Wednesday, April 01, 2009

OBAMA "OUTSOURCES" CHRYSLER TO ITALY: GOVERNMENT BY "FIAT"

Wasn't this the exact the kind of thing that Obama was railing against in his campaign? Chrysler has a month to complete the sale of their company to Fiat, an Italian car company. I've never been to Italy, but I know something about their cars, and roads, from friends. If President Obama thinks that Chrysler is going to actually sell anything like the cars driven in Europe, he's got another thing comin'. Fiat tried to crack the American market, but they're not "popular" cars here. Branding them "Chrysler" won't change that.


Of course, Fiat may not look to change the models that sell well. Once they take ownership of the company, the government will have somewhat less leverage to pressure them. They will probably end up lobbying to keep the CAFE standards where they are. It's still a free market, and people will determine what sells, not the government. I'm sure the Fiat executives will try to earn a profit on their investment.


On an economic level, this is what must happen, for the company to survive. I can't say if it will work out well or not for the economy, but I find it ironic that Pres. Obama is forcing the sale. He backed Bush's original auto bailout, which turned out to be the wrong move. Now, it's going to take another $6 billion tax dollars to complete the sale. He seems to be facing the reality that he really had no clue why companies and jobs were "going overseas."


There are many problems in our nation, among them the loss of manufacturing jobs to other nations. The fact is that the US is a recipient of thousands of "outsourced" jobs from other countries, many of which are car companies. Fiat's actually "outsourcing," by expanding into the US labor market. I'm sure Italians are saying "we can build Chryslers here!"


I'll admit that I only have 1-1/2 years of experience (more than Obama) at owning a business, and the biggest thing I learned was how not to run a business. While Chrysler will be Fiat's business now, President Obama is now effectively the President of GM, as well. Will his "vision" of the company become "reality," if they don't come up with a plan in 60 days? I hope he has a steeper learning curve than I did. I lost $60,000 owning my nightclub. Owning GM could lose the taxpayers $60 billion, easily. Geithner and the "Auto Brain Trust" better come up with something soon, and sell it to Obama. He's the one who's gonna have to sell it to you and me.


This isn't the biggest thing on his plate, either, which is why I worry about the "big picture." He's got the seemingly incompetent Geithner at Treasury, and Holder as the second coming of Ramsey Clark as AG. Hillary is staking out her policy positions from the State Department, and Sebilius is the newest addition to the list of nominees that can't understand the tax code. These are just a fraction of his challenges.


One can call this "baptism by fire," if you like religious references to our president. What I find interesting is how fast he is to use the power of government radically, and "use the crisis" to advance a bad policy choice. I suppose I feel much as the liberals felt when Bush invaded Iraq, and "restricted civil liberties." While I agreed with those policies, I was disappointed with Bush myself, when he started the "bailout" madness. I was against it then, and still am now.


Government by fiat doesn't work (pun intended). Nixon tried wage and price controls, and it nearly destroyed our economy. This is where President Obama dares to tread, and the result will be the same. Meanwhile, Ford has worked out a way not to take any government money, and stay solvent. While Bush gave the initial bailout to GM, Obama doesn't want it to fail on his watch. Will his "deadline" for GM stand? I have my doubts.


I give the president credit for the deadlines, though the Chrysler-Fiat deal may now be on more favorable terms for Fiat. Then, it may be a good thing, if it saves us from pumping more than another $6 billion tax dollars into a slumping company. GM will be the test of how much this administration wants to control the private sector. Stay tuned, eh?


PS: Read this, from the WSJ OP-ED page! The Obama Autoworks: At GM and Chrysler, politics is now Job One.

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