SPARE A LITTLE?

Townhall.com ^ | 19 November 2008 | Andrew Roman

[andrew roman]

Ineptitude pays.

This grueling government bailout saga is eerily reminiscent of that smell in almost everyone’s grandma’s house, or the image of Barack Obama’s face gracing every magazine cover in all of God's creation.

It doesn’t go away.

It’s always there.

And now, economic catastrophe looms on the horizon, they say. Millions of layoffs could be the consequence of inaction. The very stability of the nation hangs in the balance.

Naturally, this latest potential cataclysm is not to be confused with the previous calamity from September – or any other that has threatened to cripple the United States in recent times.

This is not to diminish the real economic challenges facing this country, mind you. Times are, indeed, tough – and growing tougher. It's obviously true. My heart genuinely goes out to every hard-working American family that is - and will be - affected aversely by the economy's downturn.

But this is America.

We face it. We brave it. We learn from it. We get better.

To be fair … the original three-quarter of a trillion dollar bailout of the financial markets, one could argue, was a necessary evil. Instictively, I wasn't for it, but there were sound arguments on that side. I could understand – at least to a point - those who defended it, contrary as it was to free market sensibilities. Clearly, if the ability of Americans to borrow money – and thus conduct business - is throttled (so the argument goes), the entire economy dramatically suffers.

I don’t disagree.

But now the car companies have come a-callin’. They’re asking for a $25 Billion slice of the $700 Billion bailout pie.

General Motors CEO Rick Wagoner, speaking to the Senate Banking Committee on Tuesday said, "Our industry needs a bridge to span the financial chasm that has opened up before us."

In everyday speak, that means: “We screwed ourselves. We can't manage anything. Save us, please, so that we might do it all over again .”

There is simply nothing to come from injecting billions of taxpayer dollars into one - or maybe all - of the Big Three auto makers, save for a quick, feel-good, “at least we did something,” temporary fix. It’s like buying a recovering cocaine addict some heroine to relieve him of his dependency with cash stolen from the rehab center’s safe.

Pouring money into a failing corporation – and I don’t care if it’s the automotive industry or the tiddly-wink trade - does nothing to dissuade the behavior that precipitated the failure.

What incentive is there to modify?

And what is to keep the feds from slapping billion-dollar band-aids on the boo-boo all over again once the next disaster sets in?

In a worst-case scenario, for instance, the bankruptcy of General Motors would all at once adversely effect employees and stock holders. It would also hurt the communities in and around the GM plants where these employees live. Indeed, the ramifications would be very real. But the truth is, unlike a debilitating credit crisis where there is no money available to lend to anyone anywhere – which would affect virtually everyone from sea to shining sea, as well as the world at large - life would go on for the rest of us. Americans would get their vehicles elsewhere, and the United States would endure.

In a free market, bad decisions cannot be rewarded, and the public should never be compelled to pay for loser corporations who have mismanaged their affairs into near-oblivion.

A GM failure, obviously, is not what anyone would want, but the American automotive industry, in being forced to rebuild itself, would ultimately be all the better for it.

Government intervention and cash cuddling of a dying Detroit only keeps the malignancy warm and safe – especially when there are German and Japanese car manufacturers continuing to grow and profit in the South. (This is not your daddy’s Chrysler bailout).

Bankruptcy, on the other hand, would be a much more viable remedy - that is, if the goal is to save the corporation.

But it isn’t. That's the problem.

It’s all about the union.

Declaring bankruptcy sticks a fork in the very sumptuous UAW employee and retirement benefits that helped cripple the industry to begin with – and, of course, that can’t be allowed to happen. With Washington cradled in all-Democratic arms effective January 20th, it almost certainly won’t.

Let's hope that yesterday's cool reception on Capitol Hill to the "rescue our cars" lobby remains so and that I am wrong.

_

[Syncro]

The nutshell:

"Our industry needs a bridge to span the financial chasm that has opened up before us."

In everyday speak, that means: “We screwed ourselves. We can't manage anything. Save us, please, so that we might do it all over again .”

There is simply nothing to come from injecting billions of taxpayer dollars into one - or maybe all - of the Big Three auto makers, save for a quick, feel-good, “at least we did something,” temporary fix. It’s like buying a recovering cocaine addict some heroine to relieve him of his dependency with cash stolen from the rehab center’s safe.

[jcon40]

“It’s all about the union.”

Exactly

Watching the inability of legislators to rid the public of Prevailing Wage laws I don’t see the UAW being abandoned now.

Even most Republicans are cowards in opposing unions

[Syncro]

BTW it isn’t a female hero they are talking about, it’s the drug heroin.

[andrew roman]

Right you are.

Thanks much for the spelling correction.

[Syncro]

y/w bump

[AndrewB]

"...that smell in almost everyone’s grandma’s house."

My grandma's house always smelled really good....