Wednesday, April 01, 2009

Government Motors

I wanted to write this a few days ago, particularly after I read the comments regarding how the administration plans to deal with the automobile industry. Now many of you know my approach to economics as well as my position of this crisis. First I think that there needs to be a restructuring of our financial system, that we can’t keep on giving folks money to waste, that we need to produce something the rest of the world will purchase and that we should let the free markets deal with this – let businesses fail.

Now if you have not read his remarks, I suggest you do so with the quickness. From what I have discerned, after several readings is frightening. It seems that what his auto task force is undertaking is in direct conflict with the constitution of the United States, specifically the Taking Clause of the Fifth Amendment. Now I know that many of us dumb Americans aint read and don’t know the constitution, and likely couldn’t tell the difference between the fifth or sixth amendment if asked. The Fifth Amendment provides that private property shall not be taken without just compensation and includes a provision known as the Takings Clause, which states that "private property [shall not] be taken for public use, without just compensation." This only applies to actions by the federal government. The Takings Clause imposes two requirements on government in order to exercise this power. The first being that the property to be acquired must be "for public use," and second, that the government must pay "just compensation" to the owner of the property that is seized.

It sounds to me that the government is getting in the automobile industry. I mean the programs of the government have never worked better than those in a free market. This is something that I would expect from a communist country like China or a socialist country like France – but not here. First, there is the issue with Chrysler, in which we are about to PAY a foreign company $6 billion plus (not an American company) Fiatto transfer its cutting-edge technology to Chrysler and, after working closely with my team, has committed to building new fuel-efficient cars and engines here in America.” In addition, there is the statement “the United States government will stand behind your warrantee". And check this, like an investment bank, the Federal government announced it will now begin to practice automobile financing via the “the Treasury Department's Consumer and Business Lending Initiative”...and “auto finance companies to increase the flow of credit to both consumers and dealers.”

Then there is the statement that my tax money (recovery act funds) will be used “to purchase government cars” and go out as “other federal fleet purchases as well.” How can the government get new cars with my money when I can’t afford to do such? Why not save our money so we don’t have to borrow anymore from Asia. This is not tightening ones belt buckle. Add to that that the IRS, as if it doesn’t have enough stuff to do regulating our tax dollars will become the governments automobile marketing firm. In his own words the President stated: “Third, the IRS is today launching a campaign to alert consumers of a new tax benefit for auto purchases made between Feb 16 and the end of this year -- if you buy a car anytime this year, you may be able to deduct the cost of any sales and excise taxes. This provision could save families hundreds of dollars and lead to as many as 100,000 new car sales". The current Secretary of the Treasury can’t even get Deputy’s in house to support his efforts, but we can create another wasted job at the federal level for a Director of Recovery for Auto Communities and Workers.

I do not know about you, but this is a very slippery slope. First no one in the administration is brave enough to tell us how many more bailout they are going to provide to big business or how much money they will continue to give and borrow abroad. Not to mention it will only be a matter of time before a couple of the corporations getting bailout loot will fail anyway.The sad thing is that I always her “now let me say this clearly” and “we have to do this”. We do not have to do jack. What happened to bankruptcy, at least that way nobody will have to loose their jobs while undergoing restructuring. I believe that business owners should either work their way out of their economic problems or fail for that equals a free market to me. But then again what do I know, it sounds live General motors’ don’t exist no more and has now become Government Motors.


E.Payne said...

Okay, now I'm scared.

Sista GP said...

The most disturbing is his statements on the Government Warranty. I wish there was a government warranty on the house I purchased last year where the builder has now filed bankruptcy. Now I am responsible for the outstanding repairs.

Lovebabz said...

You are top shelf with this.

Judy / IslandBroad said...

My world gets a little smaller & darker every time the veils lifts from my eyes.

ms. bliss honeycomb said...

i hear what you're saying re: the constitution, but it sounds like a provision meant to protect small and/or independent business. i wonder if the writers of that document could have imagined the corporate reach of a gm/chrysler.

i know the rule of law is the same, but part of the problem is that corporations have been allowed to shift and bend these rules to THEIR advantage while the ppl get screwed. that whole "corporation = individual" thing needs to be capped somewhere.

i'm also thinking sustainability. we're trying to cut down on fossil fuels and all that. fine. but where are the public transpo projects?

and, while we wait for those projects, who else is making cars? starting up a new automaker is not the same as opening a series of indy boutiques to combat the new walmart/target down the street.

the problem, imo, is that there ARE so many of these "too big to fail" companies around. that + the erosion of the social safety net = disaster.

i agree that we SHOULD be able to allow these things to crumble if they're making an inferior product and so on. but the way things are structured now, it would be wholly irresponsible, like it or not. we're reaping the harvest of unchecked capitalism.

if the blow isn't cushioned, we'll have a man-made armaggedon. i'd rather have a govt car (altho i hear your "slippery slope" argument, too).

i'm all for freedom and democracy, but there's no such thing as a "free market" now--not when failure = social collapse.

bottom line: i have no problem w/ billionaires as long as no one's--at minimum--homeless, hungry and illiterate.

ALL this shit is complicated and intertwined, and linear solutions aren't going to work. things need to be holistic and comprehensive. otherwise, it's just more bandaids.

Curious said...

Speaking of the Constitution, would any of these government guarantees and government kick backs be legal?

Wouldn't actions like these lead to government protectionism and an inhibition of free world trade? And if as in Article VI "...all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land," then wouldn't those actions be in conflict with the IMF treaties of which the US is a signatory and thus in conflict with the Constitution?

True, I am no constitutional law professor or even President, but I have to think something like this will not be able to fly.

rainywalker said...

They do not care in Washington for your Constitution and mine. There is not much they have not violated, except We The People. I agree with you and keep on preaching, perhaps they will give us the same cell.

Dusty said...

The Fifth Amendment provides that private property shall not be taken without just compensation and includes a provision known as the Takings Clause, which states that "private property [shall not] be taken for public use, without just compensation." ~ But Torrance, GM is a publicly traded company. And we did compensate them, handsomely I might add. We could of bought all their stock for a helluva lot less and owned them outright!

Dusty said...

Oh and lol, I have that graphic only it has Hillary and Michelle instead of McSame and Sister Sarah. ;)

Anonymous said...

I did not know McCain and Bidden could move like that. LMAO

Anjl Marie said...

ok i agree with everything that you said folk but

the thing at the end had me dying laughing

Ma'at said...

I feel better when I'm wearing the rose colored glasses. I am better knowing the truth, and damn it's all fucked up and shot to hell.

Disturbed Stranger said...

Hey how've yo been?
Haven't been here since th elsections :) congrats on Obama by the way :)

Your post... frightening...

Rich Fitzgerald said...

I want out of the Matrix.

Bee Gee said...

The twisting of the constitution is THE AMERICAN WAY, and has become more commonplace than ever. What does the constitution really mean anyways in da 09?

nicki nicki tembo said...

In interest of brevity I'll simply say that I find the economic policies of this admin. irresponsible, short-sighted and detrimental.

On the surface and, if you care to, given the benefit of doubt it almost appears ironic that Obama (the constitutional scholar) would embrace such subversion.

Milly said...

Speaking of the goverment stealing...

I need to go pay my taxes now

RiPPa said...

I don't why you continue to bring shit like this to the table instead of doing the Stanky leg. The Stanky leg is the cure to all of our economic and social ills kinfolk.

Jay Midnyte said...

LOL Rippa

Stanky Leg and The Halle Berry

Villager said...

Excellent analysis. However, I agree with Obama's decision. The president is seeking for GM to get serious about creating a viable auto company that reduces our dependence on foriegn oil...

peace, Villager

Keli said...

I was thinking that our nation's bail out programs seems like its making way to communism...

I did not even think about it being unconstitutional in the sense that the gov is planning to take private property for government use...

What gets me, is that the kool-aid drinkers don't seem to find anything wrong with this plan.

Our government (and president) is doing too much, yet doing very little to fix this economic crisis.

Tha BossMack TopSoil said...

I'm feeling like E. Payne out here

Aly Cat 121 said...

I was taught (by my hubby) that the U.S. will bail out. give money etc to industries that MAKE money. Thus if you can get folks to spend money and debt themselves, then THEY {govt etc) will spend money on you. Of course he explains it more eloquently than me.

We are a society of debt, which I'm guessing is what makes it go round.

LadyWritesTheBlues said...

Oh wow-I know I've been MIA-your daughter's so big! Too cute! Gotta new book coming out, I see. Very good! :)

Waiting for Zufan! said...

Hi there. Thank for stopping over.

You know I think Obama's doing a great job. He has lots of tough decisions to make, and there are no perfect solutions.

What do you think about the idea of people getting a tax refund (or at least a credit) for turning in a gas guzzler and buying an eco-car? You think that would be a good step? Then maybe the ones going down would step up the production of those type of vehicles instead of Hummer-like megacars.

2sweetnsaxy said...

That is disturbing. There's a part of me that thinks so much of this is moot since can't nobody buy a car if they don't have a job and folks are losing their jobs left and right, and hours and salaries are getting cut. Folks are just trying to make their bills. They're not looking to make a new one.

Anonymous said...

I agree 100%. I argued similar points last night on Shawn P. Williams' blogtalkradio show.

I am freaking out at how quickly free market ideas (and I do not support complete de-regulation) are being abandoned.

Keep it up RDB!

Glen Antoine Palmer said...

Digging the title of this post.

msladydeborah said...

This latest move has me questioning when will the can of WA come out for the bankers?

It definitely has long reaching implications and impact. I live in a rust belt state. Honda of America is buying their folks out of a gig. While the GM plant in Lordstown is looking more shakey on a daily basis.

Chanel said...

Laissez faire! Let the companies fail. and i was disappointed in the Obama administration pressuring GM to find a new CEO. what's with all this government involvment?! sheesh

Craigjc said...

I think the account of "Humpty Dumpty" suits this economy quite swell!

Torrance Stephens - All-Mi-T said...

not trying to scare u lol

Sista GP
how can they even support a warrenty is the question?

good look folk

Judy / IslandBroad
that was so poetic

ms. bliss honeycomb
well said but i wrote this from the persepctive of a small biz owner, and slope is indeed slippery, and no company is too big to fail

dang u may be rightv about that - do they care about the constitution?

we the people seems to antiquated now and that saddens me

yep but the issue is that the gov upsurped the share holders - its their job in my mind

Anonymous Anonymous

Anjl Marie
they jamming huh lol

that may get u killed babe take the shades off lol

Disturbed Stranger
where have u been did u close your blog?

Rich Fitzgerald
boy u wild - dont we all

Bee Gee
i agree totally

nicki nicki tembo
subversion is the perfect word


not the stanky leg lmbao

Blogger Jay Midnyte
you just as bad lol

we only import 52 percent of our oil and 90 percent of that comes from canada and fiat is a foreign country

i have the same problem with the kool aid drankers

Tha BossMack TopSoil

Aly Cat 121
well id like to see people who make something folk dont by stay in busines

where have u been and how is hubby home

Waiting for Zufan!
i think that is good but un-freemarket

what amendment will be upsurped next?

Carmen D.
y thank u maam i try

Glen Antoine Palmer
thanks folk

yep whats next?

yep what company and/or reason will they select next?

so true lol

Anonymous said...

I can almost see why GM would need a bailout with their cheaply made prototype vehicles, however Chysler should be doing a lot better since it's associated with Daimler which is a division of Mercedes-Benz and I can tell you for a fact that Mercedes-Benz is not in need of any bailout right now.

olu albert said...


Free markets system has always worked to the government's advantage. The basic premise of American system has always been "individualistic" as opposed to collective action. The government of the United States do not give a hoote about the common man. Folks may think I am crazy, I believe we are being schemed by all these multi-national companies, which I believed is also collaborated by the government. I dont know the reason why is taking the government time and money to put these criminals in jail. The United States government should not be an unending bailout banks to these multinational companies. Either way we look at it somebody is getting schemed and it is the American people. The whole shit is all screwed up anyway- hope we find a common grounds to all these crisis.

Mo said...

This is mindbending.

and with all the engineers this country has, you mean to tell me they couldnt find people to create fuel efficient cars here?

Linda said...

That picture....... I'm not sure whether it's just hella funny or hella disturbing ;)

Greetings from the netherlands!

Ensayn1 said...

I really wonder where they government is really heading? Do they really know?

KELSO'S NUTS said...

@ VILLAGER: We discussed this on last Thursday's RDBR show. GM doesn't need to be incentivized to do anything it feels is not maximizing shareholder value and protecting debtholder value, no matter how any of us feel about alternative fuel, low-to-no emissions automobiles.

FORD decided it was in IT'S SELF INTEREST to go deeply that way but the fixed costs in property, plant and equipment were prohibitive and both the rest of the US auto cartel didn't want to lose out to Ford just because Ford was willing to gamble and they weren't so, GM, Chrysler, Toyota and American Honda along with the US government this time put up every possible impediment to FORD's ramping up for that generation of vehicle.

But Ford has a funny, old-fashioned, idea about the USA. They seem to still think capitalism is good, so in order to do right by their shareholders and debtholders they sought out the first world countries where they could borrow in equity and credit markets and ramp up at will.

They chose four. Four countries which are extra special favorites (I'm being sarcastic here) of President Obama: France, Germany, Brazil and Venezuela.

I guess Ford CEO Alan Mulally and Board Chair Bill Ford don't seem to consider France, Germany, Brazil and Venezuela to be quite so "ANTI-AMERICAN" as Obama does.

Do you think Obama knows how silly he sounds when he speaks of such irrelevancies?

What a bloody mess this is. I'm glad one American auto company has their heads screwed on straight.

You also know that Mulally, because of a bad 2008, REFUSED ALL COMPENSATION, right?

rawdawgbuffalo said...

so true

olu albert
well said scholar

thats what im saying and they dont need no visa program to bring experts either - another post one day

Both LOL

i dont think they have aa clue

so true and i dont know what he is thinking but scary thing ios that i was thinking the same thing

MuscleDaddy said...


The MOST distrubing parts are that 'O' doesn't actually have the legal authority to do any of the Auto-shenanigans...

...and you don't even have to go all the way to the Fifth amendment - Article I, section 9, clause 3 should have stopped this before it got started:

This is just going to keep getting worse.

- MuscleDaddy

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