Saturday, June 6, 2009

Something Rotten This Way Comes

American Scofflaw
Here's how the Dow News Wire described the carnage: "GM said it would close 17 factories and parts centers and lop off 20,000 more jobs by the end of 2011 in Michigan, Indiana, Ohio, Tennessee and other states [many of those jobs will be bought off with six-figure payouts, courtesy of the taxpayers]. The new price tag will be $30 billion, on top of $20 billion in U.S. funds already put into the company. In exchange, the U.S. will own 60% of the new GM. In all, the rescue of the car industry could cost taxpayers close to $100 billion.

"GM's court-supervised restructuring began just hours after a New York bankruptcy judge approved the sale of most of Chrysler's assets to Italy's Fiat SpA. Chrysler sought Chapter 11 protection about a month ago. President Obama defended his decision to take a majority stake in GM, saying it was unavoidable and temporary." But, if the companies don't become profitable, it won't be temporary. If it takes too long to become profitable and the US keeps pouring billions into the companies, which is almost a certainty, the companies will never be able to afford to buy out the taxpayer interest.

It is amazing, how in a single crisis, a relatively free market system of laws can be overturned into socialism without any debate in Congress. Now THAT's the power of using a crisis to generate change.

"The government-orchestrated shrinkage will cost taxpayers billions. Some Republican lawmakers called the move another sign of the administration's deepening incursion into the private sector. And the risk remains high that the administration or Congress could meddle in the company's day-to-day affairs, an experience familiar to banks that took government bailout cash last fall... GM -- which hasn't made a profit since 2004 -- declared in its filing that it had $172 billion in debt and $82 billion in assets." It's incredible that creditors would keep loaning GM money until its debts doubled its assets!

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