Twinkie Deserves a Big, Fat Taxpayer Rescue
It's time to stop lamenting the Twinkie and do something.
The Washington Post just ran a "eulogy" for the cellophane-wrapped snack cake. The Chicago Tribune ran a "requiem." The New Yorker raised the question "Who Killed Twinkie?"
Twinkie gougers are taking advantage of such reports, asking exorbitant sums for Hostess Brands products on Internet auction sites such as eBay (NASDAQ:EBAY).
There's now a proposal on the Whitehouse.gov petition site titled "Nationalize the Twinkie industry." It reads: "We the undersigned hereby request Barack Obama to immediately nationalize the Twinkie industry and prevent our nation from losing her sweet, creamy center."
Much more than our nation's sweet, creamy center is at stake. Perhaps that's why a federal bankruptcy judge in White Plains, N.Y., on Monday suggested Hostess and its striking bakers go back to the bargaining table to try to avoid liquidation.
The Twinkie shouldn't be left to die. Here's why:
* The Twinkie is simply the most ingenious clump of white flour, high-fructose corn syrup, partially hydrogenated oil, and yellow No. 5 food coloring that ever rolled off a factory floor. If that doesn't sound good enough for you, go to a county fair where the value-added version comes out of a deep-fat fryer.
* An America without Twinkie would be like an America without Bank of America (NYSE:BAC). If taxpayers can love bankers, what more will they do for their childhood friends, Twinkie The Kid, Fruit Pie The Magician, King Ding Dong, Captain Cup Cake, Chief Big Wheels and Happy Ho Ho?
* Hostess is owned by two hedge funds, Silver Point Capital and Monarch Alternative Capital, and a private-equity firm Ripplewood Holdings. They stand to lose the hundreds of millions of dollars that they've put into this oven. Don't they deserve some kind of break? If the 2008 financial crisis taught us anything, it's that rich investors shouldn't have to lose all their money on bets they make while trying to make the world a sweeter place.
* Hostess is run on union labor that offered up concessions after the company filed its first bankruptcy in 2004. This saved about $110 million a year. Unions complain that Hostess' owners didn't invest this money to replace aging equipment or delivery trucks, or to keep the products relevant. And while workers took pay cuts, managers took pay raises. The owners then filed bankruptcy again this year to beat even more concessions out of workers. The striking Bakery, Confectionery, Tobacco Workers and Grain Millers International Union apparently decided they would rather see the company liquidated than take another pay cut. If managers and rich investors don't have to face economic realities, why should workers?
* The bankruptcy process isn't working. Unions blame management. Management blames unions. Everyone seems to be using excuses on par with the infamous "Twinkie Defense." It didn't work for a 1970s murder suspect who blamed his offense on junk food. A bailout would leave a better taste in everyone's mouths.
* General Motors' (NYSE:GM) bailout helped earn President Obama another four years. Badly beaten Republicans seem to forget GM's bailout started under President George W. Bush. A Twinkie bailout would help the party get back to its fiscally flagrant roots.
* GOP heavyweight, New Jersey Gov. Chris Christie refused to answer a Twinkie question last week, not wanting to become the butt of late-night TV jokes. "You people are the worst!" he responded to reporters, as quoted by the Associated Press. "This is a setup! I am not answering questions on Twinkies, no, no, no, no, no, no. It's bad that I even said the word 'Twinkie' from behind this microphone." It is highly unlikely, though, that Twinkies are responsible for Mr. Christie's girth, or even America's obesity crisis. A Twinkie is only 150 calories--which is often less than the dressing poured on a salad.
* The Twinkie was invented in President Obama's adopted home town of Chicago as a Depression-era treat. Don't we all deserve a Depression-era treat after voting for President Obama?
* Yes, I know. It is a slippery little conveyor belt. First we bail out Twinkie the Kid, then the next thing we know, we'll have Sara Lee and Little Debbie holding out their sugar-coated palms, too. But don't worry. The money will eventually be paid back at a profit.
* We still have nearly zero-percent interest rates from the Federal Reserve and all the world's money pouring into the U.S. for safety. What's good for banks will be good for Twinkies.
* This is America. We can have our golden, vanilla-cream-filled sponge cake and eat it, too.
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at al.lewis@dowjones.com or tellittoal.com)