auto bailouts (2)

Health Care Czar David Berwick ,

"Obamacare necessarily redistibutive"

Following new Obamacare head David Berwicks' recent admission that the program was "redistributive" and would necessitate rationing; and the funding of abortions in New Mexico and Pennsylvania (the very first two Obamacare operations in existence), one might wonder just how much gullibility still exists in the American public. Apparently an enormous amount since at least 38% of Americans still say that new stimulus programs are necessary to save the country.

Loyal readers of Rajjpuut’s Folly are familiar with the “Broken Window Parable” which is Chapter #2 from Henry Hazlitt’s powerful masterpiece “Economics in One Lesson.” The whole book is online absolutely free . . . however, for those of you at least as lazy as Rajjpuut and interested in the “Reader’s Digest” version . . . .

Chapter 2, above, is an ultra brief MUST-read for all thinking human beings

as far as the “one lesson,” Hazlitt says “Bad economists see only what immediately strikes the eye; the good economist looks well beyond the obvious. Bad economists see only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences (the ‘unintended consequences’). Bad economists see only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.”

Hazlitt, Rajjpuut believes, was a wonderful and very insightful man but far, far too nice. Rajjpuut’s Corollary to the “one lesson” is this: Irrationally self-interested economists and/or politicians only show you the obvious, direct benefit of their policies on one narrow group of people while deliberately ignoring the less visible, direct and indirect effects upon all taxpayers and upon the economy as a whole.

In any case, 90% of all the chicanery occurs and 99% of all economic problems arise from the deliberate political intrigue known as “wealth redistribution.” As an A#1 bad example, let’s look at the auto company bailouts engineered supposedly for the benefit of General Motors (GM) and Chrysler . . . .

Roughly $100 Billion was set aside by the U.S. government for the use of GM and Chrysler. $65 Billion has been used thus far, $50 Billion by GM and $15 Billion by Chrysler. Thus far almost $15 Billion of that $65 Billion total has been repaid. You might recall GM making a big deal of repaying $8.1 Billion and acting like they’d come all the way back to profitability . . . far from it, at that moment, GM still owed $45.3 Billion to the U.S. and $8.1 Billion to Canada. As a result of the bailout shenanigans, the U.S. government owns 61% of GM, Canada roughly 12% and the United Auto Workers Union (UAW) owns a bit more than 25% of the company. Instead of a normal bankruptcy judge, Barack Obama, defying 223 years of United States bankruptcy law orchestrated and choreographed the GM and Chrysler takeovers.

In the Obama dog and pony bankruptcy process real creditors were shunted aside with no relief and both these creditors’ money and huge amounts of taxpayer dollars went to giving the UAW partial ownership of the two failed auto companies. Need one be reminded that the UAW and other unions were the very foundation of Barack Obama’s financial support in 2008? Not only Obama’s sins need to be mentioned here . . . the United States Supreme Court refused to hear the creditors’ case, which should have yielded an “UNCONSTITUTIONAL!” slam dunk against every single action of Obama.

The $65 Billion in auto bailouts amounted to roughly $14,000 for each GM or Chrysler car. Unmentioned in all this is that the strongest American auto company, Ford which got NO bailout, has been faced with competing with that $14,000 largesse for well over a year now. Ford, the most successful American auto company was handicapped mightily and immediately became the underdog in the American Auto industry. The fact that Ford is now in a close second place, is living testament as to just how poorly Chrysler and GM have been managed since the bailouts. Chrysler may, someday soon, be standing in line with its hand out hoping for bailout #3 (1979 was the first).

The infamous “Cash for Clunkers” program was the poster child for government interference in the private sector. Although lauded as a “remarkable and totally unmitigated success” by the president and all others in the Obama administration and purportedly only going to cost $4,000 per car . . . the fact is that CfC cost the taxpayers $24, 000 per car on top of the $14,000 per automobile from the bailout itself. By some economists’ calculation, however, CfC might have actually cost $45,000 per car!

So, pulling no punches, the theft of the taxpayers’ money A) has been renamed wealth redistribution which has B) put Ford Motor Company behind the 8-ball, C) given some of Obama’s biggest supporters, the UAW, a 25% ownership in two auto companies and D) the UAW now has lots of taxpayer funds to donate to Obama’s campaigning and E) a very few auto-buyers a great new car deal at F) the expense of keeping the United States deeply in recession and taxpayers facing monstrous deficits and national debt. More importantly, a much too large sector of the public has fallen for virtually every single one of the Obama administration’s lies and sees not only Cash for Clunkers but also the auto bailout itself as “wildly successful.” With truth like that, who needs enemies?

Barack Obama has returned to promoting his five-million “green-tech jobs” program. In Spain, where they went from 3% unemployment in 1997 to 21% unemployment today after taking up just such a challenge. The theft of $667,000 worth of Spanish taxpayers’ money was necessary to subsidize each of their green jobs. Unfortunately only 10% of those jobs proved permanent while each one cost 2.2 jobs from the real economy. Translated to Barack Obama’s promise (threat?) to create five million green jobs would mean 11 million real jobs would be lost; only 500,000 permanent green jobs would be created: a 22/1 ratio of failure. Since Spanish unemployment rose 18% during the ensuing 12 years, what might Obama’s theft do to America? Help a lot of Democrats subsidize their green dreams? Help America to 28% unemployment?

Ya’all live long, strong and ornery,


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Taxpayers paid GM and Chrysler $14,000 per car$$, but during “Cash for Clunkers” GM, Ford and Chrysler received an additional $24,000 per sale from the taxpayers.

GM and Chrysler Still

More Than $50 Billion in the Hole

The numbers are terrible but many Americans seem to have forgotten the simplest facts about the takeover of the auto industry and are instead buying into the administration’s line that “He’s saved the U.S. auto industry.” Imagine being able to sell a car while knowing that the first $14,000 of underlying costs were POOF! Magically gone . . . How in hell, can these two auto companies continue to sputter and cough in recovery?

To date the facts are these: Chrysler received $15 Billion in loans; GM received $50 Billion in loans of that $65 Billion total in auto industry goals to-date $15 Billion has been repaid by GM and Chrysler . . . neither company looks particularly healthy and, indeed, Chrysler seems to be on the verge of collapse.

By the way, Chrysler received an auto bailout in 1979 in addition to the 2008 bailout both companies were given. Is there a simple lesson here? You think? Meanwhile, the only viable American auto company, Ford Motors, finds itself between the sword and the wall. On the one hand Ford like all of America is mired in a recessionary environment in which major purchases like cars and houses are not popular decisions. On the other hand that $14,000 safety net below each GM and Chrysler car is a tough nut for a company that received no bailouts to overcome. In short, the American auto industry is facing a crucial year as the 2011 models emerge onto the lots. The likelihood is that Chrysler goes under despite all the government interference and Ford, competing against the two bailed-out entities is also threatened.

One thing, Barack Obama doesn’t want you to think about is this: his “Cash for Clunkers” program achieved the brief pinnacle in sales for the three American auto makers. But what was the cost? Without going into the economics of unnecessarily removing many viable automobiles from the nation’s roads, the cost of Cash for Clunkers (CFC) came to at least $24,000** per car. So between the bailouts and Cash for Clunkers, GM and Chrysler during that two-month period had $38,000 paid them by the government for each car sold. Obama and his people, naturally enough, called “CFC, a wildly successful program.” Much akin to saying the President “saved us^^ from Depression,” it sounds like someone is seriously stretching the truth. Rajjpuut remains highly UNimpressed by the auto bailout and so should any thinking American, like you!

Ya’ll live long, strong and ornery,


$$ Actually, by orchestrating and manipulating the two bankruptcies, Barack Obama personally diverted huge amounts of taxpayer money into the United Auto Workers Union (UAW) by giving them a large chunk of ownership of the two ailing auto makers.


^^ History will show that Obama’s policies like those of FDR (which extended the dying July, 1933, recession about 8.5 unnecessary years) have done just the opposite: guaranteed a depression
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