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Monday, November 10, 2008

Taxpayers Become Crash-Test Dummies!

Here we go again!
First we bail out Wall Street with this 'emergency' 700Billion investment into poorly run companies... Now the Democrats want us to bail out The Automakers!

From The Wall Street Journal...
The auto-industry crisis is forcing a broader debate over how far the government should go to prop up ailing industries, as the Bush administration resists Democrats' request to use part of the $700 billion financial-rescue fund to aid Detroit's three struggling car makers.

House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada, in a letter Saturday, formally requested that Treasury Secretary Henry Paulson consider giving "temporary assistance to the auto industry" using money originally appropriated to shore up the banking system.

The Democratic lawmakers said federal aid should come with "strong conditions," such as requirements that car makers build more fuel-efficient vehicles, and equity stakes for the government so taxpayers could profit if the companies recover.

Senior economic advisers to President-elect Barack Obama said he broadly backs the appeal by Mrs. Pelosi and Mr. Reid on behalf of the auto industry. Mr. Obama, who on Friday called the industry "the backbone of American manufacturing," is scheduled to meet President George W. Bush at the White House Monday.

Isn't that just dandy!
I thought this whole economic problem was the fault of George Bush? He's been blamed for nearly everything else?
Now, they want him to fix it?

These Democrats have SOME nerve!

Heres what Jonathan Hoenig has to say about this deal...
From SmartMoney...
Any federal bailout of U.S. auto makers is theft; there's no other way to describe it.

For the benefit of inefficient corporations, their management, union leaders and employees, the honest American taxpayer is being burglarized.

Both Republicans and Democrats are to blame.

There is no such thing as a right to a job; there is only the right to free trade. As an industry, auto makers have no more or less rights than shopkeepers, restaurant owners, marketing consultants or professional clowns.

When the tech bubble burst and thousands of individuals were laid off from companies ranging from Pets.com to Psudo.com, there was no federal bailout. The majority of those workers, just as vital as auto makers, all found other jobs.

The real (free) market is shunning these companies. General Motors' (GM) 8.375% bond due in July 2033 is yielding 34%, while the stock trades at 1950s levels. Ford Motor's (F) 7.45% note due in July 2031 yields 22%, and the stock trades at where it did in the early 1980s. These are now tiny companies. GM's market capitalization is less than 2% that of Toyota's (TM). Ford's is about 5% of Honda's (HMC).

Nancy Pelosi , Harry Reid and, yes, Henry Paulson (the banker formerly of Goldman Sachs (GS)) are looking to invest your money in these train wrecks as many before them already have -- with disastrous results. Billionaire Kirk Kerkorian started buying Ford stock when it was at $7.70 a share in April only to dump it months later for a roughly 70% loss.

So you see, anybody that believes in a free market society is out of fashion right now. The Dems want to bailout everything so the government will be running the entire show!
That's not democracy!
That's not free enterprise at work!
That's not Capitalism!

Pure and simple, THAT'S SOCIALISM!

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