One for the road

And so ends the 8-year reign of Bush II.

The announcement of $18 bn for GM and Chrysler is the crowning glory of this administration. The economy is in a mess. Unemployment is high, and the Big Three of Detroit employ 3,00,000 people and indirectly support 3 mn, according to some analysts. Something had to be done. But that something was not government intervention, I think. I of course favour bankruptcy over nationalisation. Bondholders would have taken a hit. The generous pay of union-affiliated labour would have been reduced to more realistic levels. Restructuring and recovery would have been faster. The next best option was nationalisation. But throwing money at the companies without nationalising them is surely the abdication of all pretense to assigning responsibility for the firms' failure. Surely the shareholders should have been wiped out. Management has been left in place. It seems clear that these companies are soon going to be back, cap in hand, for more aid. These companies, that have messed up so badly, are not being allowed to die a natural death, but die they will, after sucking up more money from the taxpayer.

[BTW while the bailout for Citigroup was necessary, I think that it too should have been fully nationalised, with the aim of breaking it up and reprivatising the parts as soon as possible]

But then, what else could we except from an administration that ran down the fiscal surpluses accumulated in the Clinton years and turned them into some of the biggest deficits in US history, waged two costly wars that have cost over a trillion dollars, reinstated the practice of torturing captives, watched as a city drowned in the wake of a storm and of course presided over the biggest financial meltdown since the Great Depression.

It is always a mistake to write off America, but the 21st century has begun disastrously for the country.