Chrysler’s Bankruptcy: A complete waste of tax dollars.

Chrysler is headed for bankruptcy after all (and it looks like GM is right behind them). This is exactly what Republicans like Mitt Romney were saying to do, way back in November. Had we followed their advice, the taxpayers would have saved billions!

Why didn’t we just let the automakers go bankrupt then? The Democrats in Congress would not have gone for it. They would never allow the UAW to suffer its deserved fate in bankruptcy court. President Bush would not do it because he was worried about his legacy and lacking true conservative principles, fell for phony bailout arguments.

The phony arguments were that if the automakers went bankrupt, thousands of jobs would have been lost and thus threaten to pushing the economy into depression. Well, since Obama has become president, thousands of jobs have been lost (h/t to Emptysuit) and it did not push us over the edge. The other bogus argument was that no one would buy a car from a bankrupt automaker because of warranty concerns. Obama "solved" that problem.

But did the warranty problem really need solving? People have been buying used cars without warranties forever. If people are willing to take a risk buying a used car without a warranty, who would not risk buying a brand new car without a warranty? Especially, if the price was slashed enough. How about a brand new 300M at 50% off with no warranty, worth the risk ain’t it?

Now we have Chrysler headed to bankruptcy court with the government by its side. The government will no doubt exert all of its influence to make sure it ends up with a huge share in the new company and that the UAW comes out far better than they would have on their own. But is this what we the people really want?

Does the American people want to be shareholders in Chrysler? Do we want such a large company run by our government? Will Americans even by the cars that are produced by the new Chrysler? None of these questions would have to asked if we just let the free market run its course.

My predictions are that, we are going to get stuck with UAW legacy costs, private shareholders will get screwed, the new Chrysler is going to be constantly subsidized one way or another and the new Chrysler is going to produce crummy little Green Cars.

The New Engines of Socialism?

I stumbled across an opinion piece in at the Wall Street Journal today. The article "Obama Wants to Control the Banks", by Stuart Varney tells of how repayment of TARP money is being rejected by the Obama Administration from institutions it wishes to control.

After getting over the initial shock of this, it got me thinking. Because these banks and car companies are on the hook with TARP and bailout money, the government now has unprecedented say in all of these companies' affairs. The government can dictate what cars to make, who they should merge with and soon who the banks should lend to.

I also see another reason why the Administration would want to reject repayments, they could have a possible new revenue stream for government programs. Last week, Treasury Secretary Timmy Geithner asked for outrageous new powers for the Treasury. The new powers would literally give the government direct control of all kinds of activities in companies, all in the name of managing "systemic risk" (a term still yet to be fully defined).

If given these new powers, what would stop the government from running these newly controlled companies in such a way, that they would be profitable enough to do the government's bidding and make interest payments, but never profitable enough to pay off the principle of their loans? Could the interest payments not serve as a new source of revenue? Revenue that could help pay for a massive entitlement program like a single payer health care system? One of the biggest arguments against a single payer system is the cost. But what if the cost was eased by millions in interest payments from government run companies? Would not the argument and the taxpayer outcry go away or be significantly diminished?

Now imagine such revenue becoming regular and necessary. These banks and car companies could never be "set free" without causing "systemic risk" (there is that term again) to the economy in the form of jeopardizing the health care system or massive increases to the taxpayer. Even with Republicans in full control of the government, such a knot could not be untied without major disruptions and Democrats would have a valid argument against it. In effect we would be permanently stuck with a socialist system.

Obama and the Democrats have a once in a generation chance of making their long held dreams come true. If they are successful in executing them, why would they not try to make those changes permanent?