Rereading Atlas Shrugged, Part Deux

"Good intentions will always be pleaded for every assumption of authority. It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters."

-- Daniel Webster (1782-1852)

I am currently on page 242 of Atlas Shrugged, and am finding it un-putdown-able. Despite Ayn Rand's terrific ability to craft scenes vividly, I think my main reason for enjoying the novel this time is reading about the spirited defenses against the Statist sycophants and enablers.

Contrast that combative attitude with today's political environment, where the mainstream media is -- as many have written about en masse -- simply an outlet for the White House and Congressional press offices. The sycophantic worship of Everything Obama is stomach-turning, especially since the sole reason the Founding Fathers enshrined the protection of the press in the Constitution was to serve as a bulwark against government encroachment and abuse.

There are plenty of brave souls standing strong against the infection of government control in our lives -- Dr. Ron Paul comes to mind, as do countless bloggers and alternative media. However, if the mainstream media is your only source of news, you would think the only people opposing the solidification of the government into every nook and cranny of our lives are right-wing extremists who want the smallest tent possible.

'Tis not the case, of course, but as I have mentioned, therein lies the danger when a news outlet's main source of revenue is advertising, versus subscriptions. Only corporations with the deepest pockets can afford continuing advertising in the major newspapers, and many of those firms rely on government largesse or favorable government regulations. (And, it should never be forgotten, most news outlets are owned by the same corporations that do enormous business with the government.) Does anyone in their right mind harbor a hope that a newspaper would risk government wrath ... thus angering advertisers ... and risking cozy relationships with government staffers?

Back to Atlas Shrugged. A scene reminded me of the (continuing) fight over GM's nationalization/bankruptcy, where an "unnamed" Obama Administration official argued that,

"...the UAW was making other sacrifices in wages and benefits, and that [GM] could not function without workers."

That quote rang in my ear as I read Rand's depiction of the conflict over whether a railroad union would, in a clumsy attempt to dictate the operations of Taggart Transcontinental, try to stop the maiden voyage of the John Galt Line, a train running on advanced rail that was the last hope to save American freight shipping. (Bear with me ... the excerpt is a page long, but well worth reading.

"Well, it's like this, Miss Taggart," said the delegate of the Union of Locomotive Engineers. "I don't think we're going to allow you to run that train."

Dagny sat at her battered desk, against the blotched wall of her office. She said, without moving, "Get out of here."

It was a sentence the man had never heard in the polished offices of railroad executives. He looked bewildered. "I came to tell you--"

"If you have anything to say to me, start over again."

"What?"

"Don't tell me what you're going to allow me to do."

"Well, I meant, we're not going to allow our men to run your train."

"That's different."

"Well, that's what we've decided."

...

She reached for a sheet of blank paper and handed it to him. "Put it down in writing," she said, "and we'll sign a contract to that effect."

"What contract?"

"That no member of your union will ever be employed to run an engine on the John Galt Line."

"Why ... wait a minute ... I haven't said--"

"You don't want to sign such a contract?"

"No, I--"

"Why not, since you know that the bridge is going to collapse?"

"I only want--"

"I know what you want. You want a stranglehold on your men by means of the jobs which I give them -- and on me, by means of your men. You want me to provide the jobs, and you want to make it impossible for me to have any jobs to provide. Now I'll give you a choice. That train is going to be run. You have no choice about that. But you can choose whether it's going to be run by one of your men or not. If you choose not to let them, the train will still run, if I have to drive the engine myself. Then, if the bridge collapses, there won't be any railroad left in existence, anyway. But if it doesn't collapse, no member of your union will ever get a job on the John Galt Line. If you think that I need your men more than they need me, choose accordingly. If you know that I can run an engine, but they can't build a railroad, choose according to that. Now are you going to forbid your men to run that train?"

Now, just substitute "automobile factory" for "railroad," and you get a sense of what GM's former CEO Rick Wagoner probably felt ... just before Obama fired him.

THAT's why I'm enjoying rereading Atlas Shrugged, because I'm getting tired of being defenseless while the government cuts down one pillar of liberty after another.

New Emission Standards - Obama's Grasp for (Ever More) Control

"There are two patterns for the realization of socialism.  The first pattern (we may call it the Lenin or the Russian pattern) is purely bureaucratic....

The second pattern (we may call it the Hindenburg or German pattern) nominally and seemingly preserves private ownership of the means of production and keeps the appearance of ordinary markets, prices, wages, and interest rates.  There are, however, no longer entrepreneurs, but only shop managers....[I]n all their activities they are bound to obey unconditionally the orders issued by the government's supreme office of production management....

This is socialism under the outward guise of the terminology of capitalism."

- Ludwig von Mises, Human Action

Steven Mufson of the Washington Post reported Tuesday (May 19) that President Obama plans to propose "tough standards for tailpipe emissions from new automobiles, establishing the first nationwide regulation for greenhouse gases."  The new "CAFE standards" will also raise fuel efficiency targets to 35.5 miles per gallon for new passenger cars and light trucks by 2016.  The cost of complying with the new standards?  According to Obama, the new 2016 CAFE targets will add $1,300 to each vehicle.

In this essay, I will expose Obama's math (robustly optimistic), and describe his real reason for pushing through the new standards (government tentacles writhing into our lives).

Why the New Standards?

Why the impetus for the new emission standards?  As Mufson wrote, "The measures are significant steps forward for the administration's energy agenda by cutting greenhouse-gas emissions that contribute to climate change and by easing U.S. dependence on oil, most of which is imported."

Climate Change - Reality or Myth?  Who Really Knows?

Before I address the real, underlying reason for the new emission standards, I want to dispel the accepted notion that, despite what Al Gore bleats to anyone who will listen, "climate change" is occurring, is accelerating, and is hastening the End of Life As We Know It.

I am not a meteorological expert, but I do know that the Cato Institute has some fearsome intellectuals in its corner.  On March 30, 2009, Cato purchased advertising space in many national newspapers for this ad to counter the popular myth that climate change is a foregone conclusion.

The ad includes supporting references and over 100 scientist signees, and states that "the case for alarm regarding climate change is grossly overstated" and that Obama's "characterization of the scientific facts regarding climate change and the degree of certainty informing the scientific debate is simply incorrect."

That ad, and the copious material on Cato's website discussing Energy and Environment, leads me to, at least, question whether global warming or climate change is 1) occurring, and 2) the direct result of Industrial Man.

Obama's Consolidation of Control

And the fundamental reason for Obama's pushing through the emission requirements?  Not surprisingly, it is related to his Administration dictating the restructuring of the auto industry (as I discussed here and here), and can be summed up in one word:  control.  

As Ludwig von Mises stated so clearly, consumers are all-powerful under a market economy:

"In his capacity as a businessman a man is a servant of the consumers, bound to comply with their wishes. He cannot indulge in his own whims and fancies. But his customers' whims and fancies are for him ultimate law, provided these customers are ready to pay for them. He is under the necessity of adjusting his conduct to the demand of the consumers."

Well, so much for a consumer-driven, market economy.  Obama is wresting control of the automotive industry away from consumers and giving it to the federal government -- precisely what he is doing, of course, to the health care, education, and energy sectors.  (He is even dissolving federalism by having bankrupt state governments lining up, hat in hand, to beg the White House for money.  Not, of course, that the Administration would ever expect anything in return for its generosity."  Oh, wait.)

The new emission standards will see automobile manufacturers increasingly reliant on small vehicles, to ensure their overall fleet fuel efficiency is in compliance.  And, of course, when the government needs to dictate production, that means it is unhappy with consumption patterns.

Sure enough, despite the recent energy shock of $4/gallon gasoline, people still want large SUVs and pickups.  As a matter of fact, the two best-selling cars in 2008 were the Ford F Series and the Chevy Silverado.  The Dodge Ram is also among the top ten.

In addition to three of the top ten best-selling vehicles (made by American manufacturers, it should be noted) being specifically targeted by the new emission standards, the standards happen to attack the very models that are the most profitable.  I am sure I'm not the only person shaking my head at Congress and the President tsk-tsking Chrysler, GM, and Ford for operating poor businesses -- and then undermining the only product lines keeping them on life support the last ten years or so.

Did Obama Pass Basic Arithmetic?

It should also be noted that, in addition to the new emission standards siphoning away profits from the car companies by forcing them to produce low-margin small vehicles, the regulations will also hurt ... anyone who wants to buy a new car.  Compliance with the new CAFE standards is expected to add up to $1,300 per vehicle, which Obama says will be repaid after three years.

Let's peer under the hood at Obama's math.

The calculations below show that, under the planned 2016 CAFE standards (35.5 mpg for passenger cars), someone driving a vehicle 10,000 miles a year would save 81.9 gallons of gas compared to the current CAFE standards of 27.5 mpg.  That 81.9 gallons per year (colored in light blue) calculates to 245.8 gallons of gas over three years (colored in tan):

Obama states that the $1,300 vehicle surcharge will be repaid within three years due to increased fuel efficiency.  (By the way, does anyone believe the additional cost will be $1,300?  Does the Administration have ANY incentive to low-ball the surcharge estimate?)  

So, if the 245.8 gallons of gas saved results in offsetting the $1,300 surcharge, how much must each gallon of gas cost?

$5.29 per gallon.  I will leave it to the reader to wonder about the likelihood of gas costing over five dollars a gallon in seven years ... and, more importantly, also question why Obama did not happen to mention that fact during his preening press conference.

Why Not Raise the Gasoline Tax Instead?

Harvard professor Gregory Mankiw (certainly no bleeding-heart liberal) advocated a "Pigouvian tax" on gas aimed at curbing gas consumption and correcting for “negative externalities” like pollution and threats from hostile foreign countries.  (Incidentally, these are exactly the outcomes being promoted for Obama's new emission standards.)

So, why doesn't Obama simply raise the gasoline tax?  That would, arguably, accomplish his exact goals without penalizing the automobile manufacturers to spend billions of dollars developing new fuel-efficiency mechanisms and upgrading their assembly plants.

Several reasons explain his choice of interfering with the automobile industry:

• Raising CAFE standards forces auto manufacturers to produce smaller, more efficient vehicles -- despite consumers' preferences.  Simply raising the gasoline tax would not directly compel manufacturers to design new car models.
• Obama, it has been shown, cares not a whit for free-market principles or business, so forcing auto manufacturers to upgrade their assembly plants is not likely to cause him to miss any sleep.
• Obama, by his fiscal policies, does not really care about future generations -- otherwise, why saddle them with trillions and trillions of dollars of debt?  So, saddling Americans with thousands of dollars of additional charges per vehicle to advance his interests ... is not likely to cause any missed sleep.
• Raising the gasoline tax would go against his campaign promise [sic] that 90 percent of Americans will have lower tax bills under his presidency.  Instead, the vehicle surcharge still costs taxpayers money, but he can still claim not raising taxes.

So, let's all pray for gas to skyrocket in price, so we can all pay off the additional costs to our cars that much sooner!

Rereading Atlas Shrugged

I have started rereading Ayn Rand's magnum opus Atlas Shrugged, after having read it approximately 20 years ago.  With a confession that is risking a torrent of fury from Randophiles, I must say that I find it a little disappointing upon the revisit.  Since Atlas Shrugged is such a lodestone and flashpoint for lovers of personal responsibility, I plan to write a series of essays about my interpretation of her writing.  This is the first.

My dominant impression, so far, is that she makes her points in an almost cartoonish way -- unrelentingly, repetitively, and obviously.  Rand does NOT deal in subtlety or nuance.  At first, the style is powerful, as her lexicon vividly limns the characters.  After a while, however, its constancy becomes distracting -- you find yourself thinking, "Enough already!"

First, Ayn Rand is a superb writer; she can evoke images and scenes that the reader sees with perfect clarity.

"Far in the distance, beyond the mill structures, she saw a string of gondolas waiting on a siding.  The bridge of an overhead crane cut the sky above them.  The crane was moving.  Its huge magnet held a load of rails glued to a disk by the sole power of contact.  There was no trace of sun in the gray spread of clouds, yet the rails glistened, as if the metal caught light out of space.  The metal was a greenish-blue.  The great chain stopped over a car, descended, jerked in a brief spasm and left the rails in the car.  The crane moved back in majestic in difference; it looked like the giant drawing of a geometrical theorem moving above the men and the earth."

- Page 86

Not THAT is terrific writing.

I don't know how literature professors classify Atlas Shrugged, but reading it I feel the same way I felt about reading Frank Norris's The Octopus, a perfect representative of the naturalism movement in literature, which sought to describe things as they are, with repetitive language used to conjure a sense of realism.  (Of course, I read The Octopus in my early high-school years.  Even then, my classmates and I got fed up with the repetition.)

With Atlas Shrugged ... it is one thing to have the predominant themes/observations ringing in every chapter to keep your perspective front-of-mind, but when they occur every page ... it becomes distracting.  As a reader, you find yourself, literally, jolted back into reality -- death-knell for a novel -- where you say to yourself, "Okay, okay -- I get your point!  Your heroes are supermen and superwomen with intelligence, endurance, and grace beyond mortal understanding."  Some examples:

The reader's first introduction to oil magnate Ellis Wyatt:

"The man who entered was a stranger.  He was young, tall, and something about him suggested violence, though she could not say what it was, because the first trait one grasped about him was a quality of self-control that seemed almost arrogant.  He had dark eyes, disheveled hair, and his clothes were expensive, but worn as if he did not care or notice what he wore."

- Page 81

Dagny Taggart and Hank Rearden watching "Rearden Metal" (an advanced metal alloy with unlimited possibilities) being produced:

"Rearden Metal..."

He noticed that, but said nothing.  He glanced at her, then turned back to the window.

"Hank, this is great."

"Yes."

He said it, simply, openly.  There was no flattered pleasure in his voice, and no modesty.  This, she knew, was a tribute to her, the rarest one person could pay another: the tribute of being free to acknowledge one's own greatness, knowing that it is understood.

- Page 86

Keep in mind that pronouncements of the characters' virtues such as these are not presented in every chapter -- they occur almost every paragraph.  Reading a Rand novel is a bit like being hit over the head with an Objectivist shovel.

As anyone who knows anything about Ayn Rand realizes, she does not deal in gray; everything is black and white.  That holds true for Atlas Shrugged (and The Fountainhead).  People are either good ("clean," "angular," "graceful," "reasoned") or bad/evil ("slack," "slow," "impulsive"), and good people make good decision, while evil people make evil decisions.

I recognize that Rand was writing the shining example of her Objectivist philosophy and, hence, wanted it to be her "purest" exemplar of how objectivists (and non-objectivists) are.  (Notably, she does not write about how objectivists should be.  As will be discussed below, it appears that you are either born an objectivist ... or you will never be one.)

Nevertheless, her fiction is not an accurate reflection of life -- who, after all, is 100 percent good?  (Even Ron Paul has his faults.)

The most irritating aspect of the book -- and, ultimately, its most limiting -- is that the heroes of the book are all born as objectivists.  Not a single person sees the error of his/her ways, and grows to correct any inherent flaws.  I am currently on page 135, and Rand has introduced three main characters (all business titans) who serve as model objectivists.  Unfortunately for us mortals, all three have known from their earliest days how truly special and gifted they are.

To wit, Hank Rearden:

"...[H]e owned [the mines] as of that morning.  He was thirty years old.  What had gone on in the years between did not matter, just as pain had not mattered.  He had worked in mines, in foundries, in the steel mills of the north, moving toward the purpose he had chosen.  All he remembered of those jobs was that the men around him had never seemed to know what to do, while he had always known."

- Page 30

Dagny Taggart:

"Dagny Taggart was nine years old when she decided that she would run the Taggart Transcontinental Railroad some day....She never tried to explain why she liked the railroad....She felt the same emotion in school, in classes of mathematics, the only lessons she liked.  She felt the excitement of solving problems, the insolent delight of taking up a challenge and disposing of it without effort, the eagerness to meet another, harder test.

"Studying mathematics, she felt, quite simply and all at once:  'How great that men have done this" and 'How wonderful that I'm so good at it.'"

- Pages 50-51

Franciso d'Anconia:

"When I run Taggart Transcontinental..." Dagny would say at times.  "When I run d'Anconia Copper..." said Francisco.  They never had to explain the rest to each other; they knew each other's goal and motive."

- Page 95

In addition to knowing one's life's pursuit at an absurdly early age, Rand's protagonists are superbly intelligent.  At 12 years old, Francisco d'Anconia is already impressing adults:

Francisco's notes of calculation were still scattered about on the ground; [Dagny's] father picked them up, looked at them, then asked, 'Francisco, how many years of algebra have you had?'  'Two years.'  'Who taught you to do this?'  'Oh, that's just something I figured out.'  [Dagny] did not know that what her father held on the crumpled sheets of paper was the crude version of a differential equation."

- Page 93

Well, since I did not instinctively "create" differential calculus when I was 12 years old, I humbly recognize that I do not fit the mold of Rand's "superperson."  Does that mean I should renounce my goals of grandeur?  According to the models that Ayn Rand present, I should -- especially if I do not have a clear vision of exactly what I want to do (with a burning, unquenchable yearning, of course).

I certainly welcome prodigies and geniuses -- they are the lifeblood of innovation and progress.  However, crucially, I have yet to see a single character born "average" (or, at least, not preternaturally brilliant) in an Ayn Rand book, and not blossom to greatness through education and/or hard work.  The clear implication -- that you are either born with cognitive gifts and a focused purpose in life, in which case your success is assured -- or you have a completely corrupted personal philosophy that dooms you to unhappiness and proceeding through your days in slack-jawed torpor.

This reverence for elitism is what is most infuriating, because -- like it or not -- the vast majority of people do not have the acumen or native ability to accomplish feats of greatness.  However, that does not mean that someone could not discover truths about the world and himself, and try disciplining his life according to a set of defined values.

Life is hard.  Trying to craft a life that reflects values true to oneself, and raising children to do the same:  now that is a hero.

For the reasons discussed, I think the best age group for reading her fiction is 15 to 24.  Anyone older, I believe, would like to see character development and growth, as well as seeing people make mistakes and learning from them.

The GM Deal Stunk, But This Chrysler Deal Reeks

"It is an old fallacy that it is a legitimate task of civil government to protect the less efficient producer against the competition of the more efficient....Such a privilege conveys to the privileged the benefits which the unhampered market provides only to those who succeed in best filling the wants of the consumers."

- Ludwig von Mises, Human Action

Let no one now doubt it -- the last few weeks have laid bare Barack Obama's intent and willingness to strong-arm American industry to conform to his wishes. I speak of the convoluted arc of the Chrysler Corporation, as its lenders and the State played chicken, with the State prevailing.

To recap, during Chrysler's painfully slow slide toward bankruptcy, it borrowed money from lenders, who were granted "senior-debt" status. (In bankruptcy, there is a hierarchy of payback as follows: bank debt, senior debt, junior debt, accounts payable, preferred stock and then common stock.  This hierarchy is solidified in federal law.)

This translates during bankruptcy roughly as follows:  repayment (usually via sale of assets) at 100 cents on the dollar starts with the most senior creditors, and continues down the rungs to subsequent debt-holders until all assets are liquidated.  Usually, common stockholders receive, at most, pennies on the dollar -- this risk is also why common stockholders have the greatest upside with concomitant company success.

In Chrysler's case, lenders with senior-debt status included major banks, hedge funds, and asset managers.  The United Auto Workers (UAW) had a financial stake in Chrysler via a trust fund for retiree health insurance.  (Similar to the arrangement the union had with GM, discussed previously.)  This trust fund had junior-debt status, meaning it stood in line behind other lenders to be repaid in the event of bankruptcy.

Now, Obama and the Democrats ABSOLUTELY do not want any auto manufacturer to go bankrupt, because that would be the death knell for the still-lush salaries and benefits of its union workers.

And, much more importantly, it would probably cripple the political donations made by the UAW to Democrats.  And we are not talking about meager amounts, either:  since 1990, the Center for Responsive Politics reported that the UAW has donated over $25 million to political campaigns -- of which 99 percent has gone to Democrats.  There is a better chance Obama will be honored at the National Rifle Association than Democratic politicians will not pull out all stops to protect the UAW.

So, when it became clear that Chrysler was perilously close to bankruptcy, panic mode set in at the White House.  (After all, the UAW spent nearly $5 million to help get Obama elected.)  The Administration crafted a deal whereby the UAW would own 55 percent of Chrysler, the Italian auto maker Fiat would own 35 percent, and the government 10 percent.

Obama offered the senior creditors 32 cents on the dollar for their stakes, and managed to "convince" many of the lenders to accept the offer.  Four banks holding 70 percent of the debt agreed to a deal, while other lenders held out, believing they could get 65 cents on the dollar in a bankruptcy hearing.  Since all of the lenders could not agree to terms, Chrysler declared bankruptcy this past week.

Now, about those four banks who agreed to the deal?  It just so happens that they -- J.P Morgan, Citi, Morgan Stanley and Goldman Sachs -- received billions and billions of dollars from the Troubled Asset Relief Program (TARP) and other subsequent bailouts.  As a result, they were in no position to resist Obama's offer -- he owns them.  (Live by the sword, die by the sword.)

Obama then went on the offensive with a briefing to shame the remaining lenders that did not accept his absurd offer.  His remarks are worth noting as exemplars of the audacity of doubletalk.  Portions follow:

"But as I've said from the start, we simply cannot keep this company, or any company, afloat on an endless supply of tax dollars. My job, as President, is to ensure that if tax dollars are being put on the line, they are being invested in a real fix that will make Chrysler more competitive."

Actually, I don't think he's ever said "that" from the start.  However, simply by stating that he has, he's granted himself legitimacy as a good steward of American taxpayer dollars.  Which, given his sickeningly bloated $3.4 trillion budget for FY 2010, is such a baldfaced lie that I am baffled how anyone but a narcissistic politician (pardon the redundancy) can deliver those words with a straight face.

Additionally, he only refers to our money he's spending as "taxpayer dollars" when it suits his purposes to be seen as respecting this great responsibility he's been given.  Most of the time, when he is discussing one pet spending plan after another, our hard-earned money is referred to as "investment funds," or other such nonsense.

To continue:

"But over the past month, seemingly insurmountable obstacles have been overcome, and Chrysler's most important stakeholders -- from the United Auto Workers to Chrysler's largest lenders ... -- have agreed to make major sacrifices."

Priceless.  The "important stakeholders" he references who have made "major sacrifices"?  The UAW has been granted a potentially sweeter deal than it received under the GM reorganization.  The UAW will own a majority stake in Chrysler -- just let that percolate for a while -- even though it was far down the pecking order in terms of being repaid.  

This issue is the linchpin of why so many people are outraged over the Chrysler deal.  Let me be clear -- Obama flouted long-standing bankruptcy jurisprudence by moving the union up the repayment hierarchy, ahead of senior creditors.  These actions are probably illegal, but who in their right mind is going to cross paths with a president?  It would take years for a case to work its way through the courts; in the meantime, the bully pulpit you have doesn't even begin to compare to the bully pulpit the president has.  Not even close. 

But the interpersonal, Administration-versus-company controversies are but a sideshow to the real problem.  What do you think might happen to investment capital now?  Companies lend funds at lower rates, as long as they are granted senior-creditor status.  (In other words, lenders are willing to accept lower interest rates in exchange for a greater likelihood that they will receive a greater proportion of their principal back if bankruptcy occurs.)  

What lender, in his right mind, would offer to lend money at a low rate if they cannot even trust their place in line for repayment during bankruptcy?  Therein lies a major reason why the State, with its disproportionate influence above and beyond its expertise, should not become directly involved in private-sector financial transactions.

And, given that our president has so little business education that he does not understand that profits and earnings are the same, businesses are going to be loathe to tiptoe out on a limb the least bit.  This Administration might saw off that branch, either to help another party or out of sheer ignorance.

This scenario, single-handedly created by the Administration, has the potential to stifle lending as much as, if not more so, than the subprime lending mess.  Amity Shlaes, who wroteThe Forgotten Man: A New History of the Great Depression, has a thesis that the Hoover and Roosevelt Administrations prolonged, and deepened, the Great Depression with their inconsistent and unpredictable business interactions and decisions.  Companies that must deal with an uncertain capital, investment, or regulatory environment are much more likely simply to hoard their cash, and ride out the storm.

More from Obama's briefing:

"Fiat has demonstrated that it can build the clean, fuel-efficient cars that are the future of the industry, and as part of this agreement, Fiat has already agreed to transfer billions of dollars in cutting-edge technology to Chrysler to help them do the same. Fiat is also committed to working with Chrysler to build new fuel-efficient cars and engines right here in America."

This paragraph says the following:

1. Arrogance.  No one person -- not even Obama -- knows what the future of the automotive industry holds.  The "future" of the industry is going to be reliant upon millions of people investing and spending billions of dollars.  The assumption that fuel-efficient cars are the future is preposterous, given that SUVs, pickups, and other large cars are the best-selling vehicles, are the only profitable auto models, and the price of gas is fluctuating wildly.  It is possible -- perhaps even likely -- but not written in stone.
2. Public-sector strong-arming.  "As part of this agreement, Fiat has agreed to transfer billions of dollars in cutting-edge technology...."  In other words, Fiat would not have been able to take a large ownership stake in Chrysler unless it "transferred" billions of dollars of technology.  It also implies that, if it had a choice, Fiat would not have transferred billions of dollars of technology to the U.S.  People who run Fiat are not stupid -- they understand where, and how, the best use of their capital should be deployed.

"The United Auto Workers, who had already made painful concessions, agreed to further cuts in wages and benefits; cuts that will help Chrysler survive, making it possible for so many workers to keep their jobs and about 170,000 retirees and their families to keep their health care."

We should all be so penalized.  Only in a world where profits and earnings are different is being given 55 percent of a company considered a "concession."  The UAW, with its demands for above-market wages and benefits, played a key role in the demise of the U.S. auto industry.  It is not a coincidence that Ford, having been able to secure major concessions from union auto workers, is the only major U.S. auto manufacturer not to have to go begging and pleading to the government for an allowance like a teenager.

Additionally, if it was the "cuts" that "will help Chrysler survive," does that not imply that wages and benefits were already too high?  Seems to me that, if a salary cut is necessary to keep the business open, the business model has incorrect assumptions about wage levels.  That company better react to those market signals ... or else lights are getting turned off.

"Several major financial institutions, led by J.P. Morgan, agreed to reduce their debt to less than one-third of its face value to help free Chrysler from its crushing obligations."

No, no, no.  "Several major financial institutions ... agreed to reduce their debt" because the government had already extended them billions of dollars in grants and loans, thus creating an implicit dependence on the federal government that vaporized any negotiating power.

"While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them."

This "group of investment firms and hedge funds" was honoring their fiduciary obligations to their customers and clients.  (As was Obama to the UAW, one could say.)  An investment or hedge fund (or major bank, for that matter) is obligated to secure the greatest return on investment capital.  It is absolutely not obligated to accede to a government's wish to decimate the value of its holdings so that other parties may be rewarded with a majority stake in the new company.  That is not the free market, nor is it capitalism, nor is it even "light regulation."  It isn't even fascism, as some are implying.  Once the government controls the factors of production, you have the "S" word ... socialism.  (Don't say it loudly, else you'll simply be blasted by someone who does not even understand the economic underpinnings of the philosophy.)

An argument can even be made -- should be made -- that the four TARP-suckling banks (J.P Morgan, Citi, Morgan Stanley and Goldman Sachs) dishonored their fiduciary obligation toward their clients and customers.  Those banks did their customers a huge disservice by accepting the government's proposal without even putting up a fight.  The same cannot be said for the holdouts.

So, we are now looking at ChryslerUAW, or maybe UAWChrysler.  Those who appreciate the business world can take some small solace in envisioning the next union negotiations between UAW-as-Owner versus UAW-as-Workers-Champion.  I'm already anticipating the first $400K annual salary for an entry-level die-cutter.

Height of Irony: TV Execs Begging Obama for Scheduling Relief

Barack Obama held his third prime-time news conference this past Wednesday (April 29th).  It is widely reported that his prime-time news/press conferences costs each of the major networks between $9 million and $10 million in revenue due to lost advertising time.

As a result, the networks are apparently begging Obama to think about their pocketbooks when he considers the timing of future prime-time events.  The AP reported on this, probably not recognizing the hilarity of the situation:

"An executive at one of the three other broadcasters, who asked for anonymity because the conversations were private, said that network's executives had expressed concern to the White House about the frequency of prime-time news conferences and the financial sacrifice they were making in carrying the event."

I am sure I am not the only person to see the irony of a for-profit corporation beseeching Obama -- who believes the private sector is a piggy bank for his donor base -- to respect their need to generate revenue.

At the same time, mind you, the television networks are asking Obama to take a lower profile by not appearing on prime time.  Good luck.  We're talking about the same narcissist who campaigned on a stage resembling a Greek temple:

and who couldn't even wait to be inaugurated before giving himself a fancy title and lectern:

 

I have one suggestion to ABC, CBS, and NBC:  mark your calendars for the Second 100 Days, and the Third 100 Days, and the ....