Tuesday, December 2, 2008

Bankruptcy - A Republican Opportunity

Republicans have an opportunity to redeem themselves.
They won't.

The Big 3 are back in town, having driven themselves this time, to grovel at the feet of Reid, Pelosi, etal, for more taxpayer money.
What they don't realize, or are willing to ignore in order to guarantee the funds, is that the self flagellation and humiliation is not necessary.
Congress is going to give them the money.
Selling the corporate jets, having a "plan," is all just a dog-and-pony show, complete symbolism, having no basis in financial relevancy.
The Democrats are not going to say no. They were never going to say no.
They are indebted, not to the car companies, but to big labor; and the cool $25 billion is a thank you for the votes.
A wink and a nod for years of reciprocal back-scratching.

"U.S. House Speaker Nancy Pelosi said she believes the federal government will step in to aid domestic automakers because bankruptcy is “not an option.”
“I believe that an intervention will happen,” Pelosi said at a briefing in Washington. “It’s pretty clear that bankruptcy is not an option. Everybody is disadvantaged by bankruptcy, including our economy.”

There ya go.

But, "not an option?"
NOT an option!?
It should be the only option! What other option is there!? Bankruptcy is the necessary culling of the herd.
We have bankruptcy laws! Bankruptcy is real.
Bailouts are just made up. We didn't even have bailouts until a few months ago. (I'm ignoring subsidies and protective tariffs). Then we, well, Henry "(Like a) Chicken (running around with his head cut off) Little" Paulson and an only too eager Democratic congress started throwing money around like it was a bumper crop on harvest day in the money fields, and suddenly bankruptcy is no longer an option...for anybody.
Well, not anybody. Only those "too big to fail."
"Too big to fail?" Listen, if something is "too big to fail" in this country, then the first thing it needs to do is fail. Because is has too much power.
But there is no company "too big to fail." This is just a myth wrapped in a fable served up by a liar.
Then why do politicians keep repeating this mantra? What does it mean?
I'll tell you what it means. It means one of two things: 1) these politicians have no understanding of basic economics, or 2) ...I can't think of what else it might mean. So, it means these politicians are ignorant of basic economics. Let's go with that.
"Too Big To Fail" for the economically challenged: If we allow this company -company, not an entire industry, which is okay too, but just this company- to fail, i.e. go out of business because their revenues are not sufficient to pay their bills, X number of workers will be thrown out of work, as will workers in related, dependent industries, and will have no income, thus no purchasing power, thus causing a ripple effect throughout the entire economy, until everybody is unemployed and broke, and America looks like an episode of Survior and Jeff Probst is our god.
This assumes these now unemployed workers will never again find work, won't receive unemployment compensation(another bailout, I forgot that one), and that more efficient companies won't buy up the assets and fill the production void caused by the inefficient company's insolvency.
Hogwash and tommyrot!

It's even possible, if these companies were allowed the option of bankruptcy, they might be able to restructure themselves in a way that allows them to be leaner and meaner in the future.
And we need to know if that can happen. That's the basic knowledge we need, can they survive on their own? And bankruptcy is the perfect mechanism for discerning this knowledge.

And so...now is the perfect opportunity for Republicans to explain and defend their conservative fiscal philosophy. Namely, that companies, like able individuals, must be responsible, self reliant citizens. That bad decision making, and even the march of time, has consequences. That sometimes these consequences are painful, but never without cessation. That the free market is by far the best tool we have for sorting out these situations. That sometimes the best thing the government can do is to do nothing at all. That we shouldn't artificially, at the expense of the American taxpayer, prop up these failing companies. That by doing so we are not only prolonging the process but costing, in real dollars, ourselves more over time.

Will Republicans do it?
Of course not.

We still have the Department of Education; a minimum wage law; a failed Social Security system; No Child Left Behind, a prescription drug entitlement; a costly, and mostly ineffective, War on Drugs, etc.

If Republicans won't stand up, then they should stand down.

And one more thing about Pelosi. She says, "Everybody is disadvantaged by bankruptcy, even our economy."
Then let's do away with it...for everybody.

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