Something Is Rotten In The Auto Bankruptcy Deals

Here’s how the Dow News Wire described the carnage: “GM said it would close 17 factories and parts centers and lop off 20,000 more jobs by the end of 2011 in Michigan, Indiana, Ohio, Tennessee and other states [many of those jobs will be bought off with six-figure payouts, courtesy of the taxpayers]. The new price tag will be $30 billion, on top of $20 billion in U.S. funds already put into the company. In exchange, the U.S. will own 60% of the new GM. In all, the rescue of the car industry could cost taxpayers close to $100 billion.

Aside from the fact that all bailouts are unconstitutional, I continue to point out the utter impropriety of Congress giving the Treasury the power to arbitrarily bail out some banks while denying other smaller banks equal access. Government cannot play favorites, but it does. The FDIC says there are 350 banks on the problem list. Bob Chapman asks, “Why can’t they be bailed out like the 19 money center banks?” Good question. It is clearly meant to allow the favored, most insolvent banks, to buy up the others using taxpayer funds. “The treasury will inject a fresh $50 billion in support of GM. GM debt will drop from 170 billion to 12. US treasury is bailing out Jp Morgan Chase and Citgroup of 100% of their GM debt by paying off all of the CDS they placed on GM bankruptcy. This is selective sheltering.” Indeed it is, and it is a violation of every principle of law the US has known for 200 years.

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