Can Chrysler Survive

Chrysler may not survive even with the bailout money. It could be absorbed by another company. Speculation was that GM might be interested in merger, but GM denied any interest in consolidation. One unique solution might be for Chrysler to become an employee-owned corporation which has proven fruitful for a steel company and airlines. I wonder if the new employee-owners if this happens will be as concerned with the generous pension and health care benefits of their retirees as they demanded the company be in its previous incarnation. Will there be a large labor pool where laid off employees still collect 80% or so of their salaries? Not if the new owners want to stay in business.

Bad Management Practices

Obama reveals himself once again today to be the enemy of the capitalist economic system that has allowed America to flourish. He said he supported the $17.4 billion bailout of GM and Chrysler but wanted them to reform "their bad management practices". This places the entire onus of the companies' difficulties on management. The executives running the car companies have certainly not been sterling, but Obama, who has absolved labor which commands a much higher salary and benefit package than their foreign-owned competitors and who have demanded and received (some might say extorted) pension and health care benefits which simply make the companies unsustainable, is not credible. Obama will be the greatest ally labor has ever had in the White House, but measures like the Card Check Bill which will end the secret ballot and create nothing but closed shops will be the death knell of industry and cripple private enterprise in the US. Open shop and right to work states will have no meaning and unemployment will soar. Walmart which has advanced prosperity and literally saved consumers billions will be forced to unionize which will engender enormous increased cost of operation which will have to be passed on to the customers. Obama's economic plan will take America from recession right into depression.

Job One Bankruptcy

President Bush is evidently directing Secretary of Treasury Paulson to forestall the collapse of the US automotive manufacturers and allow Obama to ultimately solve the problems of the Big Three with a socialistic rescue of the UAW. Our Republican President has embraced the socialist tactics of French or Swedish leadership. At least there are enough capitalist Republicans left in the Senate to have prevented a bailout that would not have solved the structural deficiencies of the companies with their overwhelming legacy costs. There is a widespread misconception that all the jobs would cease to exist if GM or Chrysler took bankruptcy. Under Chapter 11, many of the positions would have been preserved and the corporations could have negotiated new labor contracts that would make their operations more sustainable. Chrysler may have been absorbed by another vehicle manufacturer. The court(s), judge(s), and receiver would not simply have padlocked plants and denied hundreds of thousands their income. As it is now, Obama will, probably in conjunction with a car czar, act by fiat and direct these companies to produce enviro-friendly compacts that few people will want and large families will find impractical. Tariffs and trade barriers will be imposed to prevent the importation of more desirable foreign models. Older vehicles will be legislated off the roads by strict emission/pollution controls that will force drivers to buy the new gas-savers or into mass transit. Fossil fuels will be saved, but freedom will be sacrificed.

Corporate Jet Crash

ABC's gadfly imp Brian Ross pilloried auto executives for flying to Washington on corporate jets. He tried to question GM's Rick Wagoner as he departed the hearing chamber. GM employs hundreds of thousands in Michigan, Tennessee(Saturn), Kentucky(the Corvette plant), many other US states in fact, and many foreign countries. He could be summoned anywhere on earth at any time and can not be tied to airline schedules. He may use his powers of suasion in person to lobby Angela Merkel and other German leaders as GM, which has sold millions of cars under the Opal label, to extend GM a line of credit (as of now, GM is seeking $1 billion from Germany). A local talk show host joined the bashing bandwagon. This usually reliable conservative does not recognize the mainstream media is on a anti-corporate jihad trying to facilitate Obama's socialism. This is not Steve Gill's first departure from reason. I well remember his defense of Sam Howard who helped bankrupt Tennessee's attempt at universal health care. He knew Howard, a colleague in Republican administrations, was an honorable man despite drawing $50 million while failing to pay providers. I guess it is alright to drain the public trough as long as you are a close personal friend, and it's fine to play the class envy card when it advances your argument. AIG was also criticized by Ross as it has multiple jets still in use but is trying to sell two of them. Part of AIG's business model and a profit center is jet leasing. Just a short-time ago, reporters were doing stories on the good corporate jets have done, transporting needed transplant organs, sick patients, or relatives of injured troops such as a flight of a family to the military burn center in Texas to be with a critically wounded soldier. The free market is our only hope for positive change.

Car Crash I

Obama has not the slightest interest in advancing the interests of US auto companies. He and the Democrats are only concerned with the automotive workers union. The bailout they craft will be a sop to the UAW. If they wanted to help the companies, they would have advocated relaxing CAFE standards and eased other regulation. Democrats have in the event done the exact opposite. The legacy costs and capitulation to UAW demands have created a situation where the bailout will only forestall the reckoning, and either the Big Three will be absorbed by foreign auto makers with union contracts ended, socialized outright, or owned by the workers.