The
Democrats have decided to run in 2012 as the bailout party. It is an odd
choice — the 2008–09 bailouts were deeply unpopular among the general
public, and even their backers were notably conflicted about the
precedent being set and the ensuing moral hazard. But Democrats have
nonetheless made one of the most abusive episodes in the entire bailout
era their economic cornerstone: the government takeover of General
Motors.
The GM bailout was always an odd duck: The Troubled Asset Relief
Program (TARP) was created in order to preserve liquidity in the
financial markets by heading off the collapse of key financial
institutions that had made catastrophically bad bets on real-estate
securities — nothing at all to do with cars, really. GM’s financial arm,
today known as Ally Financial, was in trouble, but GM’s fundamental
problem was that its products were not profitable enough to support its
work-force expenses. A single dominant factor — the United Auto Workers
union’s extortionate contracts with GM — prevented the carmaker from
either reducing its work-force costs or making its products more
efficiently. And its hidebound management didn’t help.Read more: http://www.nationalreview.com/articles/316379/democrats-gm-fiction-editors
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