Tuesday, November 11, 2008

No more bailouts.

Writing at Redstate, Francis Cianfrocca analyzes the proposed (or wheedled) bailout of GM, saying a bunch of smart things, including this:

If I were handling this for the US Treasury, I’d insist on a total wipeout of GM’s shareholders and management, force them to liquidate assets over perhaps a two-year period, and take a slug of preferred stock with a very large annual interest rate. Because you know there will be no possibility of making money on this bailout. The auto industry has too much of the wrong kind of production capacity, and it needs to disappear.

If I were in charge of handling this for the Treasury, I'd either say "We don't do this, or I walk."

The government has to stop meddling in the economy. People argue that something must be done to keep the economy moving, and I say: No! We've been spoiled by 20 years of good economies, except for hiccups, to the point where we think we've figured it out.

We can't outlaw pain. Attempts to try are leading us to a situation in which the government, soon to be led by a Marxist, controls the strategic direction of our biggest industries.

I have no doubt that GM failing would have a ripple effect on the rest of the economy. I also have no doubt that some of that effect would be seen as positive, especially by those at Ford and Chrysler.

Something has to be done all right. Something needs to be done to turn around this notion that our elections are about the economy. Something needs to be done to separate government and business. Something needs to be done to return us to the understanding of success as the result of repeated failure, that learning from mistakes doesn't happen unless we are forced to deal with the consequences of those mistakes.

GM has become too big to move quickly in response to changing market conditions. Their union membership, including retirees, is so large as to be its own voting bloc, exercising inertia of its own. Some say they have become too big to fail; I say they have become too big to succeed.

Pluck the cancer? That's the wrong metaphor. The proper one is to let the students succeed or fail based on their abilities, not slip them answers to the test so they don't fail.

Because in the end, none will study as hard or pay attention at lecture if they know that the teacher will bail them out in the end.

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