Bye Bye Bailout, for Now (Addendum And Bump)

The Wall Street Journal:

WASHINGTON — A frantic, last-ditch attempt to forge a relief package for the auto industry collapsed in the U.S. Senate, dealing a giant blow to the immediate hopes of the Big Three.

Senate Majority Leader Harry Reid of Nevada suggested the $14 billion wouldn’t be revisited until January. “It’s over with,” he said.

The talks, which appeared close to a deal several times, broke off due to a sharp partisan dispute over the wages paid to workers at the manufacturing giants.

General Motors Corp. and Chrysler LLC, which have said they can’t last the year without federal aid, both hope the White House will now relent and allow the Treasury to provide emergency loans from the $700 billion Wall Street fund, people familiar with the matter said. Mr. Reid also urged that option.

Won’t last until the end of the year? Why? Hold ‘da phone. Bruce over at Q&O points up an article at Forbes:

It seems that the stench is finally getting some attention:

Why is Cerberus, one of the world’s richest private equity firms, begging for a bailout?

When I wrote about the bailout blunders of the auto industry two weeks ago, I thought the Big Three had most likely topped out on the political outrage meter. But that was before the shady story of Cerberus, the uber-connected private equity firm that owns Chrysler, reared its three ugly heads over the weekend.

Buried on the business page of The New York Times Saturday were the details of Detroit’s biggest snow job yet—literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush’s second Treasury secretary, is leading a who’s who of crony capitalists in a lobbying campaign for a taxpayer bailout to “salvage Cerberus’ investment in Chrysler.”

That’s right. Not to save the jobs of Chrysler employees or America’s disappearing manufacturing base, mind you, but to prevent “one of the world’s richest and most secretive private investment companies” from having to take a relatively modest financial hit and use some of its own capital to prop up the smallest of the major automakers.

There’s a lot more at the link, so RTWT.

Of course, the focus on Cerberus does not mean that Chrysler is singularly unworthy of taxpayer funds. Chrysler has a bountiful source of funds available to it, so it simply has no need to go begging for our money.

He also points to GM, syaing their busienss model is unsustainable:

GM is unworthy for the following reason [HT: HAHL]:

December 10, 2008 Stat of the Day

In 2007, Toyota sold 9.37 million vehicles.

In 2007, General Motors sold 9.37 million vehicles.

In 2007, Toyota made $17.1 billion.

In 2007, General Motors lost $38.7 billion.

(Source: Mises Blog)

That’s right. For the same volume of cars sold, GM managed to run into the red $38.7 Billion while Toyota earned over $17 Billion in profit.

And guess where that extra money problem comes from?

That’s right… Unions.

As I’ve said, no bailouts until the model changes by the Unions and their demands disappear.

The Republicans are actually standing up and being counted for the first time in years, and it’s good to see. More, they are doing so on an issue where the vast majority is on their side. The polling numbers are still saying the people figure a bailout is a bad idea. A little hard for Democrats to argue that the people don’t know what they’re talking about when they just handed the Democrats an election, but you watch… if the polling data comes up in conversation, someone somewhere’s going to make that argument.

Addendum:(Bit, an hour and a drive into work later)

Look again at that WSJ article:

The collapse of the deal raises the stakes for Chrysler and its majority owner, Cerberus Capital Management LP. Lawmakers had called for Cerberus to put more money into the company, but Cerberus maintains it can’t because the bylaw of its investment funds prevents it from putting more than a small percentage of its investors’ funds into any single investment.

Nice Dodge… you should pardon the pun.  The Corner’s Andy McCarthy notes this point and says:

So Chrysler’s owners say, “You’re nuts if you think we’re going to throw our money at our loser business model” — they sit on their own wallets, play chicken with their workers and creditors, and expect the idiot taxpayers to say, “No prob — we’ll pony up for you.” 

Indeed. But you know there’s an issue we’ve all been dancing around here, and I think it’s the one that really cuts to the heart of all of this.

The reason that we’re in this situation is the unfunded mandate. No, I’m serious about this. Consider it’s implications.

Usually, when you hear of an ‘unfunded mandate’ it’s a local town or city government bitching up a blue streak about money it’s being required to spend to satisfy some law or another from either the state or federal government. Usually, it’s some state program the state didn’t have money to cover, so the legislators decided to force the local governments to pay for their brain child.  What happens when the local governments have to raise taxes to pay for all this? They, and not the state, or federal goervenment, gets the blame for the spending.

Well, if you think on this for very long, that’s what’s been happening with American industry for too many years… and the leading edge of that has been US auto makers.  Requirements for (Insert some lawmakers supposedly good idea here… ) add in OSHA, add in the government backed union demands (Which in reality is what killed off this bailout bill.. the Unions, true to form, wouldn’t take a reasonable pay and bennie cut) and you have automakers on life support.

And of course we hear those in government and the unions blaming the car makers who have all these financial obligations imposed on them by the government, and the unions, when the very reason their current situation is unsustainable is because of the government and the unions. It’s really that simple. If the car companies deserve any blame it’s for going along with this nonsense for as long as they have. Of course it was that or go out of business. But because of government and unions, that’s what it’s come to.

Am I suggesting we go ahead with the bailout on this factor? No, because that will merely hide the problem for a little while. Government needs to back off on Regulations and from laws using the force of government to back Union demands. A bailout isn’t going to solve that issue.

What I’m suggesting is we need to publicly and properly identify the cause of this meltdown… Government and unions… and react accordingly.  Given who is running our government just now, how much of a chance do you suppose we have of seeing that happen?