The dirt on ‘Government motors’

Charles Gasparino

Maybe the most disturbing news in “American Turnaround,” Ed Whitacre’s new book that describes his stint as head of General Motors, is how naïve he was about what it means to run a company that’s been bailed out by the federal government, and is now regulated by the anti-business types who populate the Obama administration.

As Whitacre takes the job back in 2009, he thinks that the automaker’s government masters are rational people looking to help the company survive and thrive. Along the way, he finds out that they’re not.

In fact, their true goal wasn’t to maximize profits to ensure GM survives for the long term, but to keep control of the company as long as possible (the feds still hold a 26 percent stake today) to both keep its union allies fat and happy and to please its green buddies by forcing GM to produce hybrid vehicles that the vast majority of Americans can’t afford now, and never will.

You have to read between the lines to learn this, but it’s pretty clear to anyone who knows what was going on.

What Whitacre does explain is how his advice to the administration that it should accept a deal in which GM would get the government completely out of its hair by repaying all the bailout money was shot down — with little rational explanation.

In the book, he blames GM’s investment bankers, who said they were skittish because of market conditions at the time — afraid that an IPO might not raise enough to repay the government’s entire $43 billion investment.

But those bankers weren’t picked by the company, but in large part by the Obama Treasury Department. And it’s clear they didn’t view Whitacre as their client — these were some of the same fat-cat bankers who themselves got a federal bailout during the 2008 financial crisis, who’d say anything to appease their ultimate bosses in Washington.

And, as Whitacre notes, the partial IPO that the bankers allowed went well. On that day, GM didn’t just get a few additional orders for its $20.1 billion offering (then the largest IPO ever) but orders worth $86 billion — enough, he notes, that GM “could have easily repaid the government the entire $43 billion it owed, and given taxpayers a nice profit for their time and trouble on top of that.”

A longtime former telecom executive, including a stint as CEO of AT&T, Whitacre knows something about Wall Street deal-making — so it’s no surprise he was right.

Again, he doesn’t cast aspersions on the administration. He writes of meeting President Obama, who urged him to stay on as CEO (he retired at the end of 2010), saying the president had “no airs at all. I liked him right way.”

But he obviously didn’t like working for him. While he never complains outright about the money-losing hybrids, Whitacre says, “Government was getting a little too comfortable with having a grip on GM.” Answering to the feds made it hard to pay and attract talented managers, which had “negative impact on our people, and a negative impact on our psyche as a company,” now known derisively as “Government Motors.”

Whitacre says he supported the controversial bailout of GM, which is odd from a guy who spent his life in the free marketplace.

Yes, the alternative would’ve been bankruptcy and an uncertain future — but plenty of companies survive such reorganization in better shape. After all, bankruptcy lets you deal more effectively with issues like overly generous union pensions, which was at the heart of GM’s financial woes. And it would’ve avoided interference from political types who couldn’t care less about how many real (money-making) cars as opposed to (money-losing) hybrids are being sold.

In the end, the lesson to take from Whitacre’s muddled message about GM and its partnership with government (particularly for US corporate leaders operating in the new world of bailouts and an administration eager to control their activities for political purposes): Be wary of handouts.

The label “Government Motors” might come with free money to avoid natural market forces, but it also means you’re never really going to be independent, and that might be a fate worse than bankruptcy court.

Charles Gasparino is a Fox Business Network senior correspondent.

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Bright spots in Latin America despite global economic uncertainty

There are bright spots as Latin American and Caribbean economies begin the year but the uncertain health of the U.S. economy, the lingering financial crisis in Europe and more sluggish growth in China are casting shadows over the region.

A decade ago, dim prospects in those major markets would have delivered a knock-out punch in the region, but this year Latin American and Caribbean economies are expected to grow by 3.5 percent and average 3.9 percent growth in 2014 and 2015, according to a World Bank forecast. The United Nations’ Economic Commission has a slightly more sanguine forecast of 3.8 percent growth in 2013.

Both are better than the 2.4 percent growth the World Bank is forecasting for the global economy and the mere 1.3 percent increase it is predicting for high-income countries.

The U.S. economy grew by 2.2 percent in 2012. But the economy shrank 0.1 percent in the fourth quarter and the first quarter of 2013 also could be sluggish..

“That creates a soggy start for 2013 in Latin America,’’ said David Malpass, president of Encima Global, a New York economic consulting and research firm.

With a recession in Japan, even slower growth expected in Europe than in the United States, and questions about whether the dip in the Chinese economy has bottomed out and whether the United States will be making sharp cuts in defense spending and other federal programs come March 1, Latin American and Caribbean nations can’t really depend on the industrialized world to spur growth.

The region must look inward and undertake structural reforms that will allow growth from domestic factors, said Malpass, who was in Miami in January for an event organized by the University of Miami’s Center for Hemispheric Policy.

Panama’s $5.25 billion investment in expansion of the Panama Canal is an example of the inward focus that will pay off down the road, said Malpass. By 2015, Panama plans to have completed two new sets of locks on the Atlantic and Pacific sides of the canal and the deepening and widening of existing channels to accommodate the so-called Post-Panamax ships too big to traverse the current locks.

“It’s a difficult period but a period where developing countries are growing solidly but not as quickly as they might otherwise want to,’’ said Andrew Burns, the lead author of the World Bank’s annual Global Economic Trends report.

That means they should focus on investment in infrastructure and healthcare, structural policies, regulatory reforms and improvements in governance that will pay future dividends down the road, Burns said.

Such economic reforms, plus high commodity prices enjoyed by countries with fertile fields and mineral wealth, helped the region move beyond the global financial crisis of 2008 and 2009 far more quickly than it did when it was so dependent on economic cycles in the rest of the world.

Economic growth slowed in Latin America and the Caribbean from 4.3 percent in 2011 to an estimated 3 percent but that was still better than the 1.3 percent growth high-income countries managed in 2012, according to The World Bank.

China will continue to play a major role in Latin America and the Caribbean this year but whether the slowdown in China has reached its low point is subject to debate. But it’s relative. Slow growth in China would be brisk growth elsewhere. China says its gross domestic product grew 7.8 percent in 2012, the most tepid growth in 13 years and a comedown from 9.3 percent growth in 2011.

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Route of Barefoot Mailman – from Pompano Beach to South Beach – is revisited

Fred Kimball slipped off his worn sneakers and beige socks and picked up the 20-pound backpack he had already carried for some 35 miles.

He set out for the beach, wanting to feel the sand between his toes – just as he imagined the mailmen of the late 1800s did on the final leg of their grueling route from Palm Beach to Miami Beach.

Honoring the “through rain, hail, sleet or snow” creed of mail carriers is what the annual Barefoot Mailman Historic Hiking Trail is all about. The trek — from Pompano Beach to South Beach — honors the mailmen who walked 66 miles to deliver mail before a new post office opened and new roads were built.

Keeping alive the memory of the herculean effort is what has kept Kimball coming back to the annual event for decades.

“They had a lot of obstacles,” said Kimball, 57, who walked alongside Peter Lewis, 78, who has done the walk for 38 years. “This is just a little taste of it.”

The 49th annual walk, which is led by the Boy Scouts of America, South Florida Council, attracted more than 500 scouts and adults – ranging in agefrom 12 to 78.

“It honors a very unique period of South Florida history,” said Stephen Blair, who has coordinated the hike for about seven years.

For the young scouts, it’s also a test of endurance.

“The boys learn how to be more self-sufficient, they learn teamwork and it teaches them about goal achievement, as well as basic scouting skills,” Blair said.

The walk began at 5:30 a.m. Saturday at the east end of Atlantic Boulevard in Pompano Beach.

The group walked all day, camped overnight at Haulover Park and then gathered at Lummus Park on South Beach Sunday before taking off for the last stretch.

Some of the younger Cub scouts joined in for the second day of the walk.

Robert Goodin, 15, sat barefoot “giving his feet a rest,” as they waited to get to the finish line. A member of Troop 457 out of Palmetto Bay, Robert said the walk was tough, especially where the sand was soft.

“It’s definitely challenge,” said the teenager, who weighs about 100 pounds – and carried about 40 pounds of gear.

In the days of the barefoot mailman, letter carriers faced challenges like snakes and alligators; inlets where they needed dinghies to get across; and they had to live off the land.

The scouts faced challenges like blisters and sunburns. They also had to carry all their food and sleeping gear.

Blair said only a few dropped out.

One was Garry Alan Taylor Sr. Taylor started out with his son and grandson to make the trek as three generations, but had to stop after about 12 miles because of circulation issues.

But Garry Alan Taylor Jr. and his 12-year-old son Garry Alan Taylor III completed the walk together.

“He did great,” Garry Alan Taylor Jr. said of his son, who came as part of Troop 247 out of Palm Springs North. “He was in front of me the whole time.”

The first South Florida hike, led by scoutmaster John Sherwood, was held in 1964, and covered 50 miles. It was later reduced to nearly 36 miles.

Sherwood began the hike after he read Theodore Pratt’s book The Barefoot Mailman, which described the real barefoot mailmen’s 66-mile route.

Each walker carries a letter, which is then placed in a mailbag.

The letter, which is sent back to the walker, tells the story of James Hamilton, who was one men who walked the route.

Hamilton’s route took him about three days; he usually lived on oysters, turtle eggs and oranges.

On Oct. 11, 1887, Hamilton’s mail pouch and clothing were found, but not his body. They mystery was never solved.

Legend has it that he took off his clothes and left the mailbag behind to swim across to get his boat, which floated to the other side.

But no one knows what really happened to Hamilton.

So in his memory — and the other men who braved the treacherous route — the walk began.

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Xbox Hoax Leads Armed Cops to Family

Members of a Florida family were shocked to be awakened in the middle of the night to find their house surrounded by police with guns drawn shouting at them to put their hands up.

Police Lt. Mike Beavers said the commotion was “very rare” for the small town of Oviedo, about 20 miles northeast of Orlando.

“This is the first time I’ve heard of it happening in our little town,” Beavers told ABCNews.com.

The frightened family did not want to be identified but recounted the ordeal to ABC News’ Orlando affiliate WFTV.

“I heard the doorbell ring,” the father of two told WFTV. “We couldn’t see anybody at the front of the door. All we saw was the rifle barrel.”

The man said he and his wife originally believed they were being robbed.

“They have rifles, they have guns, and I said, ‘Let’s get out of the house,’ so we ran down the hallway and got our two boys up,” the father said.

“We were told to freeze and put our hands over our heads,” he recalled. “They said, ‘We’re the police,’ so that was a big relief.”

What the family didn’t realize was that an Xbox hoax had led the Oviedo police to its house. The police said they were responding to a call from AT&T saying it had received online messages from a person who said he was hiding inside the house, claiming that someone had been killed there and that others were being held hostage.

But when police arrived, all they found was a very surprised and confused family.

Upon investigation, police learned that the confusion all started when an Oviedo teenager living in another house called police saying his Xbox had been hacked.

The teenager said the hackers had threatened to call in bomb threats to his home if he did not meet their demands for gaming information.

When the teenager refused, the hackers sent fake messages reporting the killing and hostage taking at the teenager’s former home. His previous address, where police showed up, was still connected to his Xbox.

The teenager did some of his own investigating, police said, and provided authorities with some possible identifying information on the hackers.

“The caller gave information to officers regarding two possible suspects, including IP addresses, Twitter and Facebook accounts and a possible name of one of the suspects,” according to the police report. “The information provided to the officers revealed that both suspects were located in different states.”

The information has been turned over to Oviedo detectives for further investigation.

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Stars React to Super Bowl Power Outage

During the second half of the Super Bowl on Sunday, power was lost in half of the stadium, halting the game for 35 minutes and sending the twitterverse into frenzy. Here are some of the reactions from the stars:

PICS: Stars Flock to Super Bowl XLVII

Rosie O'Donnell: "If this were a movie - fireworks would go off - and the joker would show up - snarling at Gotham."

Elizabeth Banks: "Oh um. Did not see that coming. Yikes. The power of Beyonce. She blew it out. Literally."

Rob Lowe: "Are the Niners in charge of the lights?"

Joe Jonas: "WHATTTTTT!"

Aziz Ansari: "WHOA WHOA WHOA. Is this power outage a Fast 6 tie in?? IS THE ROCK ABOUT TO FLY A HELICOPTER THROUGH A TANK?!!"

Ryan Seacrest: "Anyone have a charger?"

Neil Patrick Harris: "All the lights are out!! It's pandemonium!! Thank god we have out Beyonce finger lights!"

Kirstie Alley: "Think Beyonce show used too many volts?"

At the time of the outage, the Baltimore Ravens led the San Francisco 49ers 28-6. NFL analyst and former Baltimore Ravens player Shannon Sharpe speculates that the outage may serve the 49ers "quite well," as it could change the momentum of the game to their favor.

The reason for the outage is still unknown.

Superdome spokesman Eric Eagan apologized for the incident, and a spokesperson for the NFL had this to say: "Stadium authorities are investigating the cause of the power outage. We will have more information as it becomes available."

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Talking Turkey

In a terrible symmetry, a suicide bomber attacked the American embassy in Ankara on the same day that John Kerry was sworn in as secretary of state.

Kerry moves to State at a tough time. So we wonder if he has reconsidered any of his earlier characterizations of how America should address terrorism. In 2004, for example, Kerry famously stated that “we have to get back to the place we were, where terrorists are not the focus of our lives, but they’re a nuisance.”

That strikes us as fully in line with President Obama’s approach of the past four years. The problem is, while Americans may no longer make terrorists “the focus of our lives,” they make attacking the US the focus of theirs.

AP

John Kerry

In the last five months alone, the al Qaeda flag was raised over the besieged US embassy in Cairo, the US ambassador in Benghazi and three other Americans were murdered and the Yemen branch of al Qaeda put a bounty of three kilos of gold on the head of the US ambassador in Sana’a.

In Hillary Clinton’s final, combative appearance before the Senate, she rightly observed that a secretary of state has “no greater responsibility” than protecting our diplomats abroad. She also noted that “they cannot work in bunkers and do their jobs.”

She was right. Keeping American diplomats safe cannot be done simply by adding more Marines or turning buildings into fortresses. The way to do it is for the world to see that the United States exacts a swift and unforgiving price for an attack on its embassies or personnel.

US diplomats and their families deserve to know that Kerry regards their would-be killers as more than just a “nuisance.”

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Hollywood cardiologist’s ties with St. Jude sales rep raises red flags

Mark Sabbota, a Hollywood cardiologist, regularly implants $5,000 pacemakers in patients at Memorial hospitals in South Broward — generating, last year alone, more than a half-million dollars in sales for a manufacturer called St. Jude Medical.

Sabbota, public records show, also happens to be partners with a St. Jude sales rep in two corporations that run frozen yogurt shops.

What’s yogurt got to do with healthcare?

Perhaps nothing. Perhaps a lot. The question is connected to an on-going lobbying battle in Washington over a pending disclosure policy intended to more clearly reveal financial ties between physicians and the healthcare industry — often-murky relationships that have produced a long history of whistle-blower lawsuits, federal investigations and fines.

Sabbota, in a brief interview, adamantly denied any conflict of interest. “There has been no wrongdoing at all,” he said.

Memorial spokeswoman Kerting Baldwin also said the hospital saw no problem with the yogurt arrangement. As a “community” doctor, not a staff employee, Baldwin said Sabbota can select from a list of pacemakers approved by the hospital but has no say over what companies made the list.

“As for why he prefers to use St. Jude, I won’t speak for him,’’ she said. “You’d have to ask him that.”

But several medical ethics experts said such relationships fall in a gray area. They raise what Kenneth Goodman, bioethics director at the University of Miami, called “red flags” about whether the doctor’s motivation in choosing a device “is something other than the best interests of the patient.”

“Maybe it’s just a good business arrangement that has nothing to do with the devices he chooses,” said Charles D. Rosen, a California physician who is co-founder of the Association for Medical Ethics. “But the issue is public disclosure and transparency. You as a patient should have the right to know about a doctor’s financial relationships with companies.”

Concerns about the relationship between doctors and healthcare companies have been simmering for years. Americans are so suspicious of doctors’ connections that, in a 2008 Pew Charitable Trusts survey, 86 percent of patients said doctors should not be allowed to get free dinners from drug makers and 70 percent said doctors shouldn’t even be allowed to get free notepads and pens.

The 2010 Affordable Care Act includes a provision intended to address some aspects of these often-cozy relationships. Starting Jan. 1, healthcare companies were supposed to publicly post how much they were paying doctors. But that provision has been held up in the White House by intense lobbying.

“I don’t know why the hold-up, except the intense opposition of the industry,” Rosen said. His group, including members of the Harvard Medical School and Cleveland Clinic, wrote a letter to the Obama administration last month protesting the delay.

The group complains that the healthcare industry is trying to soften the rules so that foreign subsidiaries and doctors engaged in clinical trials wouldn’t have to reveal payments. But even if the disclosure rules are implemented, a side deal like Sabbota’s yogurt company would not have to be revealed under the new law, Rosen said.

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Gov. Rick Scott pushes “Finish in Four” tuition plan to save college students money

TALLAHASSEE --
Gov. Rick Scott’s push to keep tuition low includes a new twist submitted with his budget for the coming fiscal year, which begins July 1. The governor’s idea: tuition should be the same when students graduate as when they start.

Scott has offered legislation that would hold tuition steady for four years for students entering a state university this fall or afterward. The governor did not highlight the bill during his press conference unveiling his proposed budget, but the proposal is in the package he’s sending to the Legislature.

And it sticks closely to something that Scott has pounded on now for months: his belief that an era of nearly annual tuition increases need to end.

“When I talk to universities, they know that we’ve got to hold the line on tuition, we’ve got to watch how we’re spending the money,” he said Thursday.

A summary packet about the budget handed out by the governor’s office makes the case for “Finish in Four,” which alludes to the hopes that the tuition guarantee will encourage students to finish their degree in four years to take advantage of the tuition freeze. Universities could also designate some degrees that they believe take longer than four years for a lengthier guarantee.

“The unpredictability of tuition increases makes it difficult for students and families to plan for the cost of higher education,” the packet reads.

Scott has also pushed state colleges to lower the cost of four-year degrees with a “challenge” to offer at least one degree at $10,000. Every college offering four-year degrees has agreed to be a part of that challenge, but not all have come up with how they will do it.

Sen. Bill Galvano, the Bradenton Republican who chairs the Senate Appropriations Subcommittee on Education, said Friday that he wasn’t ready to take a position on the proposal. But when asked what an objection to the plan might be, he pointed to “unique challenges that students face that may make it impractical in certain circumstances” to finish in four years.

For example, jobs or other responsibilities could lengthen some students’ time at school — which would make them ineligible for the guarantee after four years.

Georgia recently experimented with a “Fixed for Four” program beginning in 2006, but abandoned it beginning with the 2009 freshman class, blaming it on budget cuts.

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Nebraska Lieutenant Governor Sheehy resigns over phone scandal

(Reuters) – Nebraska Lieutenant Governor Rick Sheehy, the leading candidate to replace the current governor in the next election, resigned on Saturday after a newspaper investigation raised questions about improper cell phone calls made to women.

The Omaha World-Herald investigation found that the 53-year-old Republican made about 2,000 late-night calls to four women, other than his wife, on his state-issued cell phone over four years. The newspaper plans to publish results of the investigation on Sunday.

Colleen Sheehy, his wife of 28 years, filed for divorce in July 2012, according to the newspaper.

Governor Dave Heineman announced the resignation of Sheehy, a rising star in state politics, at a news conference. The governor said he was “deeply disappointed” and that Sheehy had done good work, but “trust was broken.”

“Public officials are rightly held to a higher standard,” Heineman said at the news conference, provided on the Omaha World-Herald website.

Heineman will leave office in 2015 and Sheehy had announced that he would run for governor. He was considered a leading candidate. Heineman selected Sheehy as lieutenant governor in 2005 after moving into the governor’s office to replace Mike Johanns, who was tapped as U.S. agriculture secretary.

Heineman and Sheehy were elected to their first full term in 2006 and re-elected to a second term in 2010.

(Reporting by Mary Wisniewski; editing by Gunna Dickson)

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Buzzmakers: SAG Winners Pics and Nicole Kidman Explains Jimmy Kimmel Lap Dance

What had ET readers buzzing this week?

1. PICS: SAG Winners with their Statues!

Some of Hollywood's biggest stars gathered Sunday night to honor acting achievements at the 2013 Screen Actors Guild Awards. Anne Hathaway -- winner of the award for Outstanding Performance by a Female Actor in a Supporting Role for Les Misérables -- kicks off our gallery of the stars accepting their handsome statuettes!

Click here for all the pics!

2. Nicole Kidman on Her Lap Dance for Jimmy Kimmel

Nicole Kidman raised eyebrows during Matt Damon's Jimmy Kimmel Live! takeover when she greeted Kimmel -- who was strapped to a chair -- with a lap dance. On the SAG Awards red carpet, the Oscar winner explained the move to Nancy O'Dell.

Kidman described the dance as "impromptu," saying that she was just following the lead of another one of the night's guests.

"Robin Williams had done it before, so I thought, 'Well, why not?'" Kidman explained.

For years Kimmel has had a running joke where he ends every episode by apologizing to Matt Damon for running out of time for him. On last week's special episode of the late-night show -- nine years in the making -- Damon recruited some friends (which included Andy Garcia, Sheryl Crow, Ben Affleck, Jennifer Lopez, Robert DeNiro, Sarah Silverman, Demi Moore and Oprah Winfrey.

3. Top-Earning 'American Idol' Alums

American Idol is in the business of making music stars, and in turn, has made lots of money for some of their contestants. Forbes released their list of the top-earning Idol alums of 2012 a few names on this list are sure to surprise you.

Click here for the entire list!

4. Jennifer Lawrence Suffers Wardrobe Malfunction

It seemed like disaster for Jennifer Lawrence when her dress came apart just as she was called up to accept the award for Best Actress during the 2013 SAG Awards.

The Silver Linings Playbook star's apparent wardrobe malfunction caught the eye of both Marion Cotillard and Nicole Kidman, whose reaction to the getup coming apart at the seams was caught on camera. No disaster, here, though -- it turns out the dress was designed that way! A source close to designer Dior told ET that the dress did not rip -- that it was made with different layers of tulle and satin.

This minor outfit hitch comes after it was announced that Lawrence, 22, has walking pneumonia, making this one of the best and worst weeks for the award-winning actress.

5. Kris Jenner Lands Talk Show

Are you ready for a daily dose of Kris Jenner?

The TV personality will test the talk show waters this summer when Fox premieres a preview episode of Kris, a one-hour entertainment talk show. "This is something I have wanted to do all my life so it's definitely a dream come true," Jenner said in a statement! "I can't wait for this new adventure to begin and look forward to working alongside Twentieth Television and the Fox Television Stations."

Kris will be rolled out in a similar fashion to how Bethenny Frankel's talk show was last summer, with the network testing the waters to see if there's an audience appetite for more of this famous family. According to a press release, the show will "offer daytime viewers a daily jolt of celebrity guests, fashion & beauty trends; plus a mix of lifestyle topics -- all through the distinctive and unpredictable perspective of Kris Jenner. Filmed in Los Angeles, CA, the pop culture driven talk show will bring a cool blast of fun and high energy to summer television."

The trial run of Kris will launch this summer, with the program available on select Fox-owned stations in markets, including New York and Los Angeles.

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