An economic comment and personal rant by Maynard
I want to get this off my chest.
This may seem odd for a “conservative” (we’re supposed to want gas-guzzling SUVs with gun racks), but I’m happy with a small, crummy car. I like efficiency, I hate waste and excess. Just get me there reliably.
I bought my first car in the 1970’s. Detroit was struggling, and I would have helped them if only they would meet me halfway. Alas, their product was big and clunky and untrustworthy. I looked to Japan, and ended up with a Datsun 210. It served me well.
I bought my second car in the 1990’s. I looked again to Detroit, and found that Detroit had listened. I drove home in a Saturn. It’s with me now.
I’m contemplating my third car in the 2010’s. Since my last purchase, Detroit has stumbled badly (and predictably), and has been rescued by Uncle Sugar (that is to say, by the wrecking team of Bush and Obama). Although “rescued” isn’t the word I would use, at least not with respect to Detroit. Detroit would have been “rescued” by the normal process of Chapter 11 bankruptcy. It was the politically powerful UAW that was rescued, at a cost of billions of taxpayer dollars.
The “rescue” irks me. Here I am, a college graduate doing advanced technical design work, and it costs less to hire me than to hire the UAW goons of the pre-bankruptcy era. The bloated UAW compensation was based upon political strength, not value. The UAW stranglehold was a large part of the reason Detroit choked.
I have nobody other than myself looking out for my retirement. No promises from a union, and only bankrupt Socialist Security promised by Uncle Sugar. Don’t get me started on Socialist Security. Uncle Sugar has taken his piece of every paycheck I’ve ever earned, promising to take care of me in my golden years; all along I’ve been watching him shovel the money he was supposedly “saving” on my behalf into the pockets of his cronies, knowing that the SS program would become insolvent when it came time to cut me a check. The whole system is a lie, a fraud; if anyone but the government perpetrated this insanity, they’d be in jail with Ponzi and Madoff. Don’t get me started.
Anyway, back to GM…As it happened, I didn’t hold any GM stock in my nest egg. But, in a similar vein, I did hold shares in AIG, which became worthless. (That is to say, I owned stock of another company that was “bailed out”, but this bailout saved cronies but did nothing for stockholders.) Okay, fair enough; that’s the risk we take. But what burns me are the lies and the outright theft. Romney, it was said, would have let Detroit to go bankrupt. But the fact is, GM did go bankrupt; did you know that? So it’s not as if Bush and Obama saved GM from bankruptcy, because bankruptcy happened. What Obama did was pour in tens of billions of dollars and push the UAW to the front of the line of creditors. In the end, bondholders and stockholders got screwed. The UAW was protected. The UAW, Obama said, represented “workers”. Stockholders and bondholders, they were “speculators”. So what Obama did was “fair”. Never mind that the “speculators” may have been honest folk who lost their own retirement funds. No, Obama frames a pleasing narrative, and that’s what sells the presidency.
Did I mention that Obama is a criminal? And that GM is an accessory? And that we are the victims?
(Look up the numbers. The 2008 UAW compensation packages cost the automakers well over $70 an hour. To be clear, less than half of that was the actual hourly compensation. The rest was benefits. But the distinction between “wages” and “benefits” is academic. In fact, benefits usually deliver compensation in a tax-advantaged way. So a benefit is often worth more than a straight salary; in fact it’s nothing more than government social micromanagement in the form of a tax loophole, but we don’t call it that because only “bad” people get tax loopholes. Bottom line: The GM hourly package cost the company $73.26 per hour. A 40-hour week would net a worker almost $3000. That’s serious money in my book. Of all the at-risk workers in America, these are the people Obama found especially worthy of rescue.)
Should I blame GM? Maybe that’s not fair. I mean, if Bush and Obama are willing to hand over the people’s money to GM and the UAW, why should GM and the UAW not take it? How could they resist? Could you?
These thoughts are on my mind as I survey the market. I look at the Chevy Sonic with some interest. And yet, there’s a very bad taste in my mouth.
And I’m thinking of Obama’s Energy Secretary, who aspires to raise the price of gas to $9 a gallon. And I’m thinking of the likelihood of a coming gas crunch, and the likelihood of rationing. Obama loves to address a crisis with controls and micromanagement.
Obama gave us the Volt, “The car that America had to build.” More accurately, the car that America was forced to build. Actually it looks like a neat car. Too bad it costs maybe $12,000 more than comparable cars, even after massive subsidies. I wouldn’t mind having a Volt, but to buy one makes no economic sense whatsoever. (To be accurate, the Volt project was in swing before Obama came to power, but Obama stamped his name on it and shoveled public money as fast as he could, and he’s still doing so.)
Maybe I need to look at a Japanese hybrid. That would better prepare me for Obama’s next move. Or maybe I should continue to nurse my aging Saturn along. It’s still hanging in there.
Had we sent Romney to Washington, my heart would have been softened with respect to GM. I really would like to root for the home team. If there was a new sheriff in town, a sheriff not at the beck and call of the special interests, I would have tilted towards home.
Alas, we did not send a new sheriff to town. We kept the old sheriff.
Why should I save Detroit in the 2010’s? Obama already saved Detroit, don’t you know? So Detroit doesn’t need me anymore. Who needs customers when you’ve got government?
On the other hand, maybe it was me that saved Detroit the second time, and not Obama. I mean, I’m the taxpayer. It’s my money that went into the pot. Obama shouldn’t get credit when his only act was to take it out of my pocket.
Did I mention that Obama is a criminal?
So the bottom line is, Obama pushes me away from Detroit, and it doesn’t matter, because Obama saved Detroit. Nobody needs me anymore. Or, to be more precise, they need me; what they no longer need is my voluntary cooperation.
That’s the world we’re building. Hope and change. Hope for cronies. Change for people who used to get value from Detroit but now just get robbed.
I don’t know what else to say. But as a postscript, this is worth mentioning: The “saving” of GM was multi-faceted. The man on the street thinks GM paid it back, because Obama said it was paid back. Another lie. Some loans were paid back. The loans were the tip of the iceberg. There were Energy Dept. grants, there were subsidies, there were tax credits. Part of the process was the government purchase of 500,000,000 shares of GM stock (about 26% of the company) for about $53 a share. Right now that stock sits at $27. The government’s unrealized loss on this transaction is about $12 billion at current prices. This number fluctuates, but the bottom line is the government will lose about half of its “investment” in GM.
Of course, the goal wasn’t to “invest”, it was to pump money into GM. And this was achieved. The reason the stock was held through the election was political: It will be a big embarrassment when the stock is finally unloaded, because then the loss becomes “real”. With the election behind us, the the sale will go forward and the loss will be realized. Now that there’s not a damn thing we can do about it.