So GM’s CEO was fired. And now the Gov’t after billions of dollars thrown at GM, wants to begin bankruptcy proceeding? Couldn’t we have saved some money and allowed this to happen months ago? Or would that have been to injurious to the unions? Want to bet that the government run bankruptcy will protect the unions?
As for Detroit, the carmakers should have been in bankruptcy months ago. And it is a bankruptcy court that should have fired GM’s Wagoner and his board. Along with some serious pain for bondholders, bankruptcy would have broken the high-cost labor contracts with the UAW as well as carmaker contracts with dealers across the country. That’s what bankruptcy courts are for. They’re part of the free-market capitalist system…
And why isn’t Obama’s special auto task force ordering a replacement for Ron Gettelfinger, the UAW’s president? Weren’t its oversized pay and benefit packages a big part of the problem? Well, that’s never gonna happen. The election power of the union is too strong. But this does reveal the political nature of these government bailout operations.
Incidentally, most of the big bankers who met with President Obama in the White House last Friday want to pay back their TARP money, not take more of it. But the Treasury is conducting stress tests that could stop the TARP pay-downs and force the banks to take more taxpayer funds in return for even more federal control.
The big bankers say they are profitable. And with an upward-sloping Treasury yield curve and some mark-to-market accounting reform coming from the Financial Accounting Standards Board (FASB), the outlook for banks should be getting better, not worse. So why is the Treasury jamming more TARP money down bankers’ throats, especially after announcing a new plan to use private capital to clean up bank balance sheets and solve the toxic-asset problem?
It kinda sounds like the Treasury doesn’t want to let go of its new uber-regulator status.
Filed under: Economics |