The mainstream media got it wrong. Again.

The December 19th capitulation by the President was not a rescue of the auto industry.

It was primarily a rescue of the United Auto Workers and the private hedge fund, Cerberus.

It might help to step back from this debacle and imagine you were going to start a manufacturing business from scratch.

• You decide to locate this business in Rust Belt northern venues, hostile to private capital and much more heavily taxed and regulated than both southern states and foreign climes.
• You negotiate with a labor cartel to enforce highly restrictive work rules, so that you lose all flexibility on cross training and initiative.
• Worst of all, you negotiate a labor package that works out to nearly $160,000 per year for unskilled labor in wages and benefits, more than twice what your competition will pay.
• And then you wait for Congress to tell you what kind of cars you can build, without regard to market demand.
• Congress of course will dictate that you manufacture cars guaranteed to lose money.

If you spot any flaws in this business model, than you will be as puzzled as I am as to why the taxpayer is being tasked to fund such a fiasco.

Now, take every flawed premise outlined above, and overlay it with ownership that is not derived from a broad cross section of investors, but sourced entirely from an elite hedge fund catering to the mega-rich.

Chrysler has had two chances to die a dignified death.

Once in 1979, before being rescued by the Feds. And last year, before Daimler found someone willing to take this dog off their hands.

How badly did Daimler want out? By the time you net out all of the post sale guarantees and commitments, Daimler paid out of pocket just to get this hot potato into someone else’s hands.

In their colossal hubris, Cerberus imagined that their vaunted financial engineering would compensate for their conspicuous lack of automotive engineering. This euphoria lasted for several weeks, until reality and gravity once again took hold.

Nothing wrong with that. Most hedge funds managed to lose money this past year. Then again, nobody sheds a tear when the uber-rich stumble and fall just like the rest of us.

Who would have thought that hedge funds would be able to queue up to go on the dole during hard times?

It just never occurred to them that Uncle Sugar would come to their rescue.

What do we call such a myopic and misguided policy? Compassionate Capitalism?

Let’s fight back in the only arena still available to us.

Just say no.

Don’t buy anything that GM or Chrysler makes.

Let the Feds shovel in money until these companies have totally flat-lined out, and remorse and regret finally force a change in policy.

If you have to buy domestic, buy from Ford, who did not get a handout.

It’s bad enough that the government is enabling such ignoble behavior.

We can only undo this madness by starving these miscreants out of the marketplace… into submission and ultimate oblivion.

Posted: 12|29|08 at 6:42 am. Filed under: politics, recession.
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