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Cash for the Real Clunkers
By David Glenn Cox
"Blow, blow, thou winter wind! Thou art not so unkind as man's ingratitude" To drive the nail to its final rest, its head must be struck yet again and again. Few will see, so it’s the sound of the hammer that tells us that its course is true.
When GM and Chrysler were swamped in the financial meltdown last year, they came on bended knee beseeching Congress for aid and assistance. They quoted the Carter administration's bailout of Chrysler a generation before. The executives nodded and smiled, “See, see, this can work.”
But this bailout is very different from the Carter bailout; this bailout is all-inclusive, like a cruise ship to the Bahamas. Carter and Congress offered loans to help Chrysler rescue itself. Chrysler did not have loans forgiven, or union contracts voided, or environmental cleanups abated.
Democrats in the House and Senate denounced the idea of bankruptcy for GM and Chrysler. They understood that bankruptcy would cheat the creditors, short the employees and beat the taxman. Maybe you’re not a GM creditor or a GM employee, but you are the taxman. This is a dine and dash by GM and Chrysler and you are the waitress stuck with the tab!
The Republicans in the House and Senate called for GM and Chrysler to file for bankruptcy protection. They never saw a corporation they didn’t like nor a union that they did. At the same time they were lobbying for GM/ Chrysler’s bankruptcy, they were advocating against assistance for the domestic automakers and for assistance to foreign automakers. The videos of Republicans cheering Chicago not winning the Olympic games pale in comparison. These Republicans were cheering the demise of real American jobs and not temporary Olympic games jobs.
President Obama named a committee, his so-called car czars, to decide the nuts and bolts of the decision. How did the leader of the Democratic Party decide the issue? This Nigerian-born Marxist? He decided with the Republicans on all counts!
GM was allowed to pick and choose which assets it would keep and which it would be allowed to dump. The President went on television and claimed the decisions would save 30,000 jobs at Chrysler, but within a week Chrysler management broke the agreement and plants promised to be kept open were instead slated to be closed. GM’s toxic waste sites would be passed on to the taxpayers for cleanup. Thousands of dealerships would be closed to aid the automakers in lowering their overhead, even though the dealers were paying for the service.
The President Marxist Obama promised that when GM emerged from bankruptcy it would be a leaner and more competitive company, and by God he kept that promise! Then they rested, they had broken the union contracts, and shifted the burden of healthcare. They placed the burden of toxic cleanup on to the taxpayer, but then they asked, “What else can we do for you?”
“Well, you see, we’ve been selling and leasing thousands of those gas hogs for the last few years, thousands of Suburbans and Denalis and well, you see, when the lease is up they’re coming back to us and piling up on our used car lots. We can’t give the damn things away, hell we’d rather see them repossessed than to come back to us. Could you buy them from us please?”
You don’t have to buy them all, just enough to put a floor under the market. Three billion spent, two billion of it spent on foreign-built cars and getting those big American cars off the market. Even the critics praised the program, a shot in the arm for the economy, but they didn’t bother to go down to the dock to wave goodbye as the money sailed off to Asia. Nor did they realize that the secret beneficiary was GM, moving bad inventory off the road and floating the price of the remaining inventory. That three billion dollars would have been better spent on the economy if had been dropped from a helicopter.
Friday, Bank of America reported one billion dollars in losses from defaults on consumer loans. These defaulters are out of the consumer credit market, no more credit cards, no more car loans, no more home purchasers. They join the ranks of ten million home foreclosures who, too, are now out of the credit market. Citi Group is shuffling paper trying to avoid collapse, so when they ask, “What’s in your wallet?” remember that for millions of American families the answer is nothing!
So we’ve cleaned GM’s plate; we’ve eaten their vegetables and we’ve washed their dishes because GM was too big to be allowed to fail. How does GM repay the kindness shown to their corporate management?
BUPYEONG, Incheon ― "General Motors CEO Fritz Henderson said Thursday that the U.S. carmaker has been given approval by the board of directors to join its cash-strapped local affiliate's new rights offer, but failed to provide detailed figures and come up with additional solutions to keep the company's crucial hub in Asia afloat.
"The chief executive, visiting South Korea for the first time since GM got out of bankruptcy last summer, met with reporters a day after having talks with the state-run Korea Development Bank (KDB) ― GM Daewoo's main creditor ― on the struggling carmaker's future.
"GM Daewoo is seeking a 1-trillion-won ($855 million) loan after using up a $2-billion credit line.
“Despite this, the visiting executives of the U.S. auto giant stressed their intention to keep GM Daewoo afloat.
"'We, and the KDB as shareholder, have no intention of putting GM Daewoo into court receivership,' said GM's Executive Vice President Nick Reilly. He said that GM has resources around the world that can be 'used wisely' to invest in GM's businesses, including the operation in South Korea.”
Oh, really? That’s not what you told Congress when you put Pontiac in the grave, or sold off Hummer to the Chinese and bragged that it will save 3,000 jobs until 2011. That’s not saving jobs, that’s leasing them. Then, unable to find a buyer for Saturn, they will now throw it, the workers and the dealerships into the trash. But when it comes to rescuing jobs in South Korea, they’re Johnny on the spot. They’ve got plenty of money, so don’t worry; have another glass of Champagne!
"Do you think I am easier to be played on than a pipe?"
Chrysler as well, recipient of a free meal at government expense, is now teamed with its new owner Fiat to make its reentry into the American market. Polish up those resumés, boys and girls, I’m sure Chrysler will begin hiring again any day now. Last week they announced to suppliers to begin to gear up parts production for the new models.
Oct. 16 (Bloomberg) -- "Chrysler Group LLC, the U.S. automaker run by Fiat SpA, is asking suppliers to plan to make enough parts for more than 100,000 Fiat 500 small cars to be built in Mexico, people familiar with the matter said.
"Chrysler plans to sell three-fourths of the minicars in the U.S., Mexico and Canada and 25 percent in South America, said one of the people, who asked not to be named because the matter is private. The volume projections for the suppliers were for 104,000 to 120,000 vehicles annually."
So polish up that resume in Spanish. The clunkers are the companies themselves and not the cars they built. And for God sakes, would you please try and understand that Obama’s not a Marxist. He’s a Republican.
"If you prick us, do we not bleed? If you tickle us, do we not laugh? If you poison us, do we not die? And if you wrong us, shall we not revenge?" (Shakespeare)
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