Wednesday, October 17, 2012

Video clip of the day


Our trip to parts of the desert southwest has been delayed while we idle in Kanab, Utah while the clutch on our truck gets fixed, so if nothing else it's a chance to reconnect and see what's going on out there.

Alternate headline: If this is success, we'd hate to see failure

The Obama campaign is fond of saying that they saved General Motors. A political victory perhaps for a dubious definition of "saved" but consider at what cost to the tax-payer and that of our free-market system here in America did this victory come.

On this blog, we've been railing against the auto bailout for years and the following 6 minute video from the Center for Freedom and Prosperity does a nice job of covering why it is that this bailout is/was not a success and why it was and has become such a horrible idea in 4 points:

1. Taxpayers got fleeced (if GM stock were sold today, we'd all be out $25 billion)

2. President Obama gave favors to his union supporters (while other creditors got shafted)

3. When government picks winners and losers, we all lose. (Expending public capital and political pressure to build products the consumer does not want, causes ripples all up and down the auto manufacturing supply chain).

4. The costs are unseen (Moral hazard! Poor performance will be rewarded!)

Yeah, this is something Obama could've laid at Bush's feet, instead he doubled down and proceeded with the bankruptcy cramdown and ensuing favors to his union buddies at the expense of secured creditors which may all fall apart in court due to a backroom deal hatched by General Motors to meet the administration demands for a quick bankruptcy which was kept hidden at the time from the bankruptcy judge.

General Motors and Chrysler should've been allowed to enter bankruptcy under normal means which would've forced them to settle with their creditors while keeping the doors open while they restructured their organization and union deals. Instead, we have this unholy mess as a reward for bad business practices while sticking the tax payer for tens of billions of dollars.

Remember all this next time you here how the administration "saved" the U.S. auto manufacturing industry and how GM and Chrysler now represent "success" stories.


Doo Doo Econ said...

Excellent post! I am happy that finally the claim that Obama saved GM and Chrysler has been challenged in public. Obama had to admit that the companies went through bankruptcy.

Anonymous said...

Did I miss this in the debate? Get the cute girl to explain it. What a bunch of maroons we are!

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