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Many Misunderstand the Auto Bailout Legislation. What Sounds Like a Good Thing is Actually a Dangerous Fascist Alliance Between Elite Rulers and Corporate Fat Cats.

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Are you confused by the recent auto bailout legislation? If you are, you are like millions of others in the country.

This is not the first time the major manufacturers have turned to the American government for financial support.

And the way this round is shaping up, it isn’t likely to be the last.

In fact, this most recent round of financial support has a two-fold structure that provided funds in late 2008 along with a second cash injection in February 2009.

A March 31, 2009 deadline for proof of solvency was also added to the auto bailout legislation.

On that date the government will need to determine what the next course of action will be, and it can only go two ways. Continuing support or bankruptcy.

If, as many wonder, the major auto manufacturers are not well organized, profitable or capable of continuing in operations, why are they receiving so much money from the taxpayers?

Financial experts have gone on record insisting that if even one of the “Big Three” should fail, the entire automotive industry could go along with them.

This, of course, means entire communities would be devastated by the loss of the work and all associated businesses and income.

It also means that the auto bailout has created a heavy debt for future generations to carry.

So, the real question must be: what are the actual plans for the billions of dollars being committed to this rescue?

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Umm…

The real problem with the auto bailout legislation is that it has dumped roughly seventeen billion dollars into the coffers of GM and Chrysler (Ford Motors declined the funds), but without the benefits of any strong plans for recovery within the auto giant’s operations.

The disconcerting facts about major mismanagement brought to light at the Congressional hearings around the request for government funds from the Big Three in November and December of 2008 can serve as a good example of how the taxpayer’s monies might fare.

At the first round of hearings, the three CEOs of the companies arrived on individual corporate jets.

The estimated value of each of these aircraft stands at roughly $36 million. The cost to fly each of the men from Detroit to Washington, D.C. was approximately $20k.

This sort of display falls under the “too little, too late” category where demonstrations of practicality and competence are concerned.

One area of serious contention where the auto bailout is concerned, particularly after these hearings was whether or not the finger of blame pointed directly at company leadership, or if the auto unions should be included in the accusations as well.

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Consider the Numbers

Members of the press falsely stated that a Detroit auto worker takes in roughly $70 per hour in comparison to the Japanese auto worker’s $38 per hour.

Later this figure was determined to be grossly inaccurate, but the damage to the union worker’s position was all ready done.

The language of the original legislation asks both GM and Chrysler to have a “positive net present value” (NPV) by March 31, as well as proof of their return to stability.

Chrysler and GM should also write down at least two-thirds of their debt, and unions should accept wage cuts.

The Obama administration could decide to dismiss any of these clauses, or it could even call in the loans.

The auto bailout legislation said nothing about the suppliers who feed the manufacturers all of the parts so vital to their continuing operations.

In late March 2009, the administration hurriedly put together another $5 billion in bailout for the suppliers as well.

These funds will be funneled through GM and Chrysler, to be used where most effective. Clearly, someone has stopped thinking.

These companies could not manage themselves and now they are being allowed to determine which of the suppliers makes it through the economic downturn?

A quick look at the facts shows us that none of the restructuring that would actually benefit the industry is going to take place due to the bailout.

None of the idiotic executives whose collective judgment is so poor that they could not conceive of flying commercially, is being asked to step down. In fact they are being handed more power.

The bailout may save the auto industry over the short-term, but it is also preventing the market from functioning in the ways that could save the industry forever.

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