Bloodthirsty Liberal

I mean that literally and figuratively:

We supported TARP to deal with toxic bank assets and resolve failing banks as a resolution agency of the kind that worked with savings and loans in the 1980s. Some taxpayer money was needed beyond what the FDIC’s shrinking insurance fund had available. But TARP quickly became a Treasury tool to save failing institutions without imposing discipline (Citigroup) and even to force public capital onto banks that didn’t need it. This stigmatized all banks as taxpayer supplicants and is now evolving into an excuse for the Federal Reserve to micromanage compensation.

TARP was then redirected well beyond the financial system into $80 billion in “investments” for auto companies. These may never be repaid but served as a lever to abuse creditors and favor auto unions. TARP also bought preferred stock in struggling insurers Lincoln and Hartford, though insurance companies are not subject to bank runs and pose no “systemic risk.” They erode slowly as customers stop renewing policies.

TARP also became another fund for Congress to pay off the already heavily subsidized housing industry by financing home mortgage modifications. Not one cent of the $50 billion in TARP funds earmarked to modify home mortgages will be returned to the Treasury, says the Congressional Budget Office.

As of the end of September, Mr. Geithner was sitting on $317 billion of uncommitted TARP funds, thanks in part to bank repayments. But this sum isn’t the limit of his check-writing ability. Treasury considers TARP a “revolving fund.” If taxpayers are ever paid back by AIG, GM, Chrysler, Citigroup and the rest, Treasury believes it has the authority to spend that returned money on new adventures in housing or other parts of the economy.

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Treasury and the Fed would prefer to keep TARP as insurance in case the recovery falters and the banking system hits the skids again. But the more transparent way to address this risk is by buttressing the FDIC fund that insures bank deposits and resolves failing banks. The political class has twisted TARP into a fund to finance its pet programs and constituents, and the faster it fades away, the better for taxpayers and the financial system.

Amen to that. But this administration is not about using existing programs (FDIC, Medicaid); it’s about funneling hundreds of millions of dollars to favored industries and companies. And punishing the unfavored.

On a related note, I wonder if it’s just coincidence that the one automobile company that didn’t take a penny of bailout money is about to turn a profit?

Indeed, Ford has managed to gain momentum during this historic recession. It has distinguished itself as the American automaker that proudly passed on taxpayer assistance. Through the first half of the year, Ford even eked out a profit of $834 million, although much of that was because of special onetime charges.

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During the past two weeks, at least three Wall Street analysts have raised their estimates for Ford Motor Co.’s third-quarter financial results, with one, JP Morgan’s Himanshu Patel, estimating that Ford would report a profit of 16 cents per share for the July-September period when it reports results next Monday.

Buying a car isn’t like eating Chinese food. You don’t want to buy another car an hour later:

It has been nearly a month since the car-buying frenzy of the Cash for Clunkers program ended, and many area auto dealers are longing for the good old days of July and August.

Like consumers nationwide, Massachusetts residents rushed to take advantage of the federal voucher program, which offered them up to $4,500 on old gas-guzzlers to be put toward the purchase of new, more fuel-efficient vehicles. About $65 million worth of vouchers were handed out statewide during the monthlong program that ended Aug. 24.

But once the federal money dried up, so did the sales rally. Now, customers at dealerships like Silko Honda in Raynham are few and far between, and inventory is once again accumulating.

Manager Adam Silverleib said business was “pretty intense’’ as a result of the federal stimulus program, with the dealership hustling to accommodate customers and handle the piles of paperwork required for them to receive reimbursement on vouchers. “Now we’re kind of back to where we were in the spring,’’ he said.

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Nationwide, customers snatched up 700,000 new cars, most of them foreign-made, and the government ended up paying out nearly $3 billion toward the purchases. But from the start, analysts predicted that Cash for Clunkers would not boost sales for the year. September’s sales swoon seems to be making their case. Car sales are usually slow after Labor Day, but because of the recession consumers this year are especially reluctant to say yes to major purchases. To make matters worse for dealers, most are still waiting for voucher reimbursements.

“It was probably, in the end, a complete waste of taxpayer money,’’ said John Wolkonowicz, a senior auto analyst at IHS Global Insight, Lexington forecasting firm. “The dealers, who were supposed to be the primary beneficiaries, many were forced into cash flow problems because the government didn’t pay them in a timely fashion.’’

We spent $3,000,000,000 for nothing?

What else is new? Get back to me when we start wasting trillions. On health care, for example.

Ben Dover:

Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

“I think they drove a very hard bargain,” said Elizabeth Warren, the panel’s chairwoman and a law professor at Harvard University, referring to the Obama administration’s Treasury Department. “But it may not be enough.”

The prospect of recovering the government’s assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM’s case by next year.

The shares “will have to appreciate sharply” for taxpayers to get their money back, the report said.

Who didn’t see that coming?

But doesn’t this mean that the Cash for Clunkers program was a big shell game? We give you $4,500 to buy a new car, and take it back out of your wallet at tax time.

Who didn’t see that coming?

I’ve always heard that the energy drain necessary to make a hybrid car was greater than that to make a SUV or pickup—but now we know even more:

The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods.

That makes Toyota’s market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world’s dominant rare earths producer, limits exports while global demand swells.

Worldwide demand for rare earths, covering 15 entries on the periodic table of elements, is expected to exceed supply by some 40,000 tonnes annually in several years unless major new production sources are developed.

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Jack Lifton, an independent commodities consultant and strategic metals expert, calls the Prius “the biggest user of rare earths of any object in the world.”

Each electric Prius motor requires 1 kilogram (2.2 lb) of neodymium, and each battery uses 10 to 15 kg (22-33 lb) of lanthanum. That number will nearly double under Toyota’s plans to boost the car’s fuel economy, he said.

If you haven’t keyed a Prius just for the superiority of their owners, now you have an ecological reason. Please don’t; I would never encourage anyone to break the law. But I’m sure there are some EarthFirsters out there who know without any help from me how to handle resource hogs like Prius owners.

Aunt Agatha is a bit critical of Cash for Clunkers, but I don’t see why.

I don’t know about you, but I’d pay a whole hell of a lot of money to get these lemons off Massachusetts’ roads.

This jalopy’s been on the road since the early 70s and pulls to the left. Its French looks and haughty manner once made it the second most popular model in America, but now its tread has worn thin.

Now, this bucket isn’t for everyone, but does run well in reverse. Loud and prolific in production of noxious fumes, it should be retired posthaste.

Alas, this heap seems to be on its last few miles, so no effort need be exerted to withdraw it from circulation. The last of a great generation, it echoes its illustrious forebears more than it actually impresses by itself.

Local radio show host Howie Carr wondered how long before we hear of people scamming the cash-for-clunkers program. He and a caller devised a plan in which someone buys a new car at a discount, insures it for the pre-discounted price, sells it to a chop-shop for an agreed upon finder’s fee, reports the car “stolen”, and then collects the insurance on the full price. There are deductibles to take into account, and other people to “take care of”, but maybe just enough money to make it worthwhile.

Knowing our readership, perhaps one of you has already tried this. Do let us know.

Last point about Massachusetts and it politicians. Today marks the first day of a sales tax hike from 5% to 6.25%. On top of lots of other fee hikes and proposed toll increases, this one is particularly stupid. Not only does it apply to alcohol (which already carries an excise tax in its price, so we’re now charging a tax on a tax), but it topples the precarious balance between ourselves and our neighboring states. People already plan trips to New Hampshire to buy tax-free booze and smokes—now I93 will be packed on the weekends with people looking to fill their trunks with Bud, Cutty, and Camels. Retailers of any taxable goods on the Massachusetts side of the Merrimack River might as well toss their wares in the water for all the good they’re going to do them.

This used to be somewhat offset by the disparity in tax rates in the other neighboring states, Connecticut, Rhode Island, and New York, some of whose citizens shopped here to avoid higher taxes in their localities. As of today, that IV drip will cease, and the bloodletting into New Hampshire will turn into a hemorrhage.

We need to revise those Watergate era bumper stickers: Pity us, we live in Massachusetts.

I’ll leave it to Ed Morrissey at HotAir to explain exactly why electric cars are NOT the future, because he does it so well.

But I will summarize. Transferring the power source from the gas pump to the electrical socket won’t mean one less carbon atom emitted, if we continue to generate electricity from coal. It would if we switched over to nuclear power, but find me one Democrat who supports that move. Go on, just one, I’ll wait.

Even more disheartening for you greenies is EM’s point about batteries. The latest technology relies on lithium. By switching from internal combustion engines to battery powered engines, we just transfer our reliance on oil to lithium. And you know who has the most lithium in the world? Bolivia, lead by Hugo Chavez’s mini-me, Evo Morales.

We may have laughed at the time, but the Flintstones had it right:

A wealthy but naive innocent is kidnapped and held for ransom for weeks by a secretive and cult-like revolutionary group, which is led by a charismatic but manipulative leader. When freed, the victim has an eerily vacant stare, and mouths the same radical platitudes espoused by the captors.

Move over SLA (Symbionese Liberation Army) and General Field Marshal Cinque.

Make room for GM (Government Motors) and President Obama

Once the world’s largest and most powerful automaker, the troubled company is expected to emerge cleansed of massive debt and burdensome contracts that would have sunk it without federal loans. Spurred on by the Obama administration’s support, the process took just 40 days, even slightly quicker than crosstown rival Chrysler Group LLC’s 42-day timeframe.

On Thursday, a bankruptcy court order allowing GM to sell most of its assets to a new company went into effect. The new GM, 61 percent owned by the U.S. government, will face a brutally competitive global automotive market in the middle of the worst sales slump in a quarter-century.

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The Obama administration has said it does not plan to interfere with day-to-day operations, though it ousted ex-CEO Rick Wagoner and has been involved in picking the new company’s board.

Most of GM’s model lineup is expected to stay unchanged for now. But the company on Friday will probably show off its newer, more efficient models, as well as plans for a U.S.-made subcompact and rechargeable electric vehicles.

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Experts say GM’s future success will depend largely on its ability to persuade consumers that it’s a different company, one that builds cars that will equal or outlast Japanese models. To illustrate the change, GM is considering a new name.

And a new logo:

General Motors could literally turn green as it readies itself for major management and cultural changes that will coincide with its escape from bankruptcy protection.

People briefed on its plans say the company is looking into changing the background color of its corporate logo from blue to green in an effort to show consumers that it is leaner and greener, more focused on fuel efficiency and better able to make quick decisions.

We need a new phrase to describe this chilling phenomenon: I suggest Cadillac Syndrome.

The suspect was described African-American, articulate, and clean:

Justice Ruth Bader Ginsburg, who handles emergency matters arising from the United States Appeals Court for the Second Circuit, in a one-sentence order, said the orders of the bankruptcy judge allowing the sale “are stayed pending further order of the undersigned or of the court.”

The action indicates that the delay may be temporary, but for now the stay will keep Chrysler and Fiat from completing the transaction.

The stay prevented Chrysler and Fiat from completing the transaction immediately.

The suspect was last seen apologizing to Muslims for America.

No, but that’s next:

House Majority Leader Steny H. Hoyer and Reps. Chris Van Hollen and Daniel Maffei have circulated this letter today …

Dear President Obama:

We are writing to express our concerns about General Motors’ and Chrysler’s decision to close profitable automobile dealerships across the country, and urge you to ask GM and Chrysler to delay final action on proposed closures pending further review of the decision to consolidate dealerships and the process by which Chrysler and GM selected the dealerships to close.

Closing these dealerships will put over 100,000 jobs at risk at a time when our country is shedding jobs at an alarming rate. We also question the criteria being used to determine which dealerships should be closed and the fundamental fairness involved in this effort. It is our view that the market rather than leaving it up to the manufacturers whose poor leadership contributed to their demise. Furthermore, we believe car dealers will be key players in any effort to revive the American auto industry.

…

We may consider legislative proposals to ensure that dealers and their employees are treated fairly, and we look forward to your timely response.

Excuse me, but I call bogus. This letter is being cited on only a few blogs, but without a primary source. Where did it come from?

Furthermore, it reads more belligerently and less literately than I believe a letter from these gentlemen to the president would read. I’m not buying it.

Here’s what I am buying:

Attorney General Douglas F. Gansler has joined other states in opposing the closing of Chrysler dealerships because the move does not compensate franchise owners as required by state law.

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“While Chrysler should be allowed to restructure in bankruptcy, it must do so consistent with state laws,” Gansler said in a statement this week.

“Our objections contend that the proposed terminations fail to recognize protections provided for dealers under Maryland law.”

State law provides that manufacturers may not terminate a dealer franchise unless the dealer has failed to “comply substantially” with franchise requirements, and the dealer and the Motor Vehicle Administration are given 90 days’ written notice of the proposed termination.

Moreover, a new Maryland law that took effect Monday calls for a manufacturer to compensate the terminated dealer for costs of new vehicles acquired within 18 months of the cancellation, unsold parts and accessories, signs and special tools, and upgrading of the facility that were required by the manufacturer.

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The bankruptcy court is scheduled to hear the states’ objections Tuesday, which includes Ohio and Illinois, Gansler said.

Meanwhile, a U.S. appeals court in New York on Friday conditionally approved Chrysler’s sale of most of its assets to Italy’s Fiat, but it is keeping the deal on hold until Monday to allow an appeal to the nation’s highest court.

The U.S. Court of Appeals for the 2nd Circuit said it will continue to delay the sale until 4 p.m. Monday unless the U.S. Supreme Court intervenes.

Don’t touch that mouse!

This represents the worst part of what President Obama is doing: forcing non-market results on the most market-driven of industries. And the suspicions of political retribution were not doused when all Barney Frank had to do to save a GM shop in his district was to ask Fritz Henderson a few “questions”. Hey presto, thanks to Barney, GM realized they couldn’t live without it (and they were right, politically).

But where the government has yet to pollute the market, there may indeed be green shoots of capitalistic growth:

Roger Penske’s pending purchase of the Saturn brand from General Motors(GM) could be the beginning of the biggest change in how cars are sold since the dawn of the auto industry early last century.

Penske can shop globally for low-cost automakers able to build to his specifications quickly, fielding Saturns built in, say, China or India and developed for half the cost and in half the time it would take traditional automakers.

Fast turnarounds would let Saturn exploit emerging trends sooner. Lower costs could keep it profitable in brutal times.

Right. Someone saw an opportunity, and is willing to take a risk to pursue it. Pay attention, Mr. President, this is how the economy should be left to work.

But among the sun beams, I see angry storm clouds:

Such a setup would hurt the United Auto Workers union here initially, though Penske says he’d eventually like to make some Saturns in the USA.

“Ron Gettelfinger on line one, Mr. President.” The UAW has Obama in its pocket. We’ll see how far they let this go.

Last point: Saturn isn’t the only brand judged to be profitable, at least potentially:

Yes, that Hummer, maker of the famously gas-guzzling behemoths whose menacing width and armor trace their provenance to the American military, is now set to become the property of Sichuan Tengzhong Heavy Industrial Machinery Company, in a land officially still called the People’s Republic of China.

It might seem incongruous, this plaything for the unabashed American road warrior shifting to a country where the bicycle once ruled and collectivism was an organizing principle. (What next? Harley-Davidson snapped up by the Vietnamese?) But that’s just until you contemplate the realities of modern China, and the nouveau riche in the growing suburbs, setting down lawn furniture inside gated complexes of villas, shopping at big-box stores and driving luxury cars. China seems intent on nurturing the very sorts of landscapes and consumer attitudes that produced the Hummer.

Exactly right. While America shrinks and apologizes, China bloats and gloats. They’ll convert the Hummers to coal power, and laugh at our lilliputian politicians and their pathetic squeaks over CAFE standards and climate change.

As laugh they should.

Didn’t President Obama scold the “speculators” in the Chrysler bailout as being unwilling to sacrifice?

Can’t wait to hear what he has to say about this:

President Obama may have “no interest” in running General Motors, as he averred Monday. But even if that’s true, we are already discovering that he shares Washington with 535 Members of Congress, many of whom have other ideas.

The latest self-appointed car czar is Massachusetts’s own Barney Frank, who intervened this week to save a GM distribution center in Norton, Mass. The warehouse, which employs some 90 people, was slated for closure by the end of the year under GM’s restructuring plan. But Mr. Frank put in a call to GM CEO Fritz Henderson and secured a new lease on life for the facility.

Mr. Frank’s spokesman, Harry Gural, says the Congressman discussed, among other things, “the facility’s value to GM.” We’d have thought that would be something that GM might have considered when it decided to close the Norton center, but then a call from one of the most powerful Members of Congress can certainly cause a ward of the state to reconsider what qualifies as “value.” A CEO who refuses the offer can soon find himself testifying under oath before Congress, or answering questions from the Government Accountability Office about his expense account. To that point, Mr. Henderson spent Wednesday with Chrysler President Jim Press being castigated by the Senate Commerce Committee for their plans to close 3,400 car dealerships. Every Senator wants dealerships closed in someone else’s state.

As Mr. Gural put it, Mr. Frank was “just doing what any other Congressman would do” in looking out for the interests of his constituents. And that’s the problem with industrial policy and government control of American business. In Washington, every Member of Congress now thinks he’s a czar who can call ol’ Fritz and tell him how to make cars.

Don’t you think of Norton, MA when you think of the American auto industry? Henry Ford, Ransom Olds, Lee Iacocca—Barney Frank. Which doesn’t belong?

Good for Barney Frank for going to bat for his district, but if this is how the government is going to run a car company, I’ll take the bus, thanks.