess is HQ'd in Texas so maybe there was no reason to help them out there if they weren't going to vote for him I suppose

    ReplyDelete