On Bailouts and Auto Manufacturers

Privitize profits...socialize losses.

This is corporate socialism. It's about the closest thing to Fascism we have in our current world, and the US is getting quite good at it. For the last 6 years, investment banks have made billions trading worthless paper in the form of bad home loan securities. They found willing buyers in the emerging global securities market. Foreign interests assumed these banks would never be so irresponsible to sell a security that could bankrupt them. They found a willing accomplice in the Bush administration. The Bush Crime Family had run out of ways to grow the economy legitimately, so they encouraged Fannie and Freddie to lower lending standards, thus increasing the demand for housing. Didn't matter if people could afford the loans so long as the property values kept increasing. They found a willing dupe in congressional Democrats. They were on the cusp of coming back to power, and didn't want to be blamed as the guys that ended the bubble-economy by pulling the plug. There's blame to go around. Please don't name one group without blaming all. No one gets out alive on this one.

Of course no matter who you blame, the one undeniable fact is that thousands of executives made enormous personal fortunes in commissions selling these new junk-bonds. They get to keep that money they "earned" even though this was nothing more than a legitimized ponzi scheme.

In the end we gave money to the wrong guys, and we have the wrong guy handing out the cash. Henry Paulson was one of these ponzi con-men as recently as 4 years ago. He knows the players. Many are his good friends. He feels bad for them...not you. He relates to them...not you. He doesn't know how to manage real cash...because he's never had to. He's always dealt with the theoretical. Real people's money is a mystery to Henry Paulson. The smallest denomination he is familiar with starts with an M, but he prefers B's. If you handed him $20, he'd look at it as if it was an alien artifact...because for him it would be.

So $350 billion later, we see executives at AIG getting bonuses this year. We see shareholders getting dividends after accepting $25 billion in taxpayer money. Privatize profits...socialize losses.

So what of the auto industry? Why not take out our wrath at the white collar bailout on the tiny auto bailout?

1. Because it's one of the few manufacturing industries we have remaining.
2. Because 3 million workers would be out of work.
3. Because the Chinese are drooling at the idea of buying the name Chevrolet or Buick and then stamping it on their own vehicles...made in China...with Chinese labor. They can ship them over tomorrow if that's OK with you? They get 30mpg and come in 12 colors.

Ain't that America, you and me?

Oh, and it's not the unions killing the big 3. It's the stupid decisions of their executives. If all three were union-free manufacturers, they would STILL have lobbied to keep fuel standards low. They would have still lobbied to keep emission standards low. They would have still lobbied to maintain the tax rebate on vehicles over 6000 lbs. The executives in essence created the gas guzzlers because they were profitable. They produced them and pimped them to a hungry nation, which became a gas-hungry nation. Basic economics...increase demand (gas) without increasing supply and prices will go up. In essence they produced themselves out of business. Toyota would still be kicking their ever loving ass because they realized gas came from a limited supply, not a magic panacea.

So why am I endorsing a bailout for the big 3 if I think they screwed up so bad? Because they are almost there. Their leadership did pull it's collective head out of arse 2 years ago and began retooling. They've crawled 50 miles through the desert over the last 2 years and are now 50 feet from the water. This isn't the time to push them down and tell them tough shit. This isn't the time to punish the workers because their executives were tools. This isn't the time to allow one of our last strong manufacturing industries to become a subsidiary of Lo-Pan inc. Besides, there's history behind this. Chrysler, Lee Iaccoca, and the $2 billion loan that was paid back with interest ring a bell? This will be a loan, to one of the most reliable industries we have. We will get the money back with a little extra, all the while keeping 3 million of our own employed. For once the profits will be socialized...the loses private.