Remember the right-wing vitriol over President Obama’s bailout of U.S. automakers? The spittle that flew while tea party critics flailed over the “big-government takeover,” and trying to decide whether that made the president a commie, a socialist or worse?Fast-forward to 2013 and here’s what you’ll find: Every dollar of TARP bailout money has been repaid, auto industry jobs are continuing to expand and Detroit carmakers are looking at another record year for sales.
Not so fast. I left these comments:
Opponents of the auto bailout were right then, and right now. Long-established bankruptcy law could have smoothly handled the GM bankruptcy. The GM bailout, like all of the bailouts, was politically motivated usurpation of the rule of law.
The money for the bailout was stolen from the American taxpayer. The GM bondholders got screwed. Better businessmen and investors were robbed of the chance to bid on the legitimate opportunities that normal, rule-of-law bankruptcy proceedings would have opened up. Unemployed individuals lost out on the chance to apply for new jobs that would have opened up under a restructured company(s). This wasn't essentially a federal bailout, but a coerced taxpayer crony bailout by thug politicians armed with rogue legal powers. By what right?
The GM bailout, and TARP itself, was a "success?" What a leap of faith. It would take omniscience to know that the industry and the economy wouldn't have been stronger without the bailouts. Both would have snapped back without the bailouts, and been stronger in the longer run. Bailout expectations are now more entrenched than ever, setting the stage for the next, bigger economic calamity.
The whole corrupt bailout fiasco was immoral. It was a big push toward the unholy socialist alliance of big business and big government called fascism. Considering that the 2008 calamity that allegedly necessitated the bailouts was caused and exacerbated by government policy to begin with, the massive stench of bipartisan Washington corruption is impossible for any person without blinders to miss.
In answer to an opposing correspondent who questioned whether I am "such an established expert on bankruptcy that you know that it could have handled the situation 'smoothly,'" and whether I myself am omniscient in "saying the companies would have been better off
without the bailouts," I wrote:
I didn't say the companies would have been better off. No one knows what the structural outcome of legitimate bankruptcy proceedings would have yielded. I said the industry and the economy would have been better off. It doesn't take an expert to understand that the suppression of productive individuals and the free flow of ideas under the weight of coercive political cronyism will suppress economic vitality.
The apparent "success" of the bailouts are a mirage. The long term consequences of the TARP/GM bailouts are yet to be felt. What thoughtless risks are now being taken by which big companies in the expectation that the federal government will bail them out? We'll know when the next "failure of the free market" collapses the economy.
Notes on the Sub-Prime Credit Crisis