Unless you've been under a rock, you know America has been on a spending spree doling out billions of tax payer dollars to big business for reasons that are not completely clear, and with a lack of restrictions that are even less so.
“Too big to fail” is a national excuse for which no one has explained the meaning. It looms in the background as a veiled threat of what will happen if we don't give in to big government. No one has told us who is and who is not entitled to the money or under what circumstances.
The latest wrinkle in the stimulus package has been “Cash for Clunkers,” which on introduction seemed focused on bailing out some “too big to fail” car companies (presumably the ones we tax payers had recently purchased) and their dealers who, but for the misfortune of being associated with those manufacturers, didn't seem to be doing anything much differently than other dealers who were enjoying much better luck with other brands.
Unfortunately, when all the dust settled on those clunker deals, most of the cash seemed to have migrated off shore to places that were not the target of our strategy. Weeks after the close of the program, not surprisingly, many dealers were unpaid, their banks were unsupportive and the money was heading in directions other than domestic bliss.
Sadly, no one has yet explained why we were so hell bent on giving Toyota, Subaru and their dealers the time of their lives while watching GM and Chrysler lose even more market share than many thought was still possible.
In hindsight, it makes perfect sense that Cash for Clunkers wasn't a windfall for the too-big-to-fail GM that we the people now own. Keep in mind clunkers was authored by the same government gang that think they can run banking and healthcare better.
Their jump-starting the auto trade was fueled by paying people with old gas guzzlers to trade up. I get that they thought that “old” and “gas guzzler” meant domestic. What they seemed to have missed was that adding the requirement that it needed to be old and “roadworthy” would tilt the program toward imports.
And just as an aside, who thought it would be a good thing to write rules that reward gas guzzlers and punish environmentalists?
Clunkers was a rancid scheme. It achieved high points for averting the disaster of a total melt down (of course we'll never know if that were actually a risk), but it penalized a generation of ecological-minded car buyers while rewarding their frivolous gas guzzling counterparts; it rewarded imports at the expense of American taxpayers, and it caused dealers pushing record numbers of them to be out of trust as they waited for payments from the government who demanded they brand titles and give up collateral well in advance of approval, much less payment, for the products vended.
If ever there was a classic example of good intentions run amuck, this was it. It's nice that Obama wanted to improve the environment by ridding the streets of old guzzlers, open markets to newly manufactured vehicles by clearing out the current glut of aging dealer inventories and to reinvigorate automotive lending.
Too bad he rushed forward with a plan that crumbled under its own weight within days of launch, sent boatloads of tax dollars overseas and near crippled over half of the surviving dealers without moving the domestic needle to any sustainable or profitable level.
I was particularly peeked by the label Obama placed on complaining dealers who were desperately squeezed between bankers calling their lines and a government who could not honor their claims. To him, they were just whining rich men who suffered, if at all, from the pains of too much of a good thing.
I pray in the coming year that ‘we the people’ demand better and more detailed answers before we rush into whatever comes at us next. Sometimes the best stuff rises from the ashes, while the most toxic mistakes are often the result of hanging on to ideas that we're supposed to think are too big and too scary to let go of.
Peter Brandow is a veteran dealer.