The Big Three would bid against one another for bailout money, and only two would get it.
By Eliot Spitzer
Posted Friday, Dec. 12, 2008, at 12:46 PM ET
A crisis is a terrible thing to waste. This moment of decision about the auto bailout should be when we summon the courage to reject broken policies, not just to throw more capital at them; use market forces to drive restructuring, not just provide bridge loans; and put in place true market-based pressures, not a veneer of government oversight that will substitute poorly for tough decision-making.
The unfortunate reality is that we are straying further from market-driven principles and moving to an economy that relies on government as benefactor. We have nationalized the financial-services sector and are on the cusp of nationalizing the automotive sector, yet we have failed to demand anything nearly adequate in the form of genuine competition, rule changes, or transparency from the affected firms.
The current iteration of the auto bailout—car czar and all—is a move in the wrong direction. Despite the appropriately rough ride the auto CEOs were given on their first jet-ferried trip to Washington, the House, faced with mounting job losses economywide—caved on the auto leaders' second, carpooled road trip. Senate Republicans blocked a congressional bailout on Thursday, but it now seems likely that the White House will use financial rescue money to fund some version of the bailout plan.
The Big Three will receive an initial payout of billions, and nobody believes that the first check is anything more than a down payment. As with the financial-services bailout, once Washington is in the game, it is almost impossible to turn off the spigot. Yet the companies have proffered only paper-thin platitudes about possible actions to restructure, platitudes that are neither binding nor creative. And we still know precious little about the finances of the companies, especially Chrysler/Cerberus.
Even worse, the Big Three may be subject to the authority of a car czar with theoretically almost unfettered power. Yet this modern Wizard of Oz will have no more real power than did the original. I have yet to find a single person who believes that the czar would really be able to guide or force real change on the industry—or will have the wisdom to do so. Progress comes from competition, not from oligarchs or bureaucrats.
More from Spitzer's article.
1 comment:
Americans got hood winked because they didn't read Spitzer's op-ed outlining the corruption on Wall Street and the White House. Yes it was a rush to kick him out, and now millions have lost their jobs, homes and life savings. But if Americans bothered to read they would have know it was smoke and mirrors by the Republicans. Sptizer worked hard to get to the bottom of the corruption for the American people. But the American people tossed him out like trash. No problem with Vitters hiring prostitues even now, no problem with Senator Craig looking for sex in the men's room. But Spitzer is the poster boy for sex and now he'll be the poster boy who tried to Save the American People from being robbed. If I were Spitzer and treated like he was I wouldn't do anything more to help as people would rather be robbed then saved.
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