Thursday, April 19, 2012

Angry Lib

There was an Angry Liberal, we'll call him Al, on Hannity today praising the auto bailouts, screaming about the "truth" that this was a great investment for America that saved millions, (yes he said millions), of jobs.  Sean was trying to explain how bankruptcies work but the guy would have none of it, he had his facts and wasn't about to hear anything else. 

Of course his facts were false beginning with the "fact" that the bailout money had been paid back.  No doubt Al was taken in by former GM chief executive Edward Whitacre's statement that "G.M. is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse,”   G.M had taken $6.7 billion in loans to the U.S. and supposedly paid back $4.7 billion.  That's still short $2 billion by my math but let's overlook that detail for a moment.  The $4.7 billion that G.M. paid back was taken from a line of credit G.M. had with the Troubled Asset Relief Program, (T.A.R.P.), so in effect they borrowed money from taxpayers to pay the taxpayers.

I haven't forgotten what happened to Chrysler bond holders in the bailout either, many of whom were average Americans with I.R.A.s or 401Ks.  Bondholders were forced to take 29 cents on the dollar, a 71% loss on their bonds but the United Auto Workers got equity in the company and Chrysler still has to pay the full amount owed to the UAW's Retiree Medical Benefit's Trust.  That's ironic since what put these companies into bankruptcy in the first place was the huge union pensions that they are encumbered with.

What Sean didn't get a chance to tell Al was that bankruptcy courts exist to enable a company to restructure its debts and other obligations fairly.  When Obama stepped in and screwed bondholders while the UAW made out like the bandits they are he was doing what his administration does best, picking winners and loosers then saying that capitalism just doesn't work. 

BTW Al the CBO estimates that the total loss from the bailout will end up being $20 billion.  Only a liberal could consider that a good investment.  Had we done nothing other businesses would have come in and picked up these companies cheap, after they had ridden themselves of the unsustainable burdens imposed by union contracts agreed to by CEOs who knew they wouldn't be around when the bill came due.  FIAT wound up owning Chrysler anyway.

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