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November 19, 2008
Bailing Out Mr. Potatoe Head
Yeah. That is a funny spelling of potato. It is former Vice President Dan Quayle's trademark. Well Mr. Quayle is at it again. He is global investing chief of Cerberus Capital Management which owns Chrysler. And of course Chrysler wants in on the proposed auto bail out. Let's assume that the powers in Washington -- the Bush team now, the Obama team soon -- deem GM too big to let fail. If so, it's also too big to be entrusted to the same people who have led it to its current, perilous state, and who are too tied to the past to create a different future.And what is one of GM's very big problems? Their Union. The current economic crisis didn't cause the meltdown in Detroit. The car companies started losing billions of dollars several years ago when the economy was healthy and car sales stood at near-record levels. They complained that they were unfairly stuck with enormous "legacy costs," but those didn't just happen. For decades, the United Auto Workers union stoutly defended gold-plated medical benefits that virtually no one else had. UAW workers and retirees had no deductibles, copays or other facts of life in these United States.Well the unions have a lot of clout with the incoming administration. Which may not be a good thing. And too big to fail? Hmmm. Too politically connected to fail. And since we are speaking of politics Chrysler is in the thick of it. As for Ford and Chrysler, if they want similar public assistance they should pay the same price. Wiping out existing shareholders would end the Ford family's control of Ford Motor. But keeping the family in the driver's seat wouldn't be an appropriate use of tax dollars. Nor is bailing out the principals of Cerberus, who include CEO Stephen Feinberg, Chairman John Snow, the former Treasury secretary, and global investing chief Dan Quayle, former vice president.So the owners of Chrysler are loaded up with paid for political connections. You know this whole deal from top to bottom looks like Chicago politics and real estate deals with Tony Rezko. I think I detect a pattern here. And it is not one that gives any comfort. The money goes to the auto companies just like it went to Tony Rezko's housing rehab company and after a while the properties rehabbed fail any way. With the owners walking off with some very handsome fees. Well like they say in Chicago ubi est? H/T Design News Cross Posted at Power and Control posted by Simon on 11.19.08 at 09:33 PM
Comments
One presumes the misspelling of 'Quayle' to be intentional... Bill Johnson · November 20, 2008 08:20 AM Why no. Thanks! fixed M. Simon · November 20, 2008 08:33 PM I'm reminded of the scene in Goodfellas where the restaurant owner becomes partners with Paulie and the wiseguys proceed to loot the place for all it's worth---selling stolen property out the backdoor, getting loans on the house's credit they never repay, etc.--until there's nothing left; credit is gone and there's not another cent they can wring out of it. Well, the unions have looted the auto companies for every cent they can squeeze out and now there's nothing left. Ben Lange · November 23, 2008 09:12 AM Post a comment
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One presumes the misspelling of 'Quayle' to be intentional...