Friday, June 03, 2011

Bailout Bamboozle?

As Barack Obama came into office the US auto industry was in miserable shape. President Bush had already loaned GM and Chrysler money and that was quickly running out. Many saw the move to save two of the big three automakers as another necessary evil in a world of companies 'too big to fail'.

But stepping in to save the day was one thing (as Carter did with Chrysler in 1979); hoodwinking the public over the payback and profit potential of these companies is another.

First GM tried last year to snooker the taxpayers by trumpeting that it had paid back all its debt to the government early--which was a deception the mainstream media largely ignored (they were probably chasing down a Palin rumor). CEO Ed Whitacre, who presented the partial falsehood on TV and was named the permanent CEO in early 2010, eventually resigned shortly before the company's September IPO.

Today Obama was at an auto plant in Toledo heralding his gutsy auto call that saved the US manufacturing sector and made the following remark:
"Chrysler has repaid every dime and more it owes the American taxpayer," Obama said in his speech. "And, by the way, you paid it six years ahead of schedule."
Yet in the preceding paragraph of this CNN story the reporter stated:
The Treasury will sell its 6% stake, of 98,461 shares, to Fiat for $500 million. While the repayment closes the book on the bailout, taxpayers are still about $1.4 billion short of recouping all the money given to Chrysler in 2009 to keep it afloat during bankruptcy.
So, if we're still out 1.4 billion (or some figure) how are we repaid every penny and more? What about this--was it included in the 7+ billion payback? Or is the president simply rehearsing for the next episode of the Flim-flam Man? Maybe next he'll be throwing in some ginsu knives.

Meanwhile according to this Fiat now owns more than a 50 percent stake in the company. Doesn't that technically make Chrysler a foreign car company? Hopefully they won't start outsourcing.

But OK libs, Chrysler is still there, GM is still there, the union jobs and pensions were saved, and the trickle down disaster was averted. Fiat will start pushing tiny Euro-cars on the public here. There just wasn't much choice at the time--even Bush might have gone all socialist on it. But can we really say "mission accomplished" with such lackluster stock performances and generous union contract concessions that will need to be renegotiated?

And what if? History doesn't allow alternate versions so we'll never know what would have happened had they allowed Chrysler to go through a standard bankruptcy in 2009. Cars might now be rolling off the line under Fiat or another label coming from Chrysler factories purchased and re-tooled from a bankruptcy sale. They might be better. Or many of us might be in soup lines, hard to say.

Of course had the company gone belly up the unions would have been largely cut out of the deals. Under that scenario it's doubtful anyone would have been granted as much access as the big boss, who is now squawking that he didn't get enough, just like those whiny evil rich guys.

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