An Uncertain Future; GM's Bankruptcy

The General Motors and Chrysler sagas have been interesting if nothing else. The truth is that these mid 20th Century industrial titans have been shadows of their former selves for years. So what does one do with this mess? I can give you any number of reasons for justifying what the government did. On its face, these types of things are always rooted in good intentions. Saving Detroit, saving jobs, and saving a critical industry are top on the list, and are all worthy goals.

There may be another reason. GM may sell Hummer for $500,000,000.00 to a Chinese heavy equipment manufacturing company (a substantial chunk of which is owned by the Chinese government). That is like giving it away. Apparently GM is going to continue making the Hummers in the United States for shipment overseas. Hummer never really made it here in the States, but is popular in other countries. Notwithstanding, it has given the Chinese a foothold into the American automobile market. Could it be that the government and GM sensed that the Chinese would make a play for General Motors or Chrysler in a standard bankruptcy? If the Chinese took over General Motors or any of its primary brands, it would have caused a political storm in this country the likes of which we have never seen. Who knows what the big fish know whilst us minnows swimmingly speculate.

Most Americans wish General Motors and Chrysler well. We want them to succeed. Why am I so uneasy? President Obama has said he does not want to be in the automobile business. Then why is he in the automobile business? He says the government will be a hands-off shareholder. Yet he fired the GM’s CEO. He cut Chrysler’s advertising budget by half. He assisted in determining which independent dealerships should stay open and which should close, many of the forced dealership closings being owned by members of and contributors to the Republican Party. He has destroyed the integrity of our secured bond financial system by shredding the statutory debt payment priority system. He denigrated the bondholders, many of which are pension funds and retired seniors. These aren’t the big, bad Wall Street types. If folks can’t rely on our own government's compliance with our investment laws, who is going to invest? The answer is: nobody. Contrary to what government officials are saying, this is very hands on.

Here are some questions:

If it is more efficient to make cars in China than the United States, will Obama let GM do it?

If it is more profitable to make a muscle car than a green tinker toy, will Obama let GM do it?

If it is in GM’s interest to shut down a factory in an Obama crony congressional district, will Obama let GM do it?

If GM needs a certain part and goes for the best bid, will Obama let GM do it, or direct it to a more politically correct supplier?

If GM wants to advertise on the Sean Hannity Radio Show, will Obama let GM do it?

If GMAC doesn’t want to loan money to subprime car buyers, will Obama let GMAC refuse the loans, or force GMAC into the loans to achieve fairness?

And none of this takes into consideration what will happen when Charlie Wrangle, Nancy Pelosi, and Barney Frank get into the act. It will be a disaster.

And none of this takes into consideration what will happen to the viable automobile industry in American like Ford, Honda, and Toyota, when faced with a competitor with unlimited access to capital.

If you don't like the answers you came up with for the above questions, then what you, the taxpayer has bought, is the largest social engineering and political patronage machine this country has ever seen. As my friend told me today, the only way it can succeed is if everybody else fails. And that is a big problem. We will paying for this for a long, long time.