The Jury Talks Back

12/5/2008

Bad news, folks…

Filed under: Uncategorized — Scott Jacobs @ 8:10 pm

Whelp…  You knew it was going to happen.

Democratic leaders and the White House reached a deal.

There is no way this is good.  It’s like the perfect storm of “people you don’t want making a decision.”

The package, which Democratic leaders hope to win passage of next week and send to President George W. Bush, totals between $15 billion and $17 billion, the aide said, speaking on condition of anonymity.

Yup.  That’s it.  Waiter, check please.  We’re done.

I hated the financial bailout, but at least one could argue that it wasn’t solely the fault of those companies.  Mostly, sure.  90%?  I could be convinced.  But there were failures in government that shared some blame.  It was too big, but that’s life.

The auto bailout is disgusting because it is 100%, completely and fully the fault of the Big Three.  They are the ones who made the decisions that led to them building cars people didn’t want, and selling them for prices people didn’t want to pay.

That’s Free Market, people.  You either make a product people want at a price they will accept, or you go under.  That’s how it works.

The amount is far less than the $34 billion requested this week by General Motors, Ford Motor, and Chrysler, but Democratic leaders believe the money will keep them going until Barack Obama replaces Bush as president on January 20 and a new effort can be made for a rescue plan.

Oh. My. God.  They said it.  They actually freaking said it.  ‘We’re settling for so little until Ocarter gets into the White House and we can power through WAY more.’

My. God.  Shoot me.  Shoot me in the head, right now.  We are screwed, people.

Here, let me illustrate the worst part of this.

See, Chrysler is owned by Cerebus Capital (which has in its fold former VP Dan Quayle, former Treasury Secretary John Snow – who is since 2006 the chairman of the company).  Cerebus shelled out $7.4 billion to get Chrysler from Daimler AG, and has holdings or minority interests in companies around the world that in total generate over $100 billion in revenue.

Chrysler wants money from the Fed, both a bridge loan to help cover operating costs ($7 billion) and a loan from the Department of Energy to help them make energy efficient cars ($8.5 billion).

Cerebus isn’t shelling out a dime.  From the hearings:

Corker spent much of his time sparring with Nardelli over the privately-held company asking for taxpayer help.

Cerberus invested $7.4 billion in August 2007 to acquire majority control of Chrysler from Daimler AG.

[…]

“Cerberus owns 80% of this company and has cash — lots of cash — that they are unwilling to put into this company,” Corker said.

He also accused Cerberus of simply trying to buy time in order to merge Chrysler.

“It troubles me a little bit knowing that basically all we’re really doing is providing a little capital for y’all to hang around long enough to get married,” Corker said.

I’m just disgusted.  I’m so pissed off, I can’t even spit.  I’m beyond swearing, and clear into “random personal property damage.”

We’re done.  We’ve lost.  There is nothing that can stop the flood of federal money to private companies that can’t run themselves properly.  Nothing.

If you’ll excuse me, I have to go start laying plans for an insurrection.  I’ll be in the bunker.

8 Comments

  1. The way I read it, Jeep gets sold and Chrysler gets the axe. I don’t like this bailout either, but right now it’s a tiger by the tail and letting go isn’t an option. One of these companies can go under and the damage can be contained. Not all three.

    Still, I’d like to see people at the top taken out and shot. Or at least impoverished and shunned for life. That includes a number of union bosses, too.

    Comment by Kevin Murphy — 12/6/2008 @ 12:31 am

  2. Rush Limbaugh talked about this the other day. He and many of his callers pointed out many ways in which government regulations have added to the big three’s problems. HUGE subsidies (state & local) to foreign auto makers who moved their plants to the U.S., CAFE standards, safety regulations, child seat laws (can’t fit 3 car seats into a standard car), prohibiting energy independence, etc.

    Comment by nash — 12/6/2008 @ 7:31 am

  3. HUGE subsidies (state & local) to foreign auto makers who moved their plants to the U.S., CAFE standards, safety regulations, child seat laws (can’t fit 3 car seats into a standard car), prohibiting energy independence, etc.

    All of which apply equally to all car companies. GM could get the same tax breaks and bonuses from Maine – for example – as Toyota would. That Toyota takes Maine up on the offer and GM stays in Michigan isn’t Maine’s fault, nor is it the fault of the federal government.

    Safety regulations and CHild Seat laws and all the rest most definately apply to all car companies, and I would point out that foreign cars often well exceed US standards for safety, and despite that – or perhaps because of that, who’s to say what the long metric is for a person buying a car – they sell very well.

    Again, it is the act of making a poduct people want at a price that people are willing to pay.

    If the Big Three have suffered at the hands of the government, it is only in so far as in the course of a labor dispute, congress has the authority to step in and force n agreement, a fact that benefits the UAW and other unions a great deal. This leads to contracts that end up a burden for car companies

    For example, one of the Big Three (I frankly can’t recall which, but I think it was Ford but don’t quote me on that) has a pension obligation of something like $35,000 per employee currently working – compare this to a foreign company (again, I’m blanking on the name) has ZERO pension obligation.

    Is that harm generated by the Federal government? Well, yes and no, really. Yes in the sense that congress basicly forced outragous conditions upon the Big Three, but no in the sense that the workers fought HARD to get that.

    One way of looking at it is that the workers caused the burden, due to the fact that if they were a tad less greedy, GM wouldn’t be paying through the nose to the net tune of $70 an hour for labor (wages plus benifits).

    But again, companies like Toyota aren’t burdened by such costs. They have – apparently – found a way to avoid it. I don’t know how, but they’ve done it.

    Having done it, Toyota does very well making and selling cars. Their costs are lower, so they can sell for less. Why should Toyota be punished for being successful? I say punished, because they won’t be getting Free Money from the government, while the failure of the Big Three to perform as successful, profitable companies will gain them money they didn’t work for in order to remain in business.

    Tht is unfair to the companies who are doing well, and runs counter to the idea of a Free Market.

    Comment by Scott Jacobs — 12/6/2008 @ 7:53 am

  4. So the company that owns Chrysler made 100 Billion last year in profit. Yet, Chrysler is going to get bailed out by John and Jane public. This is Horse-shit with a capital H. I agree and have been saying it for weeks, we’re screwed!

    Guns and Ammo boys and girls, guns and ammo!

    It is the responsibility of the patriot to protect his country from its government. – Thomas Paine

    Comment by J. Raymond Wright — 12/6/2008 @ 9:12 am

  5. So the company that owns Chrysler made 100 Billion last year in profit.

    Not exactly, and I guess I glossed over that. My bad.

    Just because the companies in which Cerebus holds interests had over $100 billion in revenue total, not all of that would go to Cerebus.

    However a good bit would, and if they can pay over $7 billion to get Chrysler in the first place, they can pony up more money to pay its damn bills (they own upwards of 80% of chrysler stock).

    Comment by Scott Jacobs — 12/6/2008 @ 9:16 am

  6. […] Bend over, here it comes again: Bush makes a deal with the Democrats for $15 billion in auto aid. Democrats say it should hold them over until Obama gets into office and they can pass something bigger. Commentary by Scott Jacobs. […]

    Pingback by Dull Razor » Blog Archive » Weekend update and link round-up — 12/6/2008 @ 11:50 am

  7. The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. ~ Ronald Reagan

    Yeap, that’s the government I know.

    Comment by ML — 12/6/2008 @ 3:01 pm

  8. If the $15 billion contains anything for Chrysler (other than printing going out of business signs), there should be a filibuster. Too many players in a shrinking market to prop up the weak sister. Besides, there needs to be SOME justice.

    Comment by Kevin Murphy — 12/8/2008 @ 11:39 pm

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