Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 12/8) 

Editor’s Note: Liz Peek is a financial columnist and the author of wOw’s SHEconomics. 

wOw readers: Please let me know which companies you think might benefit from the recession; video game sales are up – anything else that you’re spending more money on than usual?

First Blagojevich, Illinois’s foul-mouthed governor accused of trying to sell Obama’s Senate seat. Now Bernie Madoff – a wildly successful trader who helped build NASDAQ – and who has just admitted to scamming friends and clients out of billions. Boy, no wonder this country is ready for a change!

Just as the Clinton crowd spitefully plucked the Ws out of the White House computer terminals, someone seems to have made off with the notions of honor and integrity. These scandals could not have come at a worse time. The country is being asked to have faith – faith that Henry Paulson knows what he is doing, faith that bankers will use taxpayer money responsibly, faith that the Big 3 automakers have responsible plans for paying back the loans they seek.

Americans are skeptical. They’ve seen Paulson jump from program to program, with little to show for the hundreds of billions he has handed out. They’ve seen the auto execs look like idiots as they drive to DC in hybrid cars (which, according to Mapquest, takes eight hours and 52 minutes – not a very intelligent use of their time). They’ve seen Congress bloviate and heckle everyone from Fed Chair Ben Bernanke to GM boss Rick Wagoner to billionaire hedge-fund manager George Soros (though I note that our legislators acquire a gloss of respect in direct proportion to the size of the pocketbook). It’s embarrassing, and worrisome.

No wonder polls show that taxpayers do not favor bailing out Detroit. They do not trust the petitioners, and they do not trust the legislators to honestly tackle the problems facing the automakers. They are right.

The only way that GM, Ford and Chrysler can possibly return to profitability is if they abolish their existing labor contracts – something that will probably happen only if the companies go through bankruptcy. The companies are paying more than $70 an hour for labor, while Toyota and other foreign companies in the U.S. pay only about $40. The more that Congress becomes involved in the salvage operation, the less likely that the labor problem will be addressed. Last year 98% of UAW campaign contributions went to Democrats; 96% of overall labor monies went to Democrats. The Dems are not about to bite the hand that has so richly fed them.

That is the issue. The stock market has been sawing back and forth as the prospects of a Big 3 bailout wax and wane, but the market, too, doesn’t know what it wants. No one can tell what would happen if GM went under. Rick Wagoner has said that no one will buy a car from a bankrupt company. He may be right; I don’t know. I do know that these companies cannot go back to business as usual.

This past week, traders were not only watching the car company travails. They were also watching yet another “once in a lifetime” story unfold. On Tuesday the Treasury issued three-month t-bills that temporarily had a negative yield. That means that investors were actually willing to lose money buying t-bills. If this concept makes you woozy, you’re not alone. Apparently such a circumstance arose back in the 1930s – but I never read about it. What gives?