Fix It Again, Tony
June 10, 2009
The Supreme Court of the United States okayed the Fiat/Chrysler merger yesterday. The ramifications of this will be felt for quite some time given the nature of what has transpired. Let me walk you through the events of the past year. Congress approved a stimulus package with 780 billion dollars of taxpayer money to be directed at the nation's financial institutions. Chrysler and GM ended up with some of that money. How is another question, but clearly that money was not meant for the auto industry. So, Congress passed a law and the administration took it upon themselves (both Bush and Obama) to alter it by doling out TARP funds. The auto union in Indiana took exception to that saying that Chrysler cannot declare bankruptcy, void their contracts, close dealerships, etc. because they took government money unconsititonally granted by the Federal Government. The Supreme Court refused to hear the case after an initial stay and the merger is now complete. The issue now becomes what has been gained. Will Chrysler take on the attributes of Fiat? Of course they will. Those of you who naively think that Fiat will be altered because of Chrysler don't understand the nature of majority ownerhship. The Big Three is now the Big One. The only guy left standing is Ford. GM will be much smaller and Chrysler will feature putt-putt cars that nobody wants. Hummer is gone; Saturn is gone; Pontiac is gone; Buick is gone. In its place are Honda, Toyota, Hyundai, et al. How did this happen? Simple, there was a knock on the big 3's door and when they went to answer it, the voice on the other side said, "Hi, I'm from the government and I'm here to help." Folks, governments have no business in business. They can't run the Post Office, and now they own a car company, and several banks. Heaven help us. I am obviously being intentionally tongue in cheek. I think the car companies should have gone under a year ago without the billions in aid that the government gave them. That was just pouring money down a rat hole. Clearly, management must suffer some of the blame along with renegade Congressman drunk with their new found power. Suffice it to say that America is in trouble economically. The stock market has recovered some 40% off the lows in March and some believe the recession is close to becoming a bad dream. It is not. We have considerable work to do, and if the inflation monster implodes because of the largesse of the Fed (it will, probably next year), more pain is in store. Where can you hide? Where you can always hide; in the bosom of time. That is the only thing that will get us out of this quagmire. Time and lots of it, but get out we will. We always have. To those of you who sold out in March; I'm sorry, but you were warned not to do it. Consider this your second warning.
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