I have been following what has been happening in the Auto industry. The government is basically taking over the auto industry through the Unions and doing away with the property rights of the secured lenders in the Chrysler case. I was reading 'Road Ahead; America's Creeping Revolution',pg 63, and the book showed how the socialist took over England mainly through unions. The same thing is happening now in America.
The main reason for the American Auto industry(AA) going bankrupt was the unions. They created a lot of unsustainable cost: job banks, paying people for not working, and health care and pensions etc--much like a socialist government. The unions were made possible by government law; without the support of the government unions would not be possible. Of course, the down turn in the economy had a big part in the AA being in the trouble they are in, but foreign Auto companies are not in the same level of trouble, so this is not the only reason for the AA being where they are.
The unions destroyed the AA. Then the government comes along and says they are too big to fail and they must be supported with tax payer money--let the free market work and let them go bankrupt.(All of this money was supposed to prevent the AA from going into bankruptcy but now they are going in to it anyways. The money was used by the government to put a foot in the door.) Once the AA accepts money from the government, the AA becomes controlled by the government. As it stands today the government will have a 70% and over 50% ownership stake in GM and Chrysler respectively and the unions will have a large ownership stake. The government will now indirectly own and control a major industry and will be telling the car companies what kinds of cars to make and what kind of cars we will drive through the CAFE standards.
Basically the government sidestep property rights of the secured lenders in the Chrysler case and favored the unions. Secured lenders, people who gave loans to the company, are guaranteed to get their money back when a company goes bankrupt from the hard assets that a company owns or they can have a large ownership stake in the company.(The link gives a better explanation) The unions gave loans to the Chrysler but their bonds, loans, were not secured, that means they are not guaranteed to get their money back when a company goes into bankruptcy. Well the government stepped in and did away with the rights of the secured lenders and now they are getting, in the case of the four banks holding 70 percent of Chrysler's $6.9 billion secured debt agreed to take $2 billion in cash. But the unions will be getting more of their money back and a larger ownership stake in the company while the secured lenders will be getting back something like 30 cents on the dollar and a much smaller ownership in the company. The secured lenders were going to sue the government but the White House threatened to ruin them if they persisted with the law suit. So here we have a thug President using his powers to side step the law and coerce people. This is dangerous. Look at the Russian revolution.
In my opinion and the way I see things, this is all part of the socialist and communist plan to take over America. If it is a plan or not, the end result is still the same: government ownership and control of the AA. People should be aware of what is happening to our capitalist economic system and the dangerous level of control that the government is gaining over America. If the government can do this to a big company what is to prevent them from doing the same thing to the individual? (The same thing is being done in the banking industry) Indeed, the government is using this crises to gain control over America and do "big things":
"Rule one: Never allow a crisis to go to waste. They are opportunities to do big things."
- Rahm Emmanuel(President Obama's chief of staff)
- Rahm Emmanuel(President Obama's chief of staff)
