Saving failed American enterprises

The US approved their $17 billion rescue package for GM and Chrysler late last week; and Canada immediately followed with its proportionate $4 billion version. Applauding Ottawa's promptness is Canadian Auto Workers president Ken Lewenza--he would be out of an employer had they not done so--as grateful as he is, he is not without reservations. Worrying him, is that the US version is string-heavy with strong emphasis on devaluing labour, and the trading of debt for equity. As if the entire political caste suffers from a chronic case of amnesia, this recipe is oft postulated as cooking up the current financial crisis.

These bailouts are always stomping grounds for interesting interactivity... most prominently within the lifejackets themselves: the auto bailout is both part of the financial rescue package, which the Treasury apparantly has no clue what to do with, and at the same time a miniature part thereof. This (dis)proportionality probably has as much to do with it already laughingly dwarfing GM's market cap, which is hovering at under $3 billion right now, as it does with the fact that the financial sector was actually intended to replace the manufacturing industry as the focus of economy--only this produces extreme contradictions, as evidenced by unemployment rates during the early 80s, and today's bonanza, which is a direct descendant. Fittingly, one of the chief architects of that transition was none other than the head of Obama's Economic Advisory Board, Paul Volcker.

Ultimately, these efforts raise more questions than answers. When a company's debt is $50 billion and its worth 5% of that, how is any swap there going to produce a healthy organization? And how exactly is it supposed to make itself competitive with the foreign auto-makers that have--get this--heavily subsidized and un-unionized plants on the Continent?