THE UNCONSTITUTIONAL AUTO BAILOUT

Congress set a nasty precedent when after passing the massive stimulus bill without anyone reading it, they realized they had authorized those evildoers at AIG to receive bonus's. Much political grandstanding ensued. The bonus money in question was part of the employment contracts that were already in effect between employee and employer.

Whether you agree or not with the folks at AIG getting bonus's, what should scare the heck out of you is that Congress has now decided they have to power to rescind private contracts Keep that in the back of your mind for now. Now lets have a look at the farce we know as the government takeover of General Motors, and the selling of Chrysler.

As the old saying goes, follow the money. It always seems to lead to the head rats. The rat in this case is Cerberus. Most folks have never heard of them, yet they are the big winners in this entire automotive restructuring program. I also think it is quite ironic that the company is named after the 3 headed dog who guards the gates of hell.

The CEO of Cerberus is John Snow. The name probably means nothing to you. Mr Snow was the Secretary of Treasury under George Bush. Although he had some questionable issues involving investments in Fanny Mae and Freddie Mack, and resigned in 2006.

One of the board members of Cerberus is Dan Quayle, our former Vice President and master speller.

But what does this have to do with the Auto Industry? As it happens, quite a lot.

Cerberus is one of the biggest hedge fund managers in the world. They owned most of Chrysler, and a 51% stake of GMAC, the financial arm of General Motors. Senator Bob Corker brought this up in the hearings with the Auto CEO's, and asked why the taxpayer should bail out Chrysler when the parent company refused to do so. A good question that was never answered. Senator Corker was for a structured bankruptcy instead of government bailouts. He was politely pushed aside.

Bankruptcy is not an option became the congressional battle cry. No one would buy cars from a bankrupt company became the motto. GM was simply too big to let fail, and the economy would be devastated by the ensuing layoff's that would come with a bankruptcy.

Here we are billions of dollars later. And what has been accomplished? Well, to start with, Cerberus has received billions in tax payer money to get out of Chrysler. They still own a major percentage of GMAC, and GMAC is now the company that will loan you money in the future if you purchase a Chrysler. That certainly worked out well for Cerberus.

The investors in both GM and Chrysler have been essentially wiped out. Forced to take pennies on the dollar. President Obama even went on TV to aim his wrath at them, calling them all sorts of names, saying everyone was willing to sacrifice except the evil greedy hedge funds. Truth be told, those hedge funds were the retirement accounts and pension funds of a whole lot of Americans. Under a regular bankruptcy they would have had first crack to try to re-coop their loses. Under the government plan they get about 5 cents on the dollar, and strong armed to to take it.

The UAW, now here is the kicker. They now are somehow now part owners in the companies, with tax payer assured retirement. How the only group with no money invested became part owners is beyond me.

Under the Constitution, the government is not allowed to favor one creditor over another. Yet here is another example of how the government is doing things it's own way, in clear violation of the Constitution.


And that brings us to today. Under the new government bankruptcy, thousands of jobs will still be lost. I doubt if our economy will handle it any better than it would have last December.

President Obama says he does not want to run GM. However, that flies in the face of the fact the government set up a new company specifically to run their interest in GM. Also he has placed his hand picked people on the board of Directors, and put an oversight committee in charge of this whole deal, along with a new Car Czar.

Add the dilemma of the dealers into all of this. They are being stripped of their dealerships, which are being awarded to other folks. Many of these dealerships have owned their franchise outright for decades. They are now stuck with product they were forced to buy, which they cannot sell. Some were required to spend millions of their own dollars to remodel the facilities last year by the Auto companies. They are now going to lose everything.

So lets recap this fiasco. The winners and losers:

Cerberus made billions, the UAW gets part ownership and tax payer backed retirement.

The original investors who gave the companies the working capitol have been effectively wiped out. The dealership owners who invested their own money, and employee's are going to be wiped out. Factories will still close, destroying thousands of families and communities. The Constitution has again been circumvented for a purely political purpose.

The American people are the losers.