Remember Our Fallen Heroes: Was The Bailout Worth It?

Bertel Schmitt
by Bertel Schmitt

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?

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  • Rwb Rwb on May 30, 2011

    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.

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    • Highdesertcat Highdesertcat on May 30, 2011

      @John Horner 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!

  • Ciddyguy Ciddyguy on May 30, 2011

    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.

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    • Geeber Geeber on May 30, 2011
      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.

  • Redapple2 C2 is the best. C3 next. Then C7 (looking at you jimII).
  • Jeff S Vulpine--True the CAFE rules are for ICE.
  • Gray I grew up in the era of Panther and Fox platforms. If only they developed a good looking two door Conti. The four doors became a cult in their own right. And kept the 351W as a top line option.
  • Vulpine ABSOLUTELY YES!!! Bring back the TRUE compact trucks. The demand for them is far higher than the OEMs want to admit.
  • Brn More likely, with Google having troubles, the money tree isn't as ripe as it once was and cutbacks are needed.I hope the overall industry continues to evolve. When I get the the point I can't easily drive, I would still appreciate the independence that autonomous vehicles can bring.
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