I listened to so many politician on TV last night that what they say about the US economy blurs into a uniform fog. One of them, I cannot recall if it was Bush, Clinton, or McCain used Caterpillar Inc. as an example of a firm that is already suffering from the credit crisis. The politician said that Caterpillar had had to pay twice the previous interest rate for cash to finance operations, salaries, and equipment sales.
My heart jumped at the thought: twice the interest rate to finance mining equipment. That could make things expensive. Before we look at what Caterpillar has to say about being held up as a national icon, a quick review of what the politicians said.
Bush, looking thoroughly chastened and mechanical, read a well-written speech. His heart was clearly not in the speech. Afterall he was calling his own bluff and admitting the failure of his administration. But his speech writer did warn us in the clearest possible terms that if there is no action, credit markets will seize up, and money will cease to flow to pay salaries and finance Caterpillar selling mining equipment.
McCain looking tired and scared, declared his intention to return to Washington to fix things. Maybe he is just scared to face Harry Reid who looked almost ebullient as he smiled and said that McCain’s return would not be helpful. Obama looked positively happy as he noted that presidents should be able to deal with more than one crises at a time. So now they all gather in the Oval Office to plot an honest, balanced way to unclog the financial system.
But nothing is ever what is seems. This morning we have a report of an interview with Caterpillar’s CEO given while he was in Las Vegas at MINExpo. I quote so you can decide between what he says and what Bush/Clinton/McCain/Obama said—-and be warned there are fundamental differences.
Owens, Caterpillar’s chair and chief executive, said that while “last week, for a day or two, all markets for medium-term notes were closed to anybody,” Caterpillar’s finance arm was finding plenty of buyers for its paper.
“We have been very successful in having our stuff oversubscribed basically because we’re transparent, we’re pretty solid, old-fashioned lenders, loaning to people we know, getting a down payment, knowing how to remarket.
”But having our own captive finance company in these kinds of times is a terrific advantage.”
Maybe what we need is a fleet of yellow Caterpillar bulldozers to sort through the rhetoric. And when they are done with the verbal detritus, they can be used to sweep a whole bunch of politicians out of office.
For fun, I found this report from March 2008 on financial predictions by Jim Owens who was paid about $14 million last year for his abilities:
The head of Caterpillar Inc., said the U.S. economy is probably in a recession and is unlikely to start recovering until late this year. Caterpillar Chairman and CEO Jim Owens said fiscal stimulus would help support an economy dogged by mortgage foreclosures, a steep drop-off in residential construction and financial market turmoil triggered by the subprime loan crisis. “The U.S. economy is probably in recession now but will likely have real growth this year of around 0.5 percent, so very very slow growth and probably a couple of quarters of negative growth,” Owens said.
I nominate Owens to lead that team of yellow bulldozers to clean out Washington.