One month ago, I predicted that the Obama administration would bail out Chrysler and GM, even though they had threatened to withhold federal funds. I was right (at least with the Chrysler part and probably also with GM).

Obama authorized up to $8 billion in aid to Chrysler and said today “I can report that the necessary steps have been taken to give… Chrysler, a new lease on life.” Chrysler, for its part, forged an alliance with Fiat, an Italian automaker, and declared Chapter 11 bankruptcy, which will essentially mean some restructuring and a change in management (not liquidation of assets). In the meantime, the United States taxpayer will provide this failing business with 3 to 3.5 billion dollars to help with operational costs and 4.5 billion dollars to help with the alliance with Fiat. Oh, and the American taxpayer also pledges to stand behind every Chrysler warranty. Didn’t you get the memo??

The government will now own 8% stake in the company. Currently, the government is actively pushing debt holders to drastically cut down what they are owed but some of the smaller debt holders are resisting. Bankruptcy courts (or another government bailout) will end up resolving this.

What is most curious about this deal is the fact that as part of these negotiations with the government, the United Auto Workers labor union will own a 55% stake of the company (though the government will administer its stake). Yes, you read that right, the labor union (represented by government) now has majority stake in Chrysler. In exchange, the union agreed to some pay cuts and reduced health care benefits. Ladies and Gentlemen, let me quote something from a curious book written in the 19th century: “The proletariat [workers] will use its political supremacy [Democrat-controlled gov’t] to wrest, by degree, all capital from the bourgeoisie [entreprenuers and business-people] and, to centralise all instruments of production in the hands of the State.” This is a quote (I added the brackets for clarification) from The Communist Manifesto. 100 days later we have: flagrant Communist economic policy.

Communism must be defeated.

-AG