Chrysler files for bankruptcy, about time?

This is probably the best news for Chrysler and long overdue. Propping a failed car company with taxpayer funding is utter nonsense and the Obama administration has wasted time and energy “fueling” GM and Ford. By filing for Chapter 11, Chrysler might have an opportunity to restructure and drop some of the dependencies that lead to the bankruptcy in the first place. The details are unclear as of now, but if Chrysler plans to exist and proceed further then it needs to completely shed itself of it”s union obligations. As of now, the United Auto Workers are holding Chrysler by the proverbial balls and until that hold is released then Chrysler or GM/Ford for that matter will squirm in place and howl in pain.

Unions got their teeth and power during the Great Depression armed with legislation stemming from FDR’s policies. Unions use strong arm tactics to leverage their demands and siphon profits out of the company’s coffers. Worse still, domestic companies in the United States under union control turn to international labor to fulfill their needs. We often hear about the evil US companies outsourcing their jobs to places like China, India, Mexico, etc – but why do you suppose that is? In order to escape the union clutches and their never ending appetite for retirement benefit, American companies turn to cheaper labor to get things done.

One argument for unions is that they are perfectly legal and provide the opportunity for people to organize – a protected right. However what many do not realize is that American unions operate similarly to organized crime outfits, but more powerful because they have union friendly legislation giving them certain rights. Specifically the right to demand union exclusivity within a certain locale. For instance if I start the RkD Car Company and UAW moves into my neighborhood demanding union membership from my employees the following things happen.

1) My employees will be pressured strongly to join and those that do not will experience intimidation.
2) I can’t call another auto union to provide competition and assuming one existed, UAW could actually sue me because they have a right to my company.

What once started as a mechanism to ensure equality and battle unfortunate byproducts of a thriving economy – like child labor, has quickly turned into a gigantic tumor within America. Some of the stories during the formation and power grabs of unions in America are so crazy, they border on the brink of fantasy.

Held hostage by our own government

I find some of the statements shocking in this story, seems like Chris Dodd and Nancy Pelosi can say or do anything without any consequences to speak of.

The senate in a 52-35 procedural vote smacked down this silly auto bailout, for those unaware – it means at least some democrats were involved. Yet it did not stop that thieving bastard Dodd from saying this:

“lot of people are going to get hurt by this.” and “It will be a long time before I forget these votes,” Dodd said. “Of all the filibusters that occurred this session, this one will have more economic impact.”

Good old fashioned fear mongering. If you can’t convince them on any rational basis to fork over billions of taxpayer’s money, then let’s just threaten them to death. Particularly his ‘i wont forget these’ retort, sounds like a betrayed wife crying to her husband. After all his involvement in Fannie and Freddie, how does this guy still have a job!?

Then there is always Pelosi, in her now reliable smack down mode.

“Senate Republicans’ refusal to support the bipartisan legislation passed by the House and negotiated in good faith with the White House, the Senate and the automakers is irresponsible, especially at a time of economic hardship. The consequences of the Senate Republicans’ failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry unless the president immediately directs Secretary Paulson to explore other short-term financial assistance options, including TARP and those available to the Federal Reserve. That is the only viable option available at this time.”

Sounds awful lot like the rhetoric coming from the UAW bosses, it’s nice to know that Pelosi’s allegiance lies not with the people she represents, but with the labor unions that have driven the American car industry into the ground.

Our government has already caused irreversible, unmeasurable and devastating damage with the 700 billion bailout. The effects will be with us for generations and all, but a few SANE people in Washington recognize this fact. I understand the difficulty in explaining why we should let financial companies that employ millions of people, go out of business – it’s MUCH easier to justify the death of a manufacturing sector that employs a few hundred thousand. A sector that is not critical to the flow of credit, a sector not responsible for creating and maintaining small businesses and more importantly a sector that has direct competition. No more GM? No more Ford? Fine, we will drive Hondas and Toyotas. No more AIG? That one is a bit tougher to swallow.

The entire concept is so ludicrous that it would be funny! Worst of all of course is that the House is already on-board and our messiah-dear-leader-president-elect-the-great-obama has already expressed a desire to help the auto companies.
I am disgusted with the people who run this country – DISGUSTED.

Sick market, sick congress

Two quick points.

1) Democrats asked the auto industry to formulate a plan and get back to congress by December 2nd. You know my position on the matter and I find it sickening to see this kind of government involvement.

Let the free market work! If people are not buying American cars, then it is a clear signal that these American cars are over priced. The price information being telegraphed from the auto industry is being rejected by the population, the answer is to adjust the price – not grovel to Congress. Absolutely appalling. Is there anyone out there that thinks we should bail out the auto industry? Let me know and if so, explain to me why we should violate free market principles. Do not use the financial bailout as a benchmark, because according to Wall St. the financial bailout did nothing to stem our declines.

2) Stock market is extremely weak. Today’s bounce attempt should be shorted for short term traders, because they underlying weakness is glaring. Energy shares are leading while small caps are in the red. This is a perfect recipe for Dow 6,900-7,000. This is a magnet support line and will be hit within the next few days.

Key sector overview as of 1:40pm, Friday November 21st.
This is the opposite of what you want to see on a bounce.

XLE
Energy
41.42
+1.46
+3.65%
2008-11-21, 13:22ET
XLF
Financial
9.00
-0.39
-4.15%
2008-11-21, 13:22ET
XLI
Industrial
19.49
-0.51
-2.55%
2008-11-21, 13:22ET

Congress debates the auto bailout.

Today congress met to discuss whether or not to bailout the auto industry or rather the Big 3. As mentioned in a previous post, the BIG 3 are controlled by the UAW and they are running the show in Michigan. Specifically their wages and benefits twice exceed that of the competitors.

However what I find most shocking is the very essence of discussing a non-existent issue. While I can understand the job loss and suffering that will inevitably occur with the collapse of these three companies, since when is unemployment or saving of ANY industry the responsibility of taxpayers? In fact, calling this an auto bailout is somewhat of an injustice, because only three companies are facing bankruptcy, while plenty of companies in America that manufacture automobiles and not facing such dire straits.

Therefore the claim that the UAW president made alleging that the economy has forced the three companies to declare bankruptcy does not hold water, otherwise we would expect every auto company to follow suit.

Cclaims that the financial companies received a bailout and therefore other industries are entitled, are now somewhat expected. One of the dangers that the initial bailout posed was to set a dangerous precedent whereby large companies can threaten the government with economic devastation. Still, one cannot ignore the ludicrous nature of comparing sub-par automobiles to an entire banking system. Whereas the latter fails and the entire country could potentially seize up in an economic avalanche, the former is but a nuisance and primarily effects employees of the failing corporations.

While I am pleased to see some conservative Republicans point out that this bailout will be akin to flushing money down the toilet, the notion that Obama’s white house will appeal to the union workers and approve the bailout – is sickening.

On this blog I intend to monitor Obama’s policies and actions very closely, there will be a separate page of his failures and accomplishments. If he facilitates this bailout, then we as Americans should hold this egregious act again him for being profoundly un-American and pandering to his constituency.