Cowboy Confessional

Bail it and they will come.

Perverse it is for me to slander a charming baseball movie by co-opting its most famous line to describe a government slush fund. Yet it succinctly summarizes the currently contagious insanity in Washington, Wall Street and Detroit.

Congress coughed-up $700B of non-existent money to fund financial firms who stupidly gave home mortgages to people unqualified to buy homes. These banks provided these bad loans under a mandate from the same government now bailing them out. In other words the government forced banks into bad business practices and now has to rescue those banks. Cause, effect, cause … repeat until bankrupt.

$700B is big money to anyone not living in Dubai. Toss a chunk of change like that on the table and every mismanaged institution in America will come hat-in-hand to their elected Congress Critter, begging for a slice of Corruption Pie. First among these firms are those that government helped cripple.

The banks are not alone.

In The States we have a hodge podge of labor laws. In many districts membership to a union is mandatory which — aside from being an affront to an individual’s freedom of association — is blatantly batty. When all workers are required to be union members, unions have unnatural power. Industries are like any ecosystem, and when one species becomes too good of a predator, the ecosystem will eventually change and the predator’s food supply will vanish.

Such is the case with the old Detroit auto industry (not to be confused with the new American auto industry, composed of foreign firms that set-up shop in America but far, far away from Detroit). Ford, General Motors and Chrysler are the United Auto Worker’s (UAW) food supply, which is about to disappear. The union’s ecosystem is breaking.

In the post war years the American auto industry was a national mega power with no real competition for American car buyers. Consumers had never heard of Volkswagen, Saab, Mercedes, Honda, Nissan or Toyota. Kia and Hyundai didn’t even exist. American car makers had financial excess from a geographically protected market and the UAW engineered contracts that only a government mandated monopoly could.

This explains why congress is even considering resuscitating the rapidly declining Detroit auto maker ecosystem. The Democrat majority is well funded by the unions. The unions are well funded by non-competitive contracts thanks to legislative monopoly status. Their monopoly was created by Democrat legislation … repeat until bankrupt.

UAW workers with nothing more than a high school diploma take home paychecks and benefits four times larger than an average publicly educated American. More than 12,000 laid-off UAW workers draw paychecks for not working at all, frittering away their days at so-called “job banks”. Retirement benefits were generous (I say ‘were’ because the auto makers are transferring management of retirement funds to the unions and I expect some inelegant but organized theft). Union retirement packages would make over paid CEOs blush. Union workers receive significant pensions and full health care for retired workers and their families. Union excess adds upwards of $1,500 to the bill for a new buggy.  This has altered the Detroit auto industry ecosystem and made it unsustainable.

The automobile ecosystem/economy changed, but the unions and car makers didn’t. Like dinosaurs in an ice age, both are heading for oblivion. Now the Big Three car makers are stalking congress like starving T-Rex’s chasing rats, weakly scrambling for a piece of the $700B to avoid going bust.

Everything dies eventually. It is Ford, GM and the UAW’s time. Cue the Grim Reaper.

Government intervention in the home mortgage market caused current financial crisis. American automakers are failing because of government market intervention on behalf of unions. Banks, car makers and other institutions beg to be salvaged by government intervention.

Repeat until bankrupt.

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