So it’s not really a surprise to any of us, but it turns out that General Motors (GM) and Chrysler—’saved’ from the brink by billions upon billions of taxpayer dollars that we’ll never see again—still aren’t solvent and still have no rational plan for recovery. Late yesterday, we found out that GM chief executive Rick Wagoner was being forced out the door eight years too late and today we find out that President Barack Obama’s (D) administration has given GM and Chrysler’s restructuring efforts a failing grade.
Call me crazy, but wasn’t the $13.4 billion auto bailout by President George W. Bush enough? Did nobody see the writing on the wall when they came crawling back to Congress two months later for $21.6 billion? Am I the only one sitting here thinking that a good, old-fashioned Chapter 11 bankruptcy reorganization (or Chapter 7 liquidation) would be a heck of a lot better than spending billions of dollars to prop up these empty shells of their former selves?
Obama is on the verge of setting a deadline—60 days for GM, 30 for Chrysler—for the two organizations to straighten themselves out and show they can succeed . . . which worked so well when they were given similar deadlines after the first bailout in December. Of course, the federal government (and, thus, us) will be funding their existence over this period. If King Obama and Prince Treasury Secretary Timothy Geithner are satisfied with the two companies’ progress at the end of the 30/60 days, the companies will receive yet another many-billion-dollar ‘investment’ from taxpayers’ pockets.
I seem to recall predicting this back when the companies came back to the trough for $21.6 billion:
“Let me write the next part of the story for our legislators and our new president: in six months, they’ll have burned through the $21.6 billion and they’ll come back to you asking for $43.2 billion. Six months after that, they’ll come back desperately needing $25.4 billion. Shall I go on?”
Sometimes I hate being right. I weep for the republic.