So now we hear a couple of the themes, as repeated by John who has demonstrated an affinity for passing along DNC talking points, that will be spewed by the Dems between now and November. Let's deal with at least one of them here: the auto "bailout".
First, one must remember that the "crisis" facing the auto industry was not necessarily one of their own making, was not related to some dramatic failure of the company's operations. In fact, Ford Motor company managed to dodge the "crisis" almost entirely. The crisis was lack of credit in the marketplace.
Access to liquidity in the credit marketplace was severely constrained in going into the second half of 2008. The lack of liquidity was the result of almost $500 Billion in write-offs that the financial industry was taking due to failures in the residential mortgage industry. Central to this crisis was the Federal government under Clinton, and enforced by Reno, threatening lenders who didn't ignore their own underwriting requirements and approve mortgages for those who couldn't afford them. Later, regulators under the watch of Congress failed to see what was happening in the market and exercise their regulatory authority.
Although the campaign rhetoric about Obama saving the auto industry may be effective with some of members here, anyone familiar with more than just the headlines of the 2009 auto bailout would know that it doesn’t stand up to scrutiny, for several reasons:
• The choice in 2008-2009 was not bankruptcy versus no bankruptcy; instead, the choice was between precedent-driven bankruptcy and White House-driven "pre-packaged" bankruptcy. The rule-of-law versus rule-of-czar.
The taxpayer bailout was not applied to the “American auto industry”—instead, it was applied only to the two failed companies, GM and Chrysler, bypassing companies that had been sufficiently prepared for the downturn, including Ford, Honda of America, Toyota, Nissan, BMW, and others.
Orderly, rule-of-law bankruptcy might have led to continuing operations under restructuring for GM or Chrysler, in which case many auto-making jobs would have remained in Michigan. Alternatively, orderly bankruptcy might have led to a shutdown of GM or Chrysler and an open auction of assets—probably to surviving companies—in which case car buyers would have shifted to surviving companies’ products
and auto-making jobs would have migrated to those same survivors.
The notion that the White House should intervene with a specially designed bankruptcy process, thereby sidestepping rule-of-law bankruptcy, originated in the Bush White House in 2008, not in the Obama White House in 2009. A more honest name for the program would therefore be the “Bush-Obama Bankruptcy/Bailout” for Detroit’s two failed auto companies.
http://www.usatoday.com/money/autos/...te-house_N.htm
Chrysler is no longer a company with US ownership. As part of the rule-of-czar bankruptcy process, Fiat was encouraged - some might suggest begged - to purchase Chrysler. Remember also that GM's Hummer division is now also under Chinese ownership. Ownership of these two companies was, therefore, outsourced.
Ironically, top-down economics was the de facto remedy applied to “save” GM and Chrysler—but in this case “top-down” was the government-knows-best notion that political wisdom, trickling down to displace a century of evolved bankruptcy case law, was supposedly a superior alternative for the two failed companies. Top-down economics, the politicians’ version of “intelligent design,” directly rewarded GM and Chrysler with special-interest life support—instead of indirectly rewarding their surviving competitors with new customers and the necessary additional workers. As a result, this resident of Detroit can confirm that the culture of GM - which led the company to its most recent financial and competitive demise still firmly entrenched in the company's DNA. This is not a good thing.
http://www.huffingtonpost.com/huff-w...rs-ceo-speech/