Chrysler LLC filed for bankruptcy Thursday one day after president Obama celebrated his 100th day in office. And when House speaker Nancy Pelosi was among many Democrat politicians, including Obama himself, who said recently that Chrysler bankruptcy “is not an option”, we have a perfect example of what is known as Reversal of Fortune. Because while we were assured that untold taxpayer billions would save Chrysler, save the banks and save every underwater mortgage holder, they have not. And thus the Chrysler failure puts the entire Obama agenda in question.
Meanwhile vice president Joe Biden was warning America on national television about the swine flu. “I wouldn’t go anywhere in confined places,” said the gaffe-master, meaning trains, subways or planes. The comment set off panic all over, particularly in the airline industry which is reeling from the current recession. So again a clarification was issued from the veep’s office about what Biden really meant. An apology even was issued by the White House.
What we are seeing in all these cases is an administration and a party flying by the seat of their pants, doing and saying all sorts of things and hoping that something sticks. If Obama had a grasp of authentic economics, it might be taken seriously, but in these difficult times, it is disquieting for people to be making random statements with no central theme. Because Obama simply is hoping to swerve into solutions for the nation’s current problems.
Chrysler’s filing came after lenders holding 30% of Chrysler debt refused a restructuring deal. They said in statements that they were doing what they were supposed to do – protecting their investors, including pension funds. Obama took the opportunity to criticize those lenders in yet another shot at the private markets, at the same time that a federal trial was going on to decide who would be getting paid from Chrysler! This is a politician injecting himself into a court case and is shameful. Obama should be held to account.
Because those lenders are ultimately correct. In fact it would have been better to let Chrysler go into bankruptcy months ago. After all, it would have saved taxpayers $4 billion that was lent to the company in the interim.
So you start to wonder: “A billion here, a billion there, pretty soon you’re talking about real money,” says a quote attributed to the late Illinois Republican US senator Everett Dirksen. And indeed Obama is throwing billions around like a drunken sailor who apparently does not even know he’s drunk. And what else could we expect. To a Democrat, Other People’s Money is intended for fixing even Other People’s Problems. And over a relatively short period of time, Americans are becoming increasingly alarmed at his generosity.
Tea Parties anyone?
Chrysler LLC CEO Robert Nardelli will resign after the company completes its bankruptcy. He has been running the automaker since August 2007 and formerly was CEO at Home Depot but was forced out of that job after the company’s stock fell sharply.
So how did he get the job at a gasping outfit like Chrysler? Who made that choice? Answer: The same board that has been running Chrysler badly for decades, making lousy cars and signing off on exorbitant union contracts in order to be on the golf course by 3.
Obama pro mised that the bankruptcy would be quick. But then again, he thought the government loans would help avoid the filing altogether. So Obama is shifting with the winds, which could be seen as flexibility, but might more truthfully be regarded as simple cluelessness.
Chrysler now will get $8 billion more in taxpayer dollars to keep it afloat until it gets straightened out.
We really must now start to look at the effectiveness of all this massive government spending. Obama claimed in his press conference that his largess already has saved or created 150,000 jobs.
Who says? There is no proof. Or even evidence. The figure is a fabrication.
Meanwhile, most of Chrysler’s 39,000 unionized hourly workers will get 80% of their pay during the bankruptcy, some of which is unemployment. But General Motors is planning to shut down for 9 weeks and its union workers will lose no pay at all. Yet Obama was criticizing the private hedge funds for not acceding to the restructuring plans. How about the unions, Mr. President?
Let’s face it: The American auto industry has had the flu for decades. It has been making a lot of bad cars that people did not really want to buy. While shrinking annually, it has been paying its union workers outrageous wages (up to $75 an hour wages/benefits/pension for assembly line workers) while the more successful “transplant” companies like Toyota and Honda, using nonunion labor at a sustainable $48 an hour, seem to be surviving this downturn in decent shape.
One of the historic outcomes of this meltdown is that finally the auto industry is going to see the shakeout that has building like a fever for years, just like American Motors and Packard and Studebaker once did. It will be painful for many workers, but largely a result of years of laziness and greed by many overpaid UAW members and the bosses who gladly signed these huge wage packages in the good old days when everyone was fat, dumb and happy.
And again, free markets are coming to the rescue. Americans have decided to fix their old cars rather than buy new ones, leading to a boom in the auto repair industry. Thus many GM and Chrysler parts suppliers who are getting hammered by the industry’s woes now are selling lots of replacement parts in the national repair market and doing quite well.
America will survive the current recession by relying on private markets. It is time for us to re-set the economy, to let bad companies fail, to let new ideas come to the fore. Today’s economy is much like fixing an old house. There gets to be a certain point where it is more costly in the long run to repair the old one than to tear it down and start all over. And the current state of the American economy seems to be shouting for a fresh new beginning.
Please visit my website at www.nikitas3.com for more. You can print out for free my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.