Quote Of The Day: Mission Accomplished-ish Edition
We don’t need an aircraft carrier and “Mission Accomplished” banner, but isn’t it time to agree that the auto rescue has been a success?
Former auto czar-let Steve Rattner picks an unfortunate choice of metaphors to celebrate the possible success of the auto bailout in an op-ed for the Washington Post. Meanwhile, the latest Treasury estimates still show a projected $24.6b loss on the bailout, so yeah, let’s hold off on that carrier-based victory party.
Much self-congratulation later, Rattner finally gets to the point. Though he believes in the restructured GM and Chrysler, Rattner’s clearly worried that political pressure to get the government out of the car industry as quickly as possible will lead to an unseemly stain on his otherwise spotless record:
as the opportunity to cash out its stake grows nearer, the Treasury should take care to sell wisely. Bringing an end to government ownership of the auto industry is of great importance, but let’s not have a fire sale. We owe that much to taxpayers.
To say nothing of Rattner’s own scandal-torn legacy. Meanwhile, one profitable quarter does not a successful bailout make. Let’s get these IPOs out of the way and take a look at the final bailout bill before we start even joking about the phrase “mission accomplished.”
More by Edward Niedermeyer
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I think the point of the article is fair, and the parallel with "W"'s "mission accomplished" is perfect. While it's not fair to pronounce the bailouts as failures (although I have my doubts about Chrysler), it's certainly premature to pronounce them as successes, which is what Rattner did. The only way that the bailouts can be termed "successful" is that they were structured in a way that caused the least harm to one of the Democrats' big constituencies -- the UAW -- of all of the other alternatives, which would have been a more radical restructuring of the two companies -- probably with the end of Chrysler and a pared-down GM acquiring the Jeep brand and related assets. One of the "future casualties" of the process that occurred will be either of these companies' ability to float debt securities. Given that the bondholders were stiffed in the last deal (and were not given the priority in the bankruptcy process that they were legally entitled to), anyone who lends to either of these companies (and perhaps even to Ford) in the future is going to demand a high risk premium (IOW, a higher interest rate) . . . or a government guarantee. So, the government subsidies will have to continue . . . or the companies will face higher costs than their competitors.
I guess this depends on how you determine the goals of the auto bailout and how you measure success. GM is in pretty good shape now financially and seems to be moving in the right direction with products. They aren't were they need to be yet, but they aren't shutting their doors tomorrow. Chrysler is now with Fiat, and it has been interesting so far. I don't think Chrysler will be going down soon either. So the real question is, how do you measure success or failure with the bailouts? Are the companies going to make it 5 more years? My guess is yes, but does that measure success?
>>Please provide the proof that capitalists or anyone else in this country (aside from hardcore pacifists) would have rolled over and played dead in the wake of Pearl Harbor.
"Laissez-faire capitalism fails every time it is tried. The dogmatic notion that unfettered, dog-eat-dog capitalism is a fundamental principle of Americanism is simply incorrect. Believing otherwise requires a very selective view of history." John, we have crony capitalism. Care to wager which one is worse? Crony capitalism has given us most recently the housing crisis and the bailouts (but only if you're connected to a really big bank or have Fannie or Freddie in your name, the UAW or an automaker - if you're a small business or Circuit City or Linens n Things or any other non-connected company, no bailout for you). It's also given us a poorly run FDA, an incredibly outdated air traffic control system due to poor FAA regulations and as well all know, a feckless (lacking feck?) SEC that until recently, had no balls because it was run by former employees of companies that should have been investigated. Remember the one page request for $750B in bailout money with no accountability? Crony capitalism alive and well. Crony capitalism takes the worst of us and makes it bigger. It's a feeding trough for most of our elected officials and their friends. And you appear to be okay with that because it saved GM and Chrysler.