By on May 29, 2011

This is the Memorial Day weekend, when we commemorate our fallen heroes and raise our cancer risk by burning chopped beef. Listening to the media, it looks and sounds like the fallen heroes of the year are not the ones who gave and give their lives in ceaseless wars, but the auto industry. It didn’t quite die. It was medevaced in a TARP and helped by the PTFOA to get over its PTSD.

Instead of thanking the nation’s heroes (he did so in an afterthought, asking for “single acts of kindness”) VP Biden thanked himself:

“When President and I came into office, we faced an auto industry on the brink of extinction, total collapse. At the time, many people thought the President should just let GM and Chrysler go under. They didn’t think the automobile industry was essential to America’s future. The President disagreed – and, in addition, he wasn’t willing to walk away from the thousands of hardworking UAW members who worked at GM and Chrysler.”

By taking full credit for the bailout, Biden once and for all put the argument to rest that the bailout had been inherited from G.W., and that the heirs had no other choice. Time for another pat on the administration’s shoulders:

“Because of what we did, the automobile industry is rising again. Manufacturing is coming back, and our economy is recovering and it is gaining traction.”

Some (see below) have a different opinion. The video is above and in full length, but don’t let the hamburgers go up in flames while you watch.

Meanwhile, over at the National Public Radio, an organization which is generally not under suspicion of right-of-center leanings, Memorial Day was celebrated by yet another commemoration of the heroic rescue of our auto industry.

That program was headlined “Chrysler Repays Billions, Was Bailout Worth It?” Which signaled some skepticism.

NPR is a fair and balanced station, so they had someone who was pro bailout, and someone who was against.

The pro-bailout-person, Micheline Maynard, senior editor for CHANGING GEARS, the public radio project that looks at reinventing the Rust Belt, offered only lukewarm support for the bailout:

“There a lot of people who said the court system is available. Why don’t we put the auto industry – or at least General Motors and Chrysler – through that same system? But there were also fears because the recession was, I think, at its deepest point a couple of years ago, when this all – the subject came up.

There was also worries about the auto parts part of the industry, because if Chrysler had gone bankrupt, for example, and liquidated, these auto parts suppliers served not only General Motors and Ford, but Toyota and some of the other foreign carmakers. So that was part of the argument, that we can’t let the whole network go down.

But there is this other argument that you have other ways to do this, and this is the cost of doing business. Some companies make it. Other companies don’t.“

The anti-bailout-man, Dan Ikenson of the Cato Institute, generally called “a libertarian think tank,” first said that “I don’t think that we’re really in a position to measure” whether the bailout was worth it. But then he laid into the directors of the rescue operation:

“It should have gone to court. I think that we were in a sort of crisis mode, you know, as Rahm Emanuel, when he was in the White House, as he said: Never let a good crisis go to waste.

Paulson, former Secretary Paulson, told Congress they need to pass this financial bailout right away, or else we’re all doomed. It prevents us from really thinking clearly and with circumspection as to what we’re getting into.

So the costs of the rule of law, property rights were trampled with respect to the Chrysler bondholders, and this competitive process was stymied.

And so I think we need to – and if we look at the economy today, this regime uncertainty, which still persists – you know, we’ve been trying to come out of this recession. We’ve been moving slowly. Business is keeping money on the sidelines.”

We have linked to the full 30 minute program (sorry for the empty box …), but again, don’t forget those hamburgers.

It sure was a memorable Memorial Day. We’ll remember it as the beginning of the Presidential campaign 2012.

Did you check the $3 box on your tax return?

Get the latest TTAC e-Newsletter!

82 Comments on “Remember Our Fallen Heroes: Was The Bailout Worth It?...”


  • avatar
    shaker

    Given the circumstances, and the fact that GW had already gotten the ball rolling, Obama faced two bad choices: Go against GW’s “gut reaction”, GM, Chrysler, most of his economic advisers, the teetering economy and the UAW (who helped him get elected) OR go as he did, and face the endless Monday morning quarterbacking that will continue, and possibly cost him a second term.
    I think that the politicization of economic decisions is inevitable, but this one seems to get the most play (unlike the bank bailouts) because the UAW was involved.
    I don’t think that this treatment is fair, but hey, that’s POLITICS, and that’s why I frequent TTAP.

  • avatar
    Robert Schwartz

    The true comparison must be with what did not happen. The administration choose a process that favored legacy costs and legacy players over writing off those costs and finding new players. Such a process might have resulted in a much stronger industry than the one we have. With Ford in the number one US position, and chunks of GM and Chrysler sold off to stronger hands. Jeep and Dodge to Nissan/Renault, Buick to SAIC, Chevrolet to VW, Cadillac to Ford, usw. We cannot know what would have happened, but I think we will live to regret what we did, because both GM and Chrysler will eventually (within 5 years) be liquidated.

  • avatar
    Zackman

    This subject is really getting old. Nobody wins on this – no one at all. If the automakers in question were left to die and go through who-knows-what with the economy on the brink, what do think would be discussed here? Exactly the opposite of what is discussed now. Again – nobody wins.

    Goverments, as I have opined several times previously, will do what is in their best interests at the time, using the reseach available and, of course, counting the political costs along the way, and make their decision.

    In the larger scheme of things, the decisions they made appear to be the right one, but time will tell over the long haul.

    My biggest concern right now is does GM have what it takes to move forward? From what I read on here, it appears the drastic changes have not yet been accomplished, but we really don’t get to see very far behind the scenes, and necessary changes can take time in very large corporations.

    I’m still hoping for the best, given the circumstances.

    If you want to talk about “fallen heroes:, that is a totally different story, however.

  • avatar
    chuckR

    Did you check the $3 box on your tax return?

    No. Whatever money I’ll budget in 2012 will go to individual candidates for Senate and Congress directly, provided they are smart enough to set up a PayPal button. Three bucks on the tax form goes to organs of the ossified central committee of each major political party. We let them get us to our current circumstance; I’ll offer no further encouragement. Lets face it, we have a choice between the party of big spending and the party of big spending. Not gonna play.

    • 0 avatar
      aspade

      “Lets face it, we have a choice between the party of big spending and the party of big spending. Not gonna play.”

      That exactly illustrates the problem which is that most people who don’t have day jobs as engineers or statisticians can’t comprehend large numbers. $1,560,000,000,000, 3,730,000,000,000, and $14,400,000,000,000 may as well be a foreign language. They’re all just big.

      Which is how the biggest spending party of all time can run on responsibility while taking out another mortgage for 40 million man years of your future this year. Because big is big so the other party is no different.

      It is different and there are about a trillion reasons why this year.

  • avatar

    If you have FIOS on Demand, watch the HBO on Demand movie TOO BIG TO FAIL.

    I’ve watched it 3 times thus far.

    As far as I’m concerned – not just based on the movie, but, based on what I know in reality -, the bailouts were necessary to “keep the ball rolling” and if they hadn’t been passed, America’s institutions would have fallen apart, do to the fact the banking/credit/insurance systems effect everything we do from pensions, to our employers being able to get credit to expand business.

    The entire financial market wasn’t going to be allowed to fail simply because a couple of ideological western hillbillies didn’t want it. Oh, I’m sure a lot of money was stolen and misused, but, that happens anyway.

    When you really analyze the situation, the government gave money to ALL OF THE BANKS so theey could trick the American people as to which banks were insolvent and which ones were not. The government, in my job, did a smart thing here – even though it was dishonest – because they prevented us from making a “run on the bank”.
    I remember when there were over 50 banks on the insolvent list, but, we had no idea which ones their were. When that moron Chuck Schumer even mentioned Indymac was insolvent, it prompted the biggest run on the bank i’d ever seen in my life. Anyone remember that? I used to do business with them.

    As far as the auto bailouts go. I’m an American citizen that absolutely hates the trade imbalance we have with foreign imports (with the exception of BMW and Mercedes Benz) I would never have allowed GM, Chrysler or Ford to go out of business no matter how much riff raff I had calling my office. I’d have done the same thing – passed the bailouts and then made my case to the non-ideologs in November.

    Chrysler paid back it’s bailout money, is profitable now, and is making better cars than ever. I own a Chrysler 300 SRT8 with a supercharger I had put in and I love my car. The next car I’m buying is a 2012 SRT8. Would I be able to do that if Chrysler had failed? NO.

    • 0 avatar
      aspade

      “I’m an American citizen that absolutely hates the trade imbalance we have with foreign imports (with the exception of BMW and Mercedes Benz)”

      Because yuppies should have nice cars while working people who can only afford a Mazda or Hyundai should be stuck with Detroit’s garbage.

    • 0 avatar
      MikeAR

      Enjoy your Chrysler. i’m sure it’s a nice car even though it was made by people you hold in contempt. It’s a nice trick to demean those who are so ignorant as to disagree with you. Call them western hillbillies and idealogues and stuff like that doesn’t make them stupid and sure doesn’t make them wrong.

      And guess what if you watched Too Big to Fail and took away that lesson from it, then you need to watch it a few more times. You ought to be offended and angry that the big banks were able to steal as much as they did. There was another movie, a documentary, that was much more accurate and didn’t whitewash the banks and the government during that time. I can’t remember its name but I have it on my hard drive somewhere.

      The reviews of Too Big to Fail have been negative because it is too easy on the banks and the government. The documantary actually told the truth. You might try and watch it and learn something. It won’t be to your liking but it might change your mind.

    • 0 avatar
      hreardon

      bigtruckseries -

      No, no, no. A thousand times NO. You did not get the full message behind TBTF if this is what you walked away with. Government may have helped to avoid a complete systemic meltdown, but it has been central to creating the crisis and it has failed in its duty to fix the system moving forward.

      Government is a reactive body, much like the police and fire departments. They do not necessarily prevent crime or disaster, they’re supposed to be able to react to it. In the case of the financial services industry, government became captured by the very industry it was tasked with regulating (aka “regulatory capture”, where the industry in question writes the laws and controls the oversight). By capturing the government in this way, financial services were allowed to run amock.

      Returning to your point: we had to bail out the banks. In the broad sense, yes, we did. Here’s the big “but”: we completely and totally failed to revamp the system and to punish the actors who perpetrated the crimes. Don’t let anyone fool you into thinking that we fixed the financial services industry, we did nothing of the sort – we merely papered over everything and are using the same playbook as we have since the tech meltdown in 2000: blow another bubble.

      Government should have immediately forced bondholders to take haircuts (not necessarily elimination), removed the executive teams and initiated legal investigations. None of that happened. Bernie Madoff? He just got caught up in the noise and was the easy one to make the poster child, when in reality the rabbit hole goes so much deeper. No, friends, if you think that we’ve fixed anything you are sorely mistaken and we’ve merely set ourselves up for a bigger fall the next time around.

      If you want a good read on the subject, I recommend Yves Smith’s “ECONned”. She’s one of the better financial analysts out there who has followed the meltdown with great candor and insight.

  • avatar

    There are two different issues:

    1: Was the bailout necessary?

    2: Was the way the bailout was structured in accordance with standard norms for bankruptcies?

    I’d say yes to #1 and no to #2. So there are two possible answers to Bertel’s question. It’s not just a question if the bailout saved the domestic auto industry. There’s a question as to how bankruptcies will be handled in the future. If there was nothing irregular in the way senior and secured creditors were treated, as Psar likes to repeat every time this question comes up, then we can expect some court cases in the future as DIP financiers and other empowered interests start dictating terms that play favorites, as the auto bankruptcies did. If what the government did was not irregular and if the failed appeals by bondholders establishes legal precedent, then surely others involved with bankruptcies will attempt similar strategies, then point to the PTFOA actions and say that it’s perfectly legal.

    I’d be more comfortable with the radical in the White House if he’d only be honest about his radicalism. Instead, they take radical steps (screwing bondholders, endorsing the Palestinian desire for the 1967 borders), then deny that anything has changed, that they are not doing anything different than has been done in the past. They deny the “Change” that they campaigned on. Considering that Obama is a disciple of Alinsky and Gramsci, it’s not surprising. Both of those leftist theoreticians believed in hiding one’s true intentions and appearing less radical that you really are. Gramsci knew that a slow process, the “long walk through the institutions”, a process of coopting and taking control from the inside was more effective than in your face revolution. The trick is to give the appearance of not changing a thing, all while radically changing everything.

    • 0 avatar
      Dr Lemming

      Obama a Gramsci disciple? If you submitted the above missive to a typical leftist publication people would just laugh at you. At this point the only thing keeping the left from bolting to a third-party candidate in 2012 is the fear of the Republicans winning.

      Obama has repeatedly infuriated the left because of what they see as an over-willingness to compromise with the Republicans on a host of major issues, e.g., taxes, healthcare, civil liberties, the Afghanistan war and energy policy. Obama is viewed in much the same vein as Bill Clinton — someone willing to sell down the river Democratic principles if it helped his poll numbers.

      For years Republicans have been branding mainstream Democrats as radicals in order to marginalize them politically, e.g., that was Joe McCarthy’s basic MO. Such propaganda techniques can work particularly well during times of high paranoia. However, the basic meme is just plain inaccurate.

      • 0 avatar
        psarhjinian

        I would hazard that he’s doing sometbing right if he’s being vilified by both ends of the spectrum.

        On that note, I’ll certainly admit that he’s yet another in a long string of Tony Blair/Bill Clinton-style neo-liberals, and that yes, it drives me nuts that this is what the Left is left with.

        It could be worse. I could be right-wing and having to deal with that they’re stuck with. What’s worse, sell-outs or demagogues?

      • 0 avatar
        Tommy Boy

        +1 Ronnie Schreiber; he knows whereof he speaks. Read the book “Radical in Chief” by Stanley Kurtz, which is very well researched and references the original source material for verification.

        After reading it, one can’t but conclude that Obama, who’s spent his entire life associating with Wright, Ayers, Booth and the Midwest Academy, ACORN, Gamaliel (to name BUT A FEW) is steeped in the “non-reform reforms” advocated by Gorz to slowly sabotage and eventually “collapse the (capitalist) system” while setting the stage for blaming capitalism for the collapse.

        Dr. Lemming:

        >>”Obama a Gramsci disciple? If you submitted the above missive to a typical leftist publication people would just laugh at you. At this point the only thing keeping the left from bolting to a third-party candidate in 2012 is the fear of the Republicans winning.”

        You’re referring to the “useful idiots” who don’t recognize that Obama is playing for the long-term (useful idiots probably comprising the vast majority of self-described “progressives” in the media, academia and Democrat Party); which is much more likely to achieve success and much more dangerous, for if he succeeds functionally this will no longer be the country in which we were blessed to have been born. The superficial institutions and edifices may remain intact, but functionally we’ll be a socialist (at best) country.

        Indeed, through the “crony capitalist” / corporatist methods (both government money carrot and regulatory thug-stick) being employed by this administration (GE; Goldman Sachs; health care insurers; UAW) one can make a persuasive case that in many respects this administration resembles Mussolini’s fascist government more than anything else (read the bestseller “Liberal Fascism” by Jonah Goldberg and you’ll see what I mean).

      • 0 avatar

        I could be wrong, but I don’t believe that McCarthy’s attacks on communist infiltration had a partisan aspect. There was a Republican administration at the time.

        Actually, though using the shibboleth “McCarthy” is a favorite lefty tactic to shut down debate, declassified documents indeed show significant attempts by the Soviets in the 1950s to compromise Americans. Whitaker Chambers was right. Alger Hiss was a traitor. The Rosenbergs were guilty too.

        McCarthy’s exaggerations did more to harm the anti-communist cause than help it, but to borrow a lefty term, there was a lot of “truthiness” in what McCarthy was trying to do.

        As for marginalizing politicians by portraying them as radicals, again that’s straight out of Alinsky’s Rules for Radicals and the left does it all the time. Rule #11: Pick the target, freeze it, personalize it, polarize it. Which is why anyone at all conservative or libertarian in their viewpoint is painted as a “wingnut”, akin to Genghis Khan. Anyone to the right of Hubert Humphrey is painted as an extremist.

        BTW, how come Rep. Weiner hasn’t called for an FBI investigation into how his Twitter and Facebook accounts were allegedly hacked? I mean I can’t really blame him. That 22 year old in Seattle is very pretty and has a massive rack. Even beards have needs. Weiner is a mean little prick but even mean little pricks get horny. I mean, what would you do if you were in a sham marriage with a prominent female politician’s lover?

      • 0 avatar
        Dr Lemming

        Psar: Agreed. That’s why I don’t consider myself a leftist.

        Tommy: Can we be honest? Stanley Kurtz and Jonah Goldberg are right-wing propagandists. Their work cannot be called fair, balanced and objective in any meaningful sense.

        Eric Alterman illustrates the silliness of Goldberg’s “Liberal Fascism”: “The book reads like a Google search gone gaga. Some Fascists were vegetarians; some liberals are vegetarians; ergo… Some Fascists were gay; some liberals are gay… Fascists cared about educating children; Hillary Clinton cares about educating children. Aha!”

        Ronnie: In February 1950 Joe McCarthy began a witch hunt against “communists” in the Truman administration that, with only a few exceptions, proved scurrilous. His attacks were very much partisan in nature – and led to the defeat of numerous Democrats in Congress in the early 50s as well as the black listing of a significant number of left-leaning activists. Republican leaders did not press McCarthy to tone down his witch hunt until after Eisenhower was elected president in 1952.

        The rest of your missive sidesteps my argument, so I don’t have anything else to say except to ask: Why did you feel the need to change the subject?

      • 0 avatar
        MikeAR

        Dr. Lemming, you are a leftist or more a progressive. Not calling yourself one doesn’t mean you aren’t. You are would be a perfect example of walking like a duck, talking like a duck. Another thing, saying someone isn’t to be believed if they are supposedly partisan strikes both ways, Paul Krugman is partisan, do you discredit him? The people on CNN are partisan, should you believe anything you hear on that network?

        As far as McCarthy, he was more much more often than not. Just read the Venona Intercepts and even more importantly the published KGB archives (I thiink they are called the Mitrokin papers), they prove that a great majority of the targets of the hearings were at least willing dupes of the Soviet Union. Always remember, you don’t own history, you’ve got to face facts sometime. And the fact is that that Communists did exist and they were bad people.

        One last thing, usung Eric Alterman to discredit someone is like citing Goebbels as a source. Alterman is a rabidly partisan liberal hack who massages the truth at best and outright lies at worst. The fact is that liberals and progressives in this country have all the earmarks of fascists in their behavior.

      • 0 avatar
        Tommy Boy

        Dr. Lemming,

        >>”Tommy: Can we be honest? Stanley Kurtz and Jonah Goldberg are right-wing propagandists. Their work cannot be called fair, balanced and objective in any meaningful sense.”

        Eric Alterman (from his own web site): “Eric Alterman is a Distinguished Professor of English and Journalism at Brooklyn College and CUNY Graduate School of Journalism, a columnist for The Nation, The Forward, and The Daily Beast, and a Senior Fellow at the Center for American Progress, the Nation Institute and the World Policy Institute.”

        Citing a negative review from someone from “The Nation” and the “Center for American Progress” as substantive refutation of “Liberal Fascism” doesn’t help your cause; it’s akin to citing a negative review from (the late now presumably burning in hell) Howard Zinn. Of course the review was negative … DUH!

        In fact the book is extensively footnoted citing original source material. A refutation from one or more reviewers without an agenda showing that Goldberg had fabricated source material, or taken it out of context would have credibility.

        Today’s “progressives” don’t like the book because it exposes the dirty reality of its core philosophy (diktat rule by a self-appointed elite) and its history and origins. “Trivial” little things like support for eugenics (and Margaret Sanger / Planned Parenthood’s raison d’etre); Woodrow Wilson segregating the federal government and armed forces; the mutual admiration society with European fascists (due to the parallels in philosophy and execution).

        And as for the book “Radical in Chief” the fascinating parts are the memos and other documents from ACORN and such that Stanley Kurtz found in various archives. Their words are not just damning, but self-incriminating.

    • 0 avatar
      hreardon

      To Ronnie -

      I’ve tried to avoid these discussions, honestly, and anytime friends bring this up I usually shrug it off. However, the more I actually think through his actions I keep coming back to the conclusion that he really is playing the proverbial long game.

      You can see it in his non-decision-decision about the future of NASA, his complete lack of enthusiasm for anything approaching discovery, exploration and pushing the boundaries of knowledge and abilities.

      If you look at what he has/has not done with the financial services industry, as I said, I think government is setting us up for another, bigger failure in the near future. By failing to punish and re-regulate the banking system we’re guaranteed another blow up and this time government will be able to step in and say “told ya so”, before tightening the reins even more on our liberties.

    • 0 avatar
      John Horner

      “Considering that Obama is a disciple of Alinsky and Gramsci … ”

      Do you have any evidence for that assertion?

      P.S. There is, on the other hand, firm evidence that Alan Greenspan was indeed a “disciple” of Ayn Rand. We now know exactly how Alan’s leadership of the Federal Reserve worked out.

      http://en.wikipedia.org/wiki/Alan_Greenspan

      “In the early 1950s, Greenspan began an association with famed novelist and philosopher Ayn Rand.[29] Greenspan was introduced to Rand by his first wife, Joan Mitchell. Rand nicknamed Greenspan “the undertaker” because of his penchant for dark clothing and reserved demeanor. Although Greenspan was initially a logical positivist,[39] he was converted to Rand’s philosophy of Objectivism by her associate Nathaniel Branden. He became one of the members of Rand’s inner circle, the Ayn Rand Collective, who read Atlas Shrugged while it was being written. During the 1950s and 1960s Greenspan was a proponent of Objectivism, writing articles for Objectivist newsletters and contributing several essays for Rand’s 1966 book Capitalism: the Unknown Ideal including an essay supporting the gold standard.[40][41] Rand stood beside him at his 1974 swearing-in as Chair of the Council of Economic Advisers. Greenspan and Rand remained friends until her death in 1982.[29]“

      • 0 avatar
        Tommy Boy

        Mr. Horner,

        Valid point re: Greenspan.

        As to Obama, the book “Radical in Chief” provides ample (documented) evidence. But without reading the book:

        His father was a communist (though that alone isn’t necessary dispositive);

        His teenager mentor Frank Marshall Davis was active in CPUSA (Communist Party USA) –we’re getting warmer;

        His adult 20 year stint with Reverend Wright, peddler of “Black Liberation Theology” (Marxism with a racial twist);

        His adult associations with “The Midwest Academy” and ACORN and Gamaliel Foundation;

        His adult associations with Bill Ayers and Bernadine Dohrn (who hosted his political coming out party in his living room);

        His “career” as a “community organizer.”

        Since as adults we tend to professionally and personally associate with organizations and individuals with which we’re simpatico, Obama’s lifetime associations with anti-American / Marxist-leaning (to put it mildly) organizations and individuals offers a compelling presumption of where his true lodestar lies.

  • avatar
    Demetri

    “There was also worries about the auto parts part of the industry”

    This was one of the most ridiculous hypotheses during the bailout era. Although, it was not nearly as insane as the idea that we needed GM and Chrysler so that we could use their factories if we went to war.

    Edit: Oh, and let’s not forget the belief that GM and Chrysler *deserved* to get bailed out because of World War II. I believe that maniac Jason Vines was a big proponent of that one.

  • avatar
    ciddyguy

    I agree, old, tired subject and one that’s been beaten to death, but it IS necessary to monitor and see how things evolve.

    The sad thing is, I’m in agreement that GM is still questionable, given the evidence we have so far of their changing their way of doing things. Chrysler, I have hope as they seem to be doing whatever it takes to improve their lot and ARE working with Fiat to enable this change as Fiat totally understands Chrysler’s plight, having been there and done that themselves very recently and now that Chrysler has paid or is about to pay off their loans here shortly, it looks like they may WELL be on their way to financial solvency.

    I’ve said this before but in a few years I think the lineup may well be Ford, Chrysler and trailing GM, but stranger things HAVE happened in life and the auto industry is no exception so who knows but if what we see now stands, that’s my take but will we be the mighty empire we once were? Most likely not as the competition is just too great and the days of saturating the market, just because they could is totally unsustainable and it is what got the big 3 where they are now so being a bitter pill that had to be swallowed, I think we’ll do OK as we HAVE to maintain SOME industries here in the US to remain a viable country economically.

    All that said, Obama WAS put between a rock and a hard place with the decisions already put in place by GWB and his cronies when it came to the auto industry and perhaps the banking industry and I believe Bush and his minions had a hand in SOME of the banking hijinks when it came to watering down the requirements for home loans by simply looking the other way when the cracks began to appear and now Obama has had to clean up after all that mess.

    I would not be surprised if Obama ends up with another term if there simply isn’t any good competition from either party, but if one good candidate can prove himself better than Obama, then he’s a one term president, but I don’t think in the end, if he looses next year that it’ll be entirely all his own fault as he’s had to deal with the mess from Bush and Co and that has led to a situation that has not bode as well as it could for him but we’ll see as the campaign rolls along.

    • 0 avatar
      geeber

      The push to require lower lending standards began long before George W. Bush was in office. The entire effort started under the Clinton Administration.

      • 0 avatar
        ciddyguy

        Geeber,

        That may be so but Bush allowed it to get to the depths it got before things fell apart.

        Greed played a big hand on ALL sides in the home loan scandal.

      • 0 avatar
        Tommy Boy

        Ciddyguy,

        In fact the Bush administration made multiple attempts to rein in Fannie and Freddie. These efforts were stifled by Senator “Countrywide” Dodd and Barney (“I got my boyfriend a great Exec job there”) Frank.

        There’s multiple videos on YouTube showing Congressional hearings in which Frank denied that there was any problem at those entities.

        Like most “conservatives” I was very disappointed with “W” on his domestic policies (spending, amnesty, etc.), but in this matter he made a genuine effort to prevent the problem. (BTW, in the book I keep mentioning – Radical in Chief – contains interesting archived material going back to the 1970′s through 1990′s how ACORN came up with leveraging the CRA to advance its own agenda, and make money off of it, and potentially “collapse the system” a la the Cloward-Piven strategy).

    • 0 avatar
      chuckR

      The car bailout has second order effects compared to the general financial meltdown. The seeds of the housing and banking bubbles were sown with the loosening of the CRA standards during the Clinton years, the repeal of Glass-Steagall led by Phil Graham at the end of Clinton’s term, the vociferous defense of Fannie and Freddie by Dodd and Frank during the Bush years, Bush’s failure to go over the head of Congress to the people – he was no Reagan as a communicator – and so forth. Economic historians will have a field day with this for decades. Defeat isn’t an orphan, it has many fathers.
      I also wouldn’t be surprised if Teh Won gets another term. That’s why my campaign contribution budget will go to Senate races, then Congressional races and if anything is left last to the Presidential race. But a lot could change in the next several months.

      • 0 avatar
        hreardon

        chuckR -

        Great points, all of them. Government dismantled the system that was put into place to prevent the excesses of the financial services industry through regulatory capture.

        Remember – recessions and depressions exist for a reason: they help to cleanse the financial and industrial system of bad blood, bad ideas, malinvestment and bad debt and open the way for new ideas, new companies and clean slates. If we don’t purge the old every so often, the rot that is allowed to build eventually destroys the body. We still haven’t purged the malinvestments, we still haven’t purged the debts, we still haven’t locked up the perpetrators.

  • avatar

    Look at the answers that the NPR panelists give. Kiley and Maynard blithely argue “yes, of course it was worth it,” with no sense of doubt or appreciation for the sacrifices and negatives that were demanded along the way. Ikenson argues that “we aren’t in a position to measure the success of the bailout.” The more you know about this topic, I believe the more likely you are to respect the intellectual honesty of that answer.

    Maynard and Kiley seem to think Detroit “fell behind” because of a lack of what they call “industrial policy.” To what then, I wonder, do they attribute the initial successes of the American auto industry (or, indeed, any of America’s considerable economic success), which was once a world-conquering behemoth with no need for government assistance? Detroit is awfully fond of blaming DC for every little thing, but consumers (and managers), not governments, decided Detroit’s fate. Arguing that a company is more important to a government (for reasons of “industrial policy”) than to the people who no longer buy its products in sufficient numbers to sustain it, is absurd. All the more so, when these companies are global, and serve their global interests rather than any national one (“industrial policy” notwithstanding).

    My biggest problem with the bailout is that it represents a loss of nerve, an shaken faith in the ultimate value of the American way. The pro-bailout crowd threw every nightmare scenario at the wall, and enough of them stuck to convince America that the pain of a “normal” restructuring wasn’t worth the redeeming power of market-responsive changes, including creative destruction. These (largely self-interested) chatterers simply terrified Americans with visions of jobs leaving a devastated industrial heartland (something that happened before, during and after the bailout) and made them forget the deep faith that all Americans once had in a system that occasionally demands downturns and restructuring, but always rewards innovation and market-responsiveness. In our fear we sacrificed freedom for a false sense of security, a trend that seems to be overtaking America’s once-vibrant, culture of risk, reward and opportunity.

    Was the bailout worth it? Like Ikenson, I believe the effects of this bailout still haven’t been truly felt (and many of those that have been felt haven’t been well quantified). Until adversity strikes this industry again and we see how it reacts, we still won’t understand the most important effects of the bailout.

    • 0 avatar
      psarhjinian

      Arguing that a company is more important to a government (for reasons of “industrial policy”) than to the people who no longer buy its products in sufficient numbers to sustain it, is absurd.

      Not really, no.

      We have to consider context: I don’t think anyone would have batted an eyelash has GM went down in flames before 2007. The economy could take the hit, recover and move on. It wouldn’t have been painless, but it wasn’t particularly risky.

      Heck, GM (and maybe even Chrysler!) might even have come out the other side. But Rick Wagoner and his board of, well, I don’t want to say directors because that would be inaccurate, were too proud, stupid, ignorant or malicious to take the strategic option.

      During a financial crisis, the situation changes. Consumer confidence, wages, employment and so forth become very, very critical—especially when they had been so badly undermined and the safety net to handle problems was so very, very frayed. At that point, the company is more important to the government as an economic pillar than as a relevant producer of desirable goods.

      There is a (mostly academic) argument to be made for laissez-faire’s effectiveness over the long term, but the general idea isn’t absurd in context and from a macroeconomic point of view.

      • 0 avatar

        Psar, I appreciate your trying to move the debate from an abstract, theoretical one to one grounded in context and specific circumstances, I really do. The more we look at the realities of the bailout, the better we understand it. On the other hand, if you’ll indulge my desire to step back to an abstract understanding of the decision to bail out GM and Chrysler, consider the following parallel to the philosophy you’re forwarding: circumstances, specifically the context of the immediate post-9/11 period, justified the Bush Administration’s decision to pursue the exchange of liberty for (perceived) security. It was against the finest principles of the American tradition, but we were told at the time that circumstances demanded it. And, like the bailout, subsequent events (namely the lack of attacks on America) vindicated the decision. Did that make it worth the tradeoffs? Ultimately, I would like to think it wasn’t because it helped establish a pattern of abandoning the principles that made us great in the face of adversity.

        This is why I’m dismayed at the left’s whole-hearted (and half-brained) embrace of the auto bailout. There is no left-wing principle at stake in the success of what amounts to the most egregious case corporate welfare. Was it justifiable? Certainly. Was it as necessary or admirable (in its final form) as so many would have us believe? No. Did it fundamentally change the high levels of risk inherent in the auto industry, or guarantee that GM and Chrysler won’t ever find themselves in trouble again? Once more, the answer is no. Any company will show short-term improvement if you screw its debt holders, lay off huge numbers of workers and pump tens of billions into it… but if the rules change every time the economy faces adversity, the only fundamental change will have been made to our political-economic system, not to the firms we were trying to fix.

        Keep in mind, I’m not arguing for complete, universal consistency with laissez-faire economic principles… I’m talking about protecting the most fundamental elements of a risk-reward system. Protecting those principles doesn’t preclude certain forms of government intervention/regulation (which can be positive)… but their success as an economic foundation is not “mostly academic.” America’s profound economic power is, in fact, testament to our ability to protect those basic principles even while adjusting our political practices to reflect the ideological changes that are inherent to democracy.

        The definition of maturity is typically boiled down to the ability to put off minor short-term rewards in order to reap more significant (if abstract) rewards down the road. This ability has been proven, in the the Stanford Marshmallow Study and elsewhere, to correlate strongly to future success. I see the auto bailout (along with the PATRIOT ACT, the lack of gas tax increases and more) as a sign of profound national immaturity.

      • 0 avatar
        psarhjinian

        …consider the following parallel to the philosophy you’re forwarding: circumstances, specifically the context of the immediate post-9/11 period, justified the Bush Administration’s decision to pursue the exchange of liberty for (perceived) security.

        Ultimately, I would like to think it wasn’t because it helped establish a pattern of abandoning the principles that made us great in the face of adversity.

        And that’s a good point, though I think you’re making the assumption that economic interventionism is as likely to continue (and increase) in the fashion that security theatre has. Given that most western economies, even liberal ones, are softening their stance on overt nationalization I don’t think that’s the case, while it certainly is for security.

        I wish it was, and if you’ll recall Nader’s letter (TTAC has a post on it), he wishes it was, too. But the US government certainly isn’t pulling a British Leyland or Renault: they’re divesting themselves much, much more quickly.

        I will admit that I’m biased because I don’t think economic interventionism is a bad principle, nor one that has worked against making the west “great”. There’s a number of examples where pragmatic cooperation between public and private sectors has been a generally good thing.

        This is why I’m dismayed at the left’s whole-hearted (and half-brained) embrace of the auto bailout. There is no left-wing principle at stake in the success of what amounts to the most egregious case corporate welfare.

        One, there’s far worse cases of corporate welfare: think about the banks, Obamacare or, hell, quite a lot of Defense and Agriculture business. At least the automotive bailout was very directly about floating major employers through the recession, while the aforementioned are, at best socializing stupidity and arrogance. You’ll note that, in the case of the auomakers, there was some intervention to address inept governance; something sorely missing in the bank bailouts.

        Two, I think you need to understand that there’s really two “Lefts” here, in as much as there’s two “Rights” on this issue. One is the ideological Left, which almost dead in the United States. They hate this inasmuch as they hate any cooperation between government and industry that isn’t outright nationalization. In that sense, they’re very much like Libertarians in their absolutism, only from a completely different direction.

        But again, there’s nobody like this in the US, so it’s an academic point.

        What you’re seeing as “the Left” is really either the pragmatic (if you’re generous) or the bourgeoisie/crony-capitalist (if you’re not). When the chips are down, both the left- and right wings of this group are intensely risk averse. It’s not an ideological matter: it’s one of mitigation of harm. They don’t know what the future will bring with any kind of certainty, and thusly the default action is to ensure that tomorrow or more or less like today.

        The definition of maturity is typically boiled down to the ability to put off minor short-term rewards in order to reap more significant (if abstract) rewards down the road.

        That’s really the question, though: what did we put off? Did we put off ideological purity and a quick decision in favour of long-term economic health? Or, as you say, did we put off a healthy market in the long term by supporting two sick participants?

        It’s not easy to say, one way or the other.

      • 0 avatar
        hreardon

        psar -

        I’m with Edward on this one. I do understand the argument you are making, that we have to view these situations in context, but I think that in the last ten years we’ve conditioned Americans to believe it is okay to accept “emergency situations” as enough justification to allow the federal government to do what it wants at the expense to laws and liberties.

        My argument is that we have prolonged and deepened the problems in the economy as a whole because we have failed to flush the crap down the drain where it belonged. We are propping up dinosaurs with funny money (not just the automakers, but any number of businesses), and when that bubble pops, we’ll see who the real survivors are.

        Depressions and recessions serve a purpose, no matter what the industry and its perceived importance. People have to know that failure is acceptable, there will be supports to help the legitimate players back on their feet to try again. But what we’re doing is rewarding crony capitalism and psychopathic financial services players, neither of which is healthy for anyone.

      • 0 avatar
        psarhjinian

        People have to know that failure is acceptable, there will be supports to help the legitimate players back on their feet to try again. But what we’re doing is rewarding crony capitalism and psychopathic financial services players, neither of which is healthy for anyone.

        I agree with you in principle, that the solution isn’t not to manage the economy (because that would hurt plenty of regular people), but to use this as an opportunity to a) learn how to regulate effectively, and b) prosecute those involved.

        In the case of the auto bailouts, this sorta-kinda happened. GM and Chrysler are better companies than they were going in: much of the executive deadwood is gone (especially the useless BoD, upon whose shoulders this falls) and the products are, if not always top-shelf, in most cases class-competitive in a way they were not before.

        This sits in stark contrast to the financial sector, and I think the reason is that the automotive lobby—mostly the union, at this point—had no real issues with the required executive regime change as it ensures long-term viability which they need, while the financial lobby has everything to lose from regulation, and certainly from being hauled in front of a court and prosecuted for fraud. At best we’re seeing foaming-mouth populist measures, when what’s really needed is structural change.

        Put it this way: we’re arguing about whether or not to bandage the wound; the real lesson is not to get cut in the first place.

    • 0 avatar
      Tommy Boy

      +1 (mostly)

      Look, we had a growing auto industry, in the non-UAW burdened Southeast. The “collapse” of the “American” auto industry was just so-much political horse****.

      Second, we’ve effectively borrowed money from Communist China in order to prop-up GM, Chrysler (and Ford), simply to bailout the UAW. And Chrysler is about to be owned by Italian FIAT (so much for saving the “American” auto industry) — why is an auto manufacturer owned by the Italians assembling vehicles in the U.S. superior to one owned by Germans, Japanese or Korean corporate entities? It’s not.

      The ultimate effect was that we effectively borrowed money from Communist China, eventually to be paid back (with interest) by American taxpayers, in order to insulate the politically-favored UAW from the effects of genuine Chapter 11 reorganizations (the need for which was largely precipitated by the UAW in the first place).

      Crony capitalism / corporatism is not reserved just for “management,” politically-favored unions can also play the game.

  • avatar
    highdesertcat

    While it is an old subject and we cannot do anything about past mistakes, we can learn from them. I did not support bail outs under Shrub and I did not support bail outs under Obama. That said, it is within our power to either support or not support the failed US auto industry from that point forward. If you support the UAW and believe the bail outs were warranted and worth it, then buy GM and Chrysler. If you don’t support the bail outs, the hand outs and the nationalization of the failed automakers but feel compelled to buy an American brand, then buy Ford. Mr Mulally has done wonders with Ford. If none of these options appeal to you, then buy any of the excellent foreign-brand products available to us, made in the US, by Americans, for Americans. It’s all about choice. Having owned Ford products for most of my life I agree that they have come a long way, baby, since Alan Mulally assumed command of this sinking scow. But, given the choices in our market place, many buyers do not want to reward the US automakers for their dreadful mistakes of the past and the grief they have caused many owners in the past with their unreliable and badly assembled vehicles. Once we understand that, we can also understand why the foreigners are doing so well in the US while the domestic automakers’ market share has tumbled (over decades) to where they died, or were near death, and required a massive infusion of public money and public ownership at taxpayers’ expense, just to keep them going and their UAW members employed at public expense. Can they now be classified as civil servants? It is truly regrettable that the greatest nation on earth that mass produced ginormous quantities of war-materiel could not evolve to make quality consumer products like the foreigners did, as in the case of cars and trucks. It’s too late now. There is no way for the US auto industry to be self-sufficient or self-supporting again. And it will always remain dependent on special tax accommodations and taxpayer funded infusions of some form until we either sell them to foreign interests, or give them away to a foreign company like we did with Chrysler, to Fiat.

    • 0 avatar
      Tommy Boy

      +1

      Think “American Leyland.”

      It seems to be a recurring pattern as free-market capitalist economies become (though government intervention) more and more socialistic over time, and so commensurately economically and culturally decline over time.

      • 0 avatar
        highdesertcat

        It grieves me deeply that we, as a nation, have strayed so far off the path of JFK, who said, “Ask not what your country can do for you. Ask what YOU can do for your country.” It would appear that all the bailout and welfare recipients are standing in line waiting for a taxpayer-funded handout, all asking what our country can do for them. But we ourselves are only to blame when we vote for politicians who enact laws that outsource business and jobs to other countries instead of fostering tax laws that promote jobs inside America. In essence, America is becoming a service-centered economy instead of an industry-driven economy, relying on imports rather than being self-sufficient. And the gap between haves and have-nots continues to grow as the dollar is worth less and less with each passing day.

  • avatar
    MikeAR

    Oddly enough, after I had just read this thread, I went to another website and the first thing I saw was this chart:

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/JP%201.png

    It shows what sort of economy we got for 3 trillion of stimulus. The Chicago Fed National Activity Index is explained here:

    http://www.chicagofed.org/webpages/publications/cfnai/index.cfm

    Anyone who now thinks the bailouts were a good idea and weren’t politically motivated please explain to me just how they helped. And please tell me just how letting the banks and the car companies fail would have been worse.

    • 0 avatar
      bunkie

      Mike, see my explanation below. Feel free to accept it or not. But the banking crisis scared the living crap out of me. Here’s a hint for the future: Keep an eye on the 3 month LIBOR rate. When it skyrockets, all hell is about to break loose.

      People seem to think that money just sits around in accounts. The truth is that, like blood, it only does its job when it’s circulating. The bailout kept blood flowing that provided short-term financing for every aspect of the economy. The aforementioned LIBOR rate reflects the confidence level in that system.

      • 0 avatar
        MikeAR

        The debt crisis wasn’t an unfortunate series of events or bad luck. It was pure unadulterated greed and thievery. I know the industry better than you I bet, just from being in the front lines of debt trading. And just as an example of how the game is rigged, the 3 main primary dealers last quarter had one losing day of trading between them. Think about that, approx. 270 days of trading in a supposedly fair open market and only one losing day? That is way too good to be explained by luck, the law of averages or skill. The system is corrupt and broken and needs to be brought down and a new one built. Short term pain will be much better in the long run than keeping the current system.

        I’ll add this, people like Bernanke, Geithner, Blankfein, Dimon and lots of others ought to put on trial for their lives. That’s how broken the system is now.

      • 0 avatar
        hreardon

        bunkie -

        The 2007-present financial crisis is a DEBT problem, not a liquidity problem. The federal reserve cannot do much about debt (except to inflate it away), but it can pump money into the system to make it liquid.

        To the extent that financial markets were freezing and capital was not flowing, the Federal Reserve did its job. Unfortunately, they’ve attacked the whole crisis as if it were a run-of-the-mill liquidity issue when in reality it was due to excessive debt leverage and malinvestment.

  • avatar
    probert

    Joe Biden’s son actually served in Iraq. Mit Romney forgot there were 2 (now 3) wars on our hands.

    Don’t you have any German holidays to celebrate – I know they don’t have a memorial day but there must be something for you to do with your spare time.

    • 0 avatar
      MikeAR

      Biden’s son was a JAG in Iraq, not exactly the most dangerous job in the country. Mitt Romney is a perfect example of the stands for nothing country club Republican. He will never be President.

      What is the German holiday crack aimed at? It’s kind of inappropriate isn’t it?

      • 0 avatar
        mike978

        Why inappropriate? Bertel is German and yet commented and make cracks about a US holiday.
        So now you classify someone on the level of danger in their service to the US? At least he had someone serve rather than most others.

      • 0 avatar
        aspade

        Yep, remf lawyer, really laying his life down on the line for the rest of us…

      • 0 avatar
        mike978

        asapde – I didn`t say it was the most risky assignment but he served. Second I expect they were in the green zone and that got bombed quite a bit, suicide bombers could hit anyone. By your logic General Patreus had no danger since he would not be on the frontline and have bodyguards. I am sure that isn`t want you wanted to infer but it the logic of your snide comment.

  • avatar
    bunkie

    With respect to the bailing out of the banks, I have the following to say:

    It was absolutely necessary.

    and

    The real crime is that there has been insufficient pursuit of those who were responsible for the crisis.

    Why was the bailout necessary? The answer is that the entire world economy depends on liquidity. Without the trust that you will get repaid, there is no liquidity. I work in IT on Wall Street. I’m certainly not one of the movers and shakers. But I do understand how the movement of money animates the economy. I remember the sense of panic. I was working for a very large non-US bank and there was real fear that the Lehman collapse would have led, in quick succession, to collapse of numerous other firms. In that sort of environment, deals stop happening. Commercial paper dries up (that’s the real risk to Main Street as CP funds short-term cash needs for everything from payroll to inventory to operational costs). The result would have more than equalled the carnage of the great depression.

    And there’s the problem. It’s all well and good to speak of liquidating insolvent firms using existing methods of organized bankruptcy, but it would have been too little, too late.

    The US Federal Reserve and the US Government saved the world by doing what only it could do: inject massive amounts of liquidity into the system as quickly as possible.

    • 0 avatar
      MikeAR

      I used to work in the industry as a trader. My thought is that failure would have been good for the system. The way it has evolved in the last 20 years has been toxic for the economic health of the country. The real crime of the bailout htough is that no one has been punished for anything. The world would have sorted itself out with limited real world damage, there would still have been food, jobs and all the necessities of life available. Life would have gone on for most of us but the ones who destroyed the system would have been wiped out as they deserved. I still hope that one day I will see trials and capital punishment for those in the industry and government who caused the crisis and profited from it.

      We did not get anything for our $3 billion bailout. The country is worse off than before and weaker than before.

    • 0 avatar
      hreardon

      Agreed. We’ve gotten NOTHING for our $3 trillion and the fact that nobody has rioted over this blatant looting and profiteering is absolutely disheartening.

      We have managed to kick the can down the road, nothing more.

      The government could have and should have nationalized the biggest players, replaced management and begun investigations immediately. Geithner, Paulson, Bernanke, Mozillo, Blankfein, Fuld and others are all complicit and need to be brought to task.

      THAT would have been proper use of government authority and would have stabilized the system as well as provided a wind-down for the worst of the worst in an orderly manner.

      Remember – the fear was a DISORDERLY bankruptcy or wind-down of these organizations. If government had stepped in and provided a structure to the process it would have calmed everyone. Instead, friends were bailed out, banks were allowed to mask over their losses and the perversions continue to this day.

  • avatar
    TAP

    I’m with Bunkie.

  • avatar
    bunkie

    Mike,

    Okay, I’ll bite. Since you’ll bet that you know the trading market better than me (BTW, I’ve worked three different parts of FS, debt, equities and futures), you must have some suggestions for how to fix it. What would they be?

    • 0 avatar
      MikeAR

      Reinstitute Glass-Steagall, punish the guilty very harshly, give the enforcement agencies real teeth, shut the revolving door between government and the industry, end propriatary trading, regulate derivatives and hedge funds and take most of the money out of the industry. The last is maybe the most important. If your reward is a low 6 figure salary and bonus instead of high 8 figures then you will be less likely to loot and pillage. People in the industry and government need to be in an Office Space type prison for a long time, that is a very powerful incentive to do right.

      • 0 avatar
        psarhjinian

        Why, Mike, I think we’ll make a pinko of you yet!

      • 0 avatar
        MikeAR

        Not yet, Psar, not yet.

        I forgot to add the most important things, end the FED completely and put the two most recent Fed chairmen and the two most recent Treasury secretaries on trial for treason.

      • 0 avatar
        hreardon

        psar -

        That’s actually funny and I get your point, but this is indicative of how far apart Americans have come: to think that it makes someone a “leftie” because they support rule of law and reasonable regulation says volumes about our overall discourse today.

        The financial services industry has been compared to a group of psychopathic wolves. These guys are the uber-alpha males who don’t see fences or walls, they just see the chickens in the coop to be preyed upon. They’ll stop at nothing to get there. Knowing this, it is governments job to keep the wolves at bay so they don’t slaughter everything and everyone.

        Reasonable people need to start taking back this country. Reasonable people understand that rule of law and regulation is necessary to a functioning society. Reasonable people understand that concentrating wealth and power into the hands of a few is horrifyingly dangerous. Reasonable people understand that competition is good, supply and demand is essential to understanding economics and that we must protect the weakest members of society.

        America has lost the ability to be reasonable, pragmatic and fair. I believe it is this loss of fairness that has corrupted our soul as a nation and until this is changed, we’re in for a bumpy ride.

      • 0 avatar
        Tommy Boy

        “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.” – Benito Mussolini

        One could argue that we’re there, or certainly nearly there.

        “Too big to fail” and other excuses for taxpayer-financed bailouts has injected “moral hazard” into our system — without the “ability” to fail a free-market system cannot exist (for the long term) for the responsibility-inducing effect of potential failure / potential personal liability are removed, and with it “creative destruction.” (Anyone who believes that Big Finance and/or GM-Chrysler-Ford won’t be back at the bailout trough within a few years is dreaming — and the individuals responsible will still have their mansions in the Hamptons. Meanwhile the UAW will continue business as usual, for it needn’t worry about getting realistic).

        Today we have crony capitalism and socialistic wealth redistribution: the ever-growing social welfare state; agricultural welfare; “green jobs” welfare and with the bailouts, industrial and financial welfare. Little wonder that the non-K Street middle-class is disappearing.

        From a long-term perspective, once FDR strong-armed the U.S. Supreme Court and made it “legitimate” for the federal government to take from one group of citizens and hand the proceeds to another group, the seeds were planted for our ultimate demise.

  • avatar
    John Horner

    Food for thought: In order to win WWII, the US Government took COMPLETE command and control of all aspects of the US civilian economy. Industries were put under the direct control of various federal boards and commissions. Wages, prices and access to the most basic civilian and commercial goods were all set by government edict. Factories were built with government money. Men were conscripted into military service by the legion and were forced to fight, kill and die as they were told by government command. That was the reality. It was necessary. Nobody seems to ever talk about that as a time when all the Principles Which Made America Great were summarily tossed aside to get done things which needed to get done. Absent the kind of dire circumstances of WWII I sure don’t want to go back to being a participant in a command and controlled economy, but the fact is that a modern complex society requires a highly functional government to keep things going. The imaginary utopia of an Ayn Rand is no more realistic than were Marx’ musings.

    Theoretical/abstract arguments from one utopian principal or another have a way of generating a lot of heated argument, but often go completely off the rails.

    In the end all we can ever know about the GM and Chrysler government financed and led restructurings is this: What happened, happened. At the moment, both companies are showing good signs of life as businesses and are hiring people, selling products and making the marketplace more interesting and competitive than any reasonable person would imagine it would be with one or both of them gone.

    We could argue the could-of and should-of imaginary scenarios from now until we are all dead, but in the end those are all alternate universes which don’t exist.

    It is long past time to be looking at today and tomorrow and to stop the endless spleen venting and Communist/Fascist/Whatever fear mongering this topic so often brings up.

    • 0 avatar
      hreardon

      John -

      The war effort involved the whole country sacrificing and supporting a common goal. The auto and financial bailouts went to support a small select group of Americans who perpetrated a fraud.

      In principle I agree with your statement, but the crisis this time around was not a national emergency against a common enemy, it was due to crony capitalism.

      • 0 avatar
        John Horner

        hreardon: I agree that WWII and the recent financial crises are not the same thing and had very different causes.

        My point is that calling the way the GM and Chrysler bailout/restructurings was dealt with “The End of America As We Know And Love It” as many people do is hyperbolic and ridiculous.

        Another example: People forget that the first transcontinental railroad was built by giving massive amounts of federal land and government bond (borrowing!) money to private railroad companies. Not only were they given the land to run the tracks on, but also massive amounts of land on both sides of the line from which the railroads could make a profit. Nobody seems to call that effort the Railroad Bailout Act of 1862. In fact, every school child is taught that it was perhaps the greatest technological and social achievement of that time.

        http://en.wikipedia.org/wiki/First_Transcontinental_Railroad

      • 0 avatar
        geeber

        Government action to spur the development of transportation infrastructure is completely different from the government bailing out two failed companies, while rewarding the spoiled union that helped bring about that failure.

        The appropriate analogy to the development of the transcontinental railroad would be the construction of the interstate highway system in the mid- and late-20th century.

        If the government hadn’t taken the lead, those projects would never have been built. Government has long been involved in infrastructure development (it was called “internal improvements” in the 19th century).

        If GM and Chrysler had been allowed to go through the regular bankruptcy process, we all still would have been able to buy brand-new vehicles.

    • 0 avatar
      PenguinBoy

      @John Horner – Well said sir!

      Ideology makes bad policy; arguing about what ~should~ happen based on some imaginary theory is about as useful as arguing that every car should have a perpetual motion machine under the hood.

  • avatar
    rwb

    The sum of my assets being minuscule, and with the whole of the financial world existing in a space well above my head, I would have loved to see a catastrophic, apocalyptic financial endgame across the world. No more credit, just a shovel and what land you can defend by yourself.

    That would be something tangible, that I could work with. I might miss a couple luxuries, but overall I think I could be happy going Full Kropotkin. I love watching the comfortable squirm.

    • 0 avatar
      John Horner

      Most Armageddon fantasy fans really do wish for immeasurable pain, suffering and harm to come upon their fellow man.

      • 0 avatar
        highdesertcat

        John, when the US government selectively bails out the UAW, failed companies, banks and investment houses, that sounds an awful lot like Obama’s mantra of ‘spreading the pain around’ (as opposed to ‘spreading the wealth around’). As I have outlined earlier, we can either support the bail outs and buy American, or we can choose to show our disagreement and buy something else. Ultimately, the choice is ours.

      • 0 avatar
        PenguinBoy

        @highdesertcat

        When I’m shopping for a vehicle, I’ll either be practical look for the one that best meets my needs, or be less practical and simply pick one that I happen to like.

        Politics isn’t something that influences my choice in any material way.

      • 0 avatar
        highdesertcat

        Penguin, the choice is still yours. When I shop around for cars I look at everything that is out there to see what works best for me, and then factor in the political variables. For instance, it doesn’t make sense to me to pay twice for a GM or Chrysler product since I am already part owner in them, or was. I should be getting a car free from each of them. For the last two new vehicles, bought in 2008 and 2011, I clearly bought what I thought to be the best in their respective classes, and GM and Chrysler products didn’t even come close. No contest there.

      • 0 avatar
        rwb

        John:

        Maybe it’s just the people I’ve met and the places I’ve been but it ain’t just the Armageddon folks who like to see suffering in lives other than their own. Can’t count the number of the conspicuously “comfortable” who’ve behaved in front of my own eyes in a way so unbecoming of an empathetic human that I can’t help but think they’re hardly possessing of actual personalities: more miasmas of desire and drive piloting a bag of meat to actions which belittle and disenfranchise others. Maybe they’re all nice folks sometimes; be that as it may, I don’t think an equal quid-pro-quo is what they want- only natural to want to lead the pack.

        I have a PC and an automobile, plus a roof over my head. Because of those three things, I would fall into a rather “comfortable” demographic. Other than shelter, I think these things are petty, and I don’t like being dependent on them. (It’s just me, I know.) So, to see people pursue with such fervency the right to amass incredible amounts of absolute sh*t makes me a little bitter, and sometimes makes me write dismissive little missives in forums of little relevance.

      • 0 avatar
        PenguinBoy

        @highdesertcat – I agree with your approach of selecting the product you feel to be best. Picking one you simply like because you like the way it looks or drives is good too, cars can be fun purchases as well.

        As a reluctant part owner of GM and Chrysler, I would think if anything you would favour those brands to increase the chances of getting your money back.

        Personally I would like to see the bailed out automakers succeed (I want my money back too…) but it wouldn’t be enough to influence my choice of vehicle either way.

      • 0 avatar
        MikeAR

        I’ve got a question for you guys, would you buy a tv from someone that you knew was stolen? If your answer is no, then you won’t buy a car from GM. It’s pretty simple, money was stolen from the taxpayers so that the UAW could live. You are buying stolen property if you buy GM. It’s that simple.

      • 0 avatar
        highdesertcat

        Penguin, I, too, fervently hope that we, the people, will get all the money back we so generously bestowed on these failed companies, with interest. Whether that happens or not remains to be seen. As with most things we won’t know for quite a while yet how all this will turn out. What happened with the bail outs was that a very select and well-connected group benefitted from these hand outs, starting under Bush, and then really raked in the dough under Obama. But the vast majority of businesses who failed and people who lost their jobs did not benefit from these bail outs. I read where someone posted elsewhere that it doesn’t make sense to keep 6% of America’s workforce (the auto industry) employed at the expense of the other 94% of the workforce (taxpayers). Hey, we have plenty of car makers right here in the US – one or two less is not going to affect anything. It’s just a matter of time before we have to divvy up GM and sell it off to a foreign company. Chrysler already was a corpse that we gave to Fiat, at US taxpayer expense. So the choice of how we spend our money to buy new cars always remains ours, depending on our views of the bail outs and special tax accommodations tailor-made for the UAW and the US auto industry. Judging from the respective market shares, the foreigners continue to be favored by most buyers, and Chrysler is also a foreign company now with its headquarters in Italy, akin to Toyondasan, et al, with their headquarters in a foreign country.

        MikeAR, I would not have been against the bail outs if they had been applied equitably and across the board. Though well-intentioned for the select, favored group, the UAW included, all the bail outs amounted to tampering with the natural order of things in a Capitalist system. When the “State” (government) determines who will live and who will die, that smacks of Fascism and Communism, where everything is dictated from the top. That’s not what America is about. But we have sunk to that low since the founding of this Republic. Is this what our people are fighting and dying for? To preserve THIS way of life? No way!

  • avatar
    ciddyguy

    Wow, this touched off a lot of replies, some of which I wonder aren’t just conspiracy theories, or at least they READ like it anyway.

    Some good points here on ALL sides and I know I’ve commented earlier in this thread but wanted to bring up somethings not really mentioned.

    Part of the problem as I see it is US, the citizenry, so many of us got caught up in the spend, spend, spend and put it all on plastic, beginning in the 1980′s as housing got larger, cars got more grandiose (for some), boats, trailers, expensive TV’s, electronic video games, $40+ jeans, $30 T-shirts, etc, all of it added up to a huge debt upon ALL of us, it’s marketing and greed, marketing in that we were all told we needed these things and the banks just happily gave us credit, even if we had bad credit.

    Greed in that we felt left out when the “Joneses” next door bought a fancy new something, so we then went out and bought something similar to “keep up” but over time, it became an entitlement that we HAD to have that huge monstrosity of a McMansion and therefore, we HAD to buy furniture to FILL said house, the kids NEEDED new toys, computers etc, the list goes on – and a good percentage of that was bought on, you guessed it, credit. So many of US have lived well beyond our means for so long, the economy was BOUND teeter and fall.

    As for Clinton, I’d forgotten about the fact that the housing bubble began near the end of his reign in office, but I don’t blame Bill especially for that as he or may not have been a part of it, that I don’t know but he DID get us back in the black for the first time in years. I remember his adulterating, I recall people trying to impeach him and all that but as time has gone on, he’s proving to be a MUCH better president than it initially appeared but Bush undid all that by letting the deficit balloon back into the red and beyond and left us in shambles for some “shmuck” to pick up the pieces, and that person is Obama.

    As for banking, totally agree that nothing new there has taken place and I had issues back in 2004 to get a loan, a simple $3000 loan to buy my best friend’s 1991 Honda Accord EX wagon, but no, Wells Fargo, whom I was banking with then would not even try to help me as I had “no recent credit”, true, but to NOT even help me re-establish credit history? The shame.

    So I ditched them and went to a credit union and I’ve not looked back. I WAS able to re-establish credit with them when I bought/upgraded my computer to gain new skills so I could better my life and make a decent enough living to live comfortably and yet still save as my income isn’t keeping pace with the cost of living as is.

    But in the end, I think it was a combination of us citizenry who felt compelled to buy even if we could not afford, predatory lenders, feeding on the bottom of society to get them into homes without having any proof of income etc and generally making it easier to live well beyond anyone’s means and now, guess what? the economy as it is now and has been since 2008 with many now unemployed, those not having to deal with bankruptcies, defaults on loans and now the banks are having to deal with all these homes that have no owners – plus the real estate market, along with the banks who sold, and resold home loans to the point that no one knows who owns many of the loans anymore.

    It’s tragic I tell you but in the end, we are ALL to blame for what happened to one degree or another.

    • 0 avatar
      highdesertcat

      This topic touched of a bunch of replies because it is a volatile subject, on both sides of the spectrum. If you’re UAW and part of the bailed out bunch, of course this was worth it to you. Those people continue to live large on the tax payers’ dime, looking for even more hand outs. But if you’re one of the people not doing so well under Obama you’re left wondering where your share of the “spreadin’round wealth is”.

    • 0 avatar
      geeber

      ciddyguy: As for Clinton, I’d forgotten about the fact that the housing bubble began near the end of his reign in office, but I don’t blame Bill especially for that as he or may not have been a part of it, that I don’t know but he DID get us back in the black for the first time in years.

      He was a part of it, as his administration led the push to lower lending standards in the early 1990s. That was one of the seeds that started the entire process. The fact that all of it finally hit the fan after he was free to spend his time chasing interns and wolfing down Big Macs doesn’t absolve him of the blame, nor does the fact that you apparently voted for him.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India