NO BAILOUT FOR DETROIT
Jon Christian Ryter
November 14, 2008
Socialist President-elect Barack Hussein Obama who campaigned on message of "change," promising the downtrodden masses that he would be their Robin Hood—taking from the rich and giving to the working class. Instead, he has torn another page from the FDR playbook and is about to reincarnate sitting president George W. Bush into a 21st century Herbert Hoover, letting Bush take the blame for bailing out Detroit before he leaves office. This will allow Obama to take the socialist high ground and rail against Big Business Republicans, further damaging the GOP's chances of regaining seats in the midterm election of 2010.
Bush will try to cut a deal with Obama to save some of his executive decisions that he knows Obama will negate on January 20, 2009 during his first hour as the 44th President of the United States. Even though both Bush and Obama live in the world of the super elite where handshakes are more binding than signed contracts, the current president should realize that Obama is a consummate liar whose word is not his bond. Regardless what promises are made between the two in the sanctity and secrecy of the Oval Office, Obama will not keep any promises that contravenes the agenda he has planned for the first 100 days of his administration.
Obama, who let Sen. John McCain take the blame for the financial crisis that started with Obama's street advocacy in Chicago in 1992 when he strong-armed local banks to provide risky loans to minorities, threatening to brand the bankers as racists if they did not. Obama, as both a State Senator and a US Senator, worked with Fannie Mae executives to guarantee what would become known as "subprime loans," creating an industry that both the Clinton and Bush-43 Administrations latched onto in desperation as the US jobs-exports "industry" went into full swing as Detroit moved their plants from the American continent to China. Construction, not factory work, became the number one industry in the United States. Home construction created jobs. But newly-constructed homes needed to be sold.
It can honestly be said that Barack Hussein Obama, who strong-armed Illinois banks to provide risky mortgage loans to minority buyers who lacked credit standing, was instrumental in creating the subprime mortgage industry. The loans generated by Obama's street advocacy in the early 1990s were backed by Fannie Mae. Obama's advocacy in Illinois became the model for the subprime mortgage industry that was jump-started by Bill Clinton and continued, to its demise, under George W. Bush who ultimately got the blame for its collapse. The pitfall—loaning money to people with credit histories that show they will default on their loans—were concealed by the Congressional Black Caucus and the Democratic leadership which actually believes that people who refuse to work should be granted economic equality paid for by sweat equity of those who slave to provide a better life for their families.
On the top end of the handout scale, while Congress—which will not be back in town until next week—was on "election recess," the Democratic congressional leadership quietly met with Detroit automakers and agreed to funnel $25 billion of the $700 billion taxpayer-financed bank bailout to GM as General Motors stock plummeted to $3.36 per share.
Once the world's largest automaker, GM executives told House Speaker Nancy Pelosi [D-CA], House Majority Leader Steny Hoyer [D-MD], Fred Upton [R-MI] co-chairman of the Congressional Auto Caucus (the token Republican to make it a bipartisan effort) and other senior Democrats that they were going to have to lay off 5,500 workers almost immediately because the automaker said it feared they would run out of cash before the end of the year. (The bailout would give GM over $4.5 million per job saved.) And, to make the prospects even more dismal, GM warned that GM's "...future path is likely to be bankruptcy-like." (Perhaps GM could borrow from DiTech, their wholly-owned, cash-flush mortgage finance company.)
Even with the impassioned pleas of the Speaker of the House and Senate Majority Leader Harry Reid [D-NV] begging Bush to include the automaters in the Treasury's bailout program (which was conceived and enacted into law to stabilize banks which had gotten badly burned from the subprime mortgage business they were forced, by law, to underwrite), the Bush-43 Administration has resisted calls from the Democratic leadership to further indulge Ford, GM, and Chrysler. Bush-43 officials reminded the Democratic leadership that Detroit already received $25 billion in low-interest loans to "jump-start" the auto industry. What Bush should have given them was booster cables and a battery charger. (If you recall, GM and Ford both cried wolf in 2005 and again in 2006 because their profits slipped. GM claimed to have lost $10 billion because of rising healthcare costs. Screaming mass layouts both auto makers got top union officials to agree to wage cuts for current employees and both jettisoned healthcare coverage for retirees. When Vegas casino magnate Kirk Kerkorian bought 10% of GM's stock he commented that GM CEO Rick Wagoner had done a "...great job warehousing cash." When GM cried wolf the first and second time, they had over $50 billion in cash reserves.
That aside, let me pose a question. What would be your prospects of getting a loan from your friendly neighborhood bank if you walked in and told them you needed a loan because it was likely you were going to go bankrupt next year? I mean, if banks were still actually in the business of loaning money to ordinary citizens. Silly me. Instead of jumpstarting the economy with that $700 billion, the bailout money is being used by solvent banks to buy insolvent banks and get tax writeoffs that exceed the prices they paid for the failing banks. But then, back to my original question. The answer? Zero. Zip. Nada.
Let's take off the rose-colored glasses and look at this picture in stunning black and white. The US auto industry is failing because...well, it's no longer the US auto industry. It likes to call itself the American auto industry because it's an all-encompassing hemispheric "American" entity. The Big-3 has plants in Canada, Mexico and now, in South America. They claim their cars are all "American-made" when they are showcased in US dealerships because, being transnationalists, they no longer distinguish between the United States, Mexico and Canada—or Brazil and Argentina.
The world has become their global smorgasbord.
In an era of rising gas prices, Ford, GM and Chrysler failed to read the proverbial tea leaves. Failing to take a lesson from history when vehicle downsizing during gas crisis of the 1970s was the economic rule of thumb, Detroit (a euphorism for the auto industry even though almost no cars are made in the Motor City), did the opposite. It not only continued to build gas guzzling monster trucks and SUVs, it even made them bigger. As much as 80% of the inventories of Ford, GM and Dodge were extended cab pickup trucks and oversized SUVs. If you wanted a traditional passenger car without waiting six weeks for delivery you bought a Toyota, a Honda or a Hyundai—all of which are more "American" than the American car sitting in your driveway if that car was made in 1999 or later. In 2006 there were 7.6 million motor vehicles sold in the United States. Of those, 5.5 million—including Ford, Chrysler and GM—were imported under NAFTA regulations. What that means is that only 2.1 million of the vehicles that were purchased by US consumers were actually built in the United States by US labor. And, about 75% of those domestic cars and trucks were actually Japanese or Korean branded vehicles: Toyota, Honda and Hyundai.
So here's the $25 billion question. Why in the world should the US taxpayers bail out Detroit? There are virtually no jobs at stake because there are virtually no Ford, Chrysler or GM passenger cars or trucks made in the United States. If the Big-3 need a quick fix from government, they need to ask Beijing, Ottawa, Mexico City, Buenos Aires or Brasilia. If the governors in the states where what few Big-3 vehicles are built want to kick in State money to make Detroit's financial statements look better for investors by erasing the losses that stupid auto designers who decided to upsize their vehicles when the world was downsizing, caused, so be it. Those governors can answer to the voters in their States.
Subscribe to the NewsWithViews Daily News Alerts!
However, the American people—i.e., US citizens—should not be expected to bail out international companies who, collectively, have more money than those collective taxpayers. Unless, of course, there is a quid pro quo for the taxpayers. What quid pro quo? If GM wants a $25 billion bailout, here's the price: close down all manufacturing plants in China, Mexico, and Brazil and return those jobs to the United States. The same goes for Ford and Chrysler. Jobs for money. It sounds like a good idea to me.