Thursday, December 4, 2008

Who Benefits from a Big Three Bailout?

Cui bono? Who benefits from the proposed bailout of the Big Three auto companies? That’s the first thing you have to ask yourself when you’re considering whether you want Congress to hand over your cash to GM, Chrysler-Cerberus, and Ford.

The second question to ask is this one: “Is this truly an emergency for the car companies or not?”

With regard to the latter, it can’t be an emergency and a non-emergency at the same time. If it truly is an emergency, then why shouldn’t Congress let the Big Three spend the 25 Billion dollars already loaned to the car companies to meet the emergency crisis? After all, it’s a matter of priorities. The idea that $25 billion dollars be earmarked strictly for the development of alternative fuel vehicles is stupid if there is no company to produce them. Equally absurd is the notion that the car makers wouldn’t produce green vehicles unless the government and the taxpayers cough up the cash. The car companies will produce the vehicles that people want. If people want alternative fuel vehicles and are willing to pay for them, then the car companies will make them. The idea that government largesse is such a big stimulant to creativity and productivity is egomaniacal and delusional.

Using the $25 billion already provided to the car companies to sustain them in tough economic times is the smart thing to do. Indeed, there could be only one reason for not doing so. That reason would be that it is not an emergency at all and that a bailout is being contemplated by some in Congress for other reasons. Cui bono?

The UAW benefits from a buyout, certainly, as do members of congress who support it. Barack Obama benefits hugely from a Big Three bailout because it guarantees votes in the next election. Nanny Pelosi and Oil Can Harry benefit because it locks in the blue states which can be relied upon to activate the political machinery necessary to political power.

But does the taxpayer who must cough up the money benefit? What if the car companies are the bottomless pit and can’t stand on their own no matter how much money is provided to them? The public is being frightened into believing that the crisis is so aggravated that it cannot be ameliorated except by mortgaging the future at unsustainable rates. The politicians would have you believe there is no penalty on the other end. The public is being told that they can “buy” their way out of an economic crisis if only they borrow and spend with government debt securities purchases globally. But isn’t that kind of thinking what got us in the mess in the first place? Borrow and spend. Leverage as much as you can. Think big! Why buy a tiny little shoebox house when we can show you how you can afford a castle?

Who benefits? Cui bono? Americans may not understand the mechanical underpinnings of their complex economies but they should not allow themselves to be brainwashed by “superior intellects” who haven’t managed to solve the problem except by spending more money. It doesn’t take an MBA from the Sloan School of Management at MIT to figure that out.

Don’t get the impression that I am some Luddite skinflint who won’t spend a penny on good faith efforts to help Americans in a time of need. I agreed with the Bernanke-Paulsen warning of “systemic risk” even though it was only later that I found out about root causes. I found out most of the root causes are in the Congress of the U.S. and the concept of “root causes” is synonymous with the names of Jamie Gorelick, Frank Raines, Barney Frank, Chris Dodd, Nanny Pelosi and a host of other major and minor players in this shadow play of Screw the Taxpayers and Look Good While Doing It.

If the chumps who are otherwise known as taxpayers have learned one thing, it is that they can say “no.” That doesn’t mean that “no” is always right, but it certainly means that they are not rubber stamping the ever expanding chorus of “yes” they are hearing from the Great Panderers in Congress.

I love American cars and we own two of them. I wonder if the most ardent advocates of an auto company bailout are driving American cars. I would love to see the American car companies expand on the cars and trucks that have been such great successes and slice away at the greedy excesses of the UAW bureaucracy.

And Congress should announce they’ve got the message that “no” means “no” without the taxpayers having to show the results of the rape kit.

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