Buy American - Buy Toyota

I bought a used Toyota Tundra awhile back...

My family had outgrown the old Ranger we used to go camping in, and going camping in a minivan just ain’t right.  We took the Tundra camping up in the mountains last week, and it hauled all our gear while handling the roughest 4 wheel drive trails.  It also serves as a vehicle the whole family can go to church in without a fight breaking out because somebody touched somebody (those with kids will understand.)

A smartass liberal at work chided me, since I’ve always been a Buy American guy, but I countered that buying a Toyota is buying American. My truck was made in Texas by American workers, and Toyota took not one dime of bailout money. Toyota did clean up on the cash for clunkers debacle, through no fault of their own, but by the free choice exercised by American consumers.

Your federal government…

…gave Chrysler’s secured creditors, who would have had priority in a normal bankruptcy, 29 cents on the dollar. Chrysler’s unions, on the other hand, got more than 40 cents, even though they are equivalent to low-priority lenders. This made a mockery of longstanding bankruptcy law, something that will make credit markets wary of lending to political sacred cows in the future. (Shikha Dalmia – Driving to Delusionville)  

Obama also favored unionized workers over non-unionized ones:

All United Auto Workers retirees at Delphi, GM’s auto supplier, got 100 percent of their pension and retirement benefits. But 21,000 nonunion, salaried employees lost up to 70 percent of their pensions, and all of their life and health insurance.

Shikha Dalmia goes on to say that GM and Chrysler shirked the opportunity to lower labor costs. At $58/hour, they are still higher than relatively high Toyota, but can’t touch Toyota’s quality and reliability standards. Worse, they come nowhere close to $40/hour Hyunai and Kia. She concludes,

“The bailout prepared GM and Chrysler to compete with the industry leaders of yesterday, not tomorrow.”

Finally, the bailout of GM and Chrysler rewarded failure and punished prudence and fiscal discipline:

By bailing out GM, the administration rewarded its recklessness and penalized Ford’s prudence. Every company that feels it is too big to fail, or is a national icon or major regional employer, will wonder whether it makes more business sense to save for a rainy day or simply hold out for taxpayer assistance.

And contrary to the propagandistic Obamablather, GM still owes you and me over $13 billion, twice that if you figure in generous tax breaks. Buy a vehicle from a car company that shamelessly put such a permanent dent in the US Treasury? That would be downright un-American. I’ll stick to my Fords and Toyotas.

Source for all quotes: 
Shikha Dalmia – Driving to Delusionville

Banker's Bailout

How do we fix the banks?  Set them free 

 I normally frown upon blog posts consisting of large chunks of direct quotes, but John Tamney has hit a home run.

Deregulation and free markets didn't wreck the world economy--Government protections did. Bad banksters and the governments who love them are the Bonnie and Clyde of global monetary scams.
 
Governments have shielded banking from market forces, and we're all now paying the price:  

it's apparent from the myriad bailouts of banks within it in modern times that, absent government protection, the financial world would look quite a bit different. Put simply, political unwillingness to apply market forces to the business of finance means that its long-term health and dynamism is in fact reduced.

Government intervention distorts markets and creates perverse incentives

The better, more realistic, explanation for the paralyzed credit situation in the aftermath of Lehman actually goes back to the spring of 2008. It was then that the Fed and Treasury, fearing "contagion" relating to Bear's demise, saved its creditors through a deal in which the Fed took Bear's debased assets on its balance sheet.

Then J.P. Morgan was offered the still-functioning bank on the relative cheap, its downside covered by the federal government. As Wallison put it, "I see the market meltdown that followed the Lehman bankruptcy as a result of the moral hazard created by the rescue of Bear Stearns six months before."

Your government took the toxic assets off of the banksters's accounts and put them on YOURS

Other accounts of the time in question support Wallison's view. The fact that the federal government subsidized J.P. Morgan's acquisition of Bear Stearns created an expectation among healthy financial institutions that they too should have their downside protected in snapping up insolvent firms. 

As Andrew Ross Sorkin put it in his 2009 book, Too Big To Fail, acquirers wanted "Jamie" (J.P. Morgan CEO Jamie Dimon) deals whereby the government would guarantee the most toxic assets of companies being purchased. Absent the subsidized buyout of Bear, there would have been no presumption of a government role as savior of any financial institutions, thus a more realistically priced market for banks in trouble.

What the episode teaches us is that while markets can ably prepare for and weather all manner of calamities, what they handle badly are opaque government policy stances whose changing nature causes information vacuums and panics like that of October 2008.

I'd love to see the US Government finally give free market capitalism a try... Source for all Quotes:  Global Economy Held Hostage by Lehman

If the Government Doesn't Stop Helping, Our Economy Will Never Improve

In Washington, success is measured by how much money is wasted

Liberals loudly trumpet the success of the Cash for Clunkers program, pointing to the three-billion-dollar handout as a successful government program.  In a nation where people are still falling for the Nigerian bank e-mail scam and prostituting their moronic lives to The Jerry Springer Show for a night in a luxury hotel, getting them to take free money is not much of an accomplishment.

Success!  Government got people to take free money!

What our governmental Department of Unintended Consequences ended up doing was destroying hundreds of thousands of serviceable cars, driving up the average price of a used car 10-30%.  Productive human beings create wealth.  Government destroys it.  Literally. 

Now Obama and his hallelujah chorus in the press are telling us how he saved the US Auto industry.  Actually, he saved Chrysler and GM from going through the painful restructuring needed to compete in the 21st century, but who cares?  And as usual, his math is off by billions.

GM still owes We The Taxpayer $24 billion, when special tax breaks are factored in, and Chrysler is in hock to us for about $5 billion.

God save us from more democrat "successes"

Worse than the loss to taxpayers was the "le etat cest moi" way Obama did it.  Not by the rule of law via bankruptcy court, but by kingly fiat:

As an exercise in what Zywicki calls  "state capitalism," the bailout was a procedural horror show. It was probably illegal to funnel TARP funds into the companies; they may not have been car companies worthy of the name any longer, but they certainly weren't "financial institutions." 

Chrysler's creditors, who held secured bonds and were guaranteed repayment first, got forced into taking 29 cents on the dollar. In contrast, the United Auto Workers' pension plan got 40 cents on the dollar. The creditors of both Chrysler and GM were denied their usual right to have a say in the reorganizations. (Rich Lowry)

Even more outrageous, Chrysler was a privately-held company, but the owners refused to put more of their own money in to save the company.  Would you invest in such a company?  Add in interest-free loans, and the government strong-arming investors into taking a 70% haircut, and you see just how close to Zimbabwe we really are.