Barack Obama argued that if GM collapsed, jobs would be lost and shipped overseas, dealers would close, and the taxpayer would be saddled with all kinds of costs. Well, Obama is “saving” GM and all those things are happening anyway.
This is not a bankruptcy; it’s the moral equivalent of a bank robbery. The White House didn’t “broker” a deal, but it BROKE the things that make our economic system work: rule of law, respect for contracts, and bankruptcy supervised by the judiciary, as specified in the Constitution.
The discussion today misses the point. It’s should not be about the economy but about what this raw exercise of power means for the future of democracy.
GM and Chrysler are being turned into appendages of Obama’s political machine. Nothing would be more harmful to the automakers than this cap-and-trade scheme being considered in Congress, but the companies are up there lobbying for it. And now we have these allegations that dealerships are being closed for political reasons. The White House should release the criteria for the closings, so these charges can be evaluated.
Big, institutional bondholders were bullied into violating their fiduciary duties to their investors, just like with Chrysler. Small bondholders had no say at all. These are very bad precedents.
Steven Rattner and Ron Gettelfinger sat around and divided up property belonging to others: taxpayers and bondholders, for one purpose: to maintain the political power of the UAW.
Giving the UAW VEBA stock doesn’t solve anything. Gettlefinger knows this. In fact, he tipped his hand recently when he said that the UAW priority is now national health care.
The VEBA could run out of money in something like three years, and if these companies don’t start selling cars, the stock is going to be worthless. And Obama is making it harder with the higher CAFÉ standards and this mandate that they build small cars.
With an additional $30 billion to GM, the cost of the auto bailout is now over $100 billion. I admit that I grossly underestimated what this process would cost when I said on CNBC that it would be $50-100 billion. And we are now probably only in the second inning.