Well it has happened. It only took $50 billion dollars and 7 months. Yes I mean the bankruptcy of General Motors.
When I spoke about the auto industry bailouts in 2008 (November to be exact) I stated
“Does anyone seriously believe that they won’t bailout the auto industry, and receive neither repayment terms, nor assurances of industry improvement. They couldn’t even create a bailout for the financial industry that could prevent Paulson from moving the money around however he chooses, and that was a concern of House Republicans from the start. With even more Democrats in Congress, and the continued misleadership of Harry Reid and Nancy Pelosi is a better outcome likely? …
The fact is that the U.S. automakers need to fail. Let several go bankrupt. It won’t be the end of the world. It will actually be the best thing that could happen.”
Well since that time, the Government has partially funded the auto companies. Just enough to ensure that the Governement owns significant, if not primary, ownership in these companies. Because President Obama does not want to run a car company.
Like hell he doesn’t.
In November 2008, the Obama Administration and the Democrat-led Congress were well into their plans to economically restructure the Government. It is a fact that President Obama stepped forward and ensured the direction that the Congress would take on this issue and most all policy. It was the first time that a President-elect was so involved BEFORE they had taken the oath. The reason why now becomes apparent.
IF the Government had no intention of owning the car industry, we would have given them all the money they asked for. A mere $50 billion dollars at the time meant nothing after spending a trillion dollars in a year. It meant almost nothing when 2 months later the Government spent $1.2 trillion dollars more. But instead Congress postured as if they were being responsible, and gave the auto industry just enough money to ensure failure.
That enabled a “car czar” to be put in place. It created the opportunity for President Obama to structure Government ownership of the auto makers. It gave President Obama the ability to reject restructuring plans, fire private business leaders, initiate guidelines of Government approval of salaries, and dictate what can and cannot be made. Which leads us to today.
With the failure of GM, we now have Government Motors. A company owned 70% by the Government, which will ‘better manage the ownership stake on behalf of the American people’. Right. Because the Government is so smart it can’t even run a checkbook in my lifetime, even though I do it every month.
Right now, tens of thousands of employees are being fired (so much for last week’s announcement that the Obama Administration has saved or created 150,000 jobs since Febrary). Several million IRA and 401K accounts have become worthless, removing the retirement options of those that need the money. Unemployment will be even higher in the coming months, and the recession will continue longer.
But, in wonderful polispeak, the Democrats will claim that more jobs were saved because of the stimulus plan and the bailouts. The future of the car industry will be more green. And one day, in the undetermined future under plans that have yet to be even considered, the “investments” in GM and Chrysler will turn a profit (not including the interest on the money borrowed to make the investment) and that will be given back to the public. Or it will be used by the Government for programs that will help us all (or so we will be told), because the Government is smarter than us as individual citizens.
The reality is that we will never see a dime of this money. Just in the same way that the Government has ensured that banks can’t repay the bailout funds they gave received. And those that just lost their investments are out of luck, while banks and high–end investors are covered. And the Government has now politicized one of the largest industries tied to GDP.
Think about it. The Government will mandate green cars. Not that there is a consensus on what type of green car is best, or most feasible. The Government will pick one and GM will make it. Thus some other country will likely figure out a better idea (like ethanol from sawgrass instead of food staple corn), and the GM cars will not sell.
Another point is that since politicians are now in charge, costs will go up. No elected official wants to have their constituents get fired because of cost over-runs. IE Senator whomever will ensure that a plant in his/her state will stay open even if it is the least cost effective, because they want to be re-elected. Another Representative will release a bill (or earmark) mandating that parts are made and/or assembled in their State, for the same reason, regardless of the higher cost or lower workmanship.
Add to this the fact that the new GM employees are now Government workers. The last time you were at the Post Office, how involved or efficient were the workers there? That’s the new GM employees to come.
But President Obama does not want to run a car company. No, he just ensured that the Government would run the auto industry. And the banking industry. Plus the potential to enter the newspapers as well – if rumors of bailouts for that industry come true too.
There isn’t a single positive in the news of a GM bankruptcy. Not now or in the future. The stock market will react as was expected, because there was plenty of forewarning and time to absorb the news. In addition, most of the major investors are protected. But for the average citizen, this is the worst outcome we could have witnessed.
The polispeak will rage for days. This will be spun as if it were manna from heaven. But the fact is that this could have happened 7 months ago, it could have not cost over $65 biullion dollars of our money, and the Government that can’t run a single Department efficiently in my lifetime would not have been involved.
Yet, think of this. We have just started the 6th month of an Obama Administration. Aren’t you just anticipating what America will look like, and function as, by the end of 3 ½ more years?