The bureaucrats and politicians at GM and the bureaucrats and politicians in DC are carefully and politely carving up the cadaver that was once GM. The autopsy is being performed in Washington behind closed doors, perhaps in the Rayburn building. The scenario could play out like this: While GM executives sit out in the hallway, UAW bosses sit in secret sessions with Congressional Democrats, pounding the table and demanding that they and their union members be compensated for delivering the vote. Democrat party leaders scratch their collective heads, trying to figure out a way to put money in the hands of unions without rewarding automotive execs for sub-par performance. This is no easy task, even for experienced enablers of parasitic behavior like those on Capitol Hill.

Meanwhile, the remaining GM execs are in a huddle trying to figure out how to save their jobs or cobble together a nice golden parachute that doesn’t draw too much attention from the media, the unions or the clowns in Congress. Rick Wagoner’s exit package will be closely scrutinized. They’ve already thrown white collar retirees to the wolves - the government will likely take over the non-union retiree pension programs and slash pension payments and benefits. The media won’t report on it.

President Obama has, in his infinite wisdom as Supreme Leader, appointed a leftist social scientist as the auto czar. Not a car guy. Not an engineer or a corporate finance guy, but a socialist academic who’s never held a real job in his life. Edward Montgomery has never had to deliver a product on time, on budget, with repeatable quality and show a profit – not even an ice cream cone. There is no evidence that Edward Montgomery has ever changed the oil in his car, much less displayed any knowledge of automobiles or the industry. Instead, Edward Montgomery will become the most powerful automotive executive in US history so that he can preside over the ‘equitable’ distribution of money to the UAW and skilled trade unions. He’s certainly not interested in having GM or Chrysler throw off a profit, because he probably doesn’t even understand how that happens. Therefore, GM’s new board of directors, hand-picked by Mr. Montgomery, will probably be composed of radical environmentalists, labor union representatives, academics, ‘victims’ of corporate excesses and ‘community’ leaders. GM will become very much like the old Soviet Union’s state-run enterprises - cranking out sub-par goods at outrageous prices. In fact, the Democrats can probably still find some old, disgruntled Soviet apparatchiks that can show them how best to milk the system for all it’s worth.

GM and possibly Chrysler will be forced to build cars designed by bureaucrats and social activists. These vehicles will make the infamous Soviet-era Trabant look stylish by comparison. Of course, most Americans won’t buy them, prefering to pay a carbon-credit tax on a real car made elsewhere — like Japan, Korea, India or China. The Obama administration will then give these unwanted GM cars away to undeserving wards of the state, who’ll leave them lying by the roadside once they have a flat tire. And the American taxpayer will be on the hook for this entire mess.

But, it’s too easy to blame Obama and the Democrats for the mess. After all, they’re just taking advantage of a situation they didn’t create. No, that happened on Rick Wagoner’s watch, along with an entire gang of GM exec’s that just plain didn’t do their job. The UAW’s attitude is understandable to a degree - they can’t save GM even if their members worked for free. It’s not the union’s fault that GM management wasn’t looking ahead, that it wasn’t nimble enough to create a car company that could roll with the punches like a Honda or Toyota. Yes, the car business has been cruel to everyone, but Toyota lost $2 billion in 2008, while GM lost something north of $40 billion. Both firms sell about the same number of vehicles.

GM points to ‘legacy’ costs such as retiree benefits. Toyota has similar costs. Its labor force is actually older than GM’s and Japan also mandates similar retirement benefits for unionized auto workers. The money is distributed differently, but the numbers are similar. The same is true for German autoworkers who receive 80% of their working salary during retirement. And yet, both the Japanese and German automakers are in better shape than GM.

The blame is to be shared equally by GM management and UAW/skilled trades union bosses. On the part of GM management, a chronic shortage of vision and leadership allowed the company’s bureaucracy to bungle forward, oblivious to the realities of the marketplace.  On the union side, the UAW and the skilled trades unions did their level best to create work rules that hampered productivity and ballooned the cost of tooling up for a new vehicle. They were adamant about preserving jobs in order to protect that flow of dues into union coffers. Too bad it backfired on them. GM’s senior management was too timid to confront the unions and demand more cooperation. Much like the state and federal government, union bosses could not grasp the fact that more productive union workers would make the car companies more profitable and they would in turn build more manufacturing plants. Those plants would need more workers. Instead, union bosses dug in their heels and insisted on increasingly unproductive work rules and procedures that hamstrung automakers and gobbled up available cash.

Why would the unions do such a thing? It would seem short-sighted and self-destructive. Because, union workers and union bosses were firsthand witnesses to the bad decision-making emanating from GM’s executive suites. Those decisions cost them jobs and opportunities. When a new product fails, like GM’s infamous Pontiac Aztec, management doesn’t get laid off or fired. Assembly line workers do. When GM’s board of directors approves investment in a new vehicle line, executives aren’t called on the carpet when it doesn’t sell. Instead, white collar and blue collar workers are asked to make sacrifices and the auto suppliers are told to cut their prices. The automotive industry as a whole has been making sacrifices for the better part of two decades. GM’s senior management has not.

So, when GM is on the ropes, executives shouldn’t expect too much help or sympathy from the UAW or the supplier base, even though the fate of both are closely tied to the failing giant. On the political front, GM has bellyached for years about the unfair trade advantages held by imported brands. Those arguments began to fall apart when imports set up manufacturing facilities in the US while GM continued to move jobs overseas.

It’s likely that GM will go the way of Hudson, Kaiser, Studebaker, Rambler and the venerable Hupmobile. There’s nothing griven in stone that says a corporation must live forever. Big corporations are like miniature civilizations. They possess their own culture, social pecking order, rules of etiquette, ways of doing things. And like any civilization, they have a birth, a period of vibrant growth, maturity and finally, a decline followed by death or dismemberment. Younger, more aggressive corporations feed on the remains. In the end, GM’s demise may give rise to smaller, nimbler carmakers that can remain competitive in the world markets. Propped up by government, GM will simply remain a huge and costly socialist experiment, draining the country of resources that could be put to better use. Steamships and the Pony Express are gone, along with buggy whips and hoop skirts. As unpleasant as it may be in the short term, maybe it’s time for GM to ride off into the sunset. In this case, the pieces will be of greater value than the sum of the parts.

Political pundits and TV newsreaders make much of ‘crony capitalism’ - as if all capitalism is based on monopolistic tendencies. The mainstream media will usually characterize this as conspiratorial corporate collusion aimed at hapless consumers. Monopolies or price-fixing never last because they’re inherently inefficient and unmanageable in a dynamic free-market system. One needs only to look at OPEC, an openly conspiratorial and monopolistic bunch. Whenever OPEC oil ministers agree to set market prices at an artificially high benchmark it only takes a couple of weeks before one of their own is exceeding their production quota or lowering their prices. Despite all their machinations, they can’t control the price of oil. It’s market forces and human nature at work - good, bad or indifferent.

Typically, ‘crony capitalism’ involves government intervention or collusion, because the ‘cronies’ involved are usually government officials, elected or otherwise. Free-market capitalism by its very nature wouldn’t tolerate an unfair advantage, because market forces and competition would undermine the enteprise with an unfair or unethical advantage. This was true when our own government got involved in the corrupt practice of handing out special charters to politically connected individuals who would then form steamboat, railway, subway or trucking lines. These government-sponsored businesses were inherently inefficient and unprofitable not only because of the amount of bribery and graft involved, but because workers and management didn’t apply themselves, confident that their government charter protected their incomes. This is as true today as it was in the 1840s, when crony capitalism first began to appear. Compare Northern Suffolk Railways, a profitable private-sector operator, to Amtrak, a government-controlled operator that costs taxpayers millions each year. Fannie Mae and Freddy Mac, both government-chartered lenders, were subject to corruption and political gamesmanship that triggered the mortgage meltdown.

Pure capitalism has little in common with crony capitalism. In fact, crony capitalism is more closely aligned with socialism, where the government owns businesses outright. When government gets involved in business, those businesses will be run with the vision, energy and efficiency of government itself. In other words, it will be a disaster. Which doesn’t provide us much hope now that government is part-owner of banks, broker-dealers, insurance companies and carmakers.

The last 6 months of 2008 will be marked as a turning point in America’s history and its status as an economic superpower. The real estate crash could have been contained had it not been for Wall Street’s unethical packaging of questionable home loans. Those loans were resold to other banks and governments as secure, rated investments. As housing prices corrected in the US, which does occur occasionally, those multi-trillion dollar investments became suspect. Once banks and investors lost confidence in these shaky loan packages, they were effectively worthless. No one wanted to buy them or guarantee them. Trillions of dollars evaporated overnight.  As a result, the global financial system was severely damaged and the world economy nearly collapsed. Someday it will be revealed how near the brink Wall Street pushed us for the sake of a sales commission.

The George W. Bush administration and Congress acted swiftly (pork-barreling nothwithstanding) to shore up the American side of the ledger sheet. Whether the initial $1 trillion was well spent is a matter for economists to debate. It provided a badly needed confidence-booster  and signaled to the world that America would attempt to clean up its mistakes. Since September 2008, trillions more have been pumped into the financial system. As of January 2008 that number stands at approximately $7 trillion. Just to provide some perspective: At 3% interest, that $7 trillion demands almost $1 billion in interest payments per day. At 1% interest, it will take almost a 1,000 years to pay off the debt based on our government’s past performance for loan repayment. America had already piled up $40 trillion in national debt before this most recent debacle.

Given the gravity of the situation and the magnitude of the destruction, it’s outrageous that no one’s been arrested, investigated or even pilloried in the press. Of course, Bush administration officials have been grilled endlessly, but what about the clowns on Wall Street who created this mess? What about Obama’s housing advisor Franklin Raines, who was a key player in the mortgage meltdown as CEO of Fannie Mae? The press has diverted attention away from the people who created this mess to an intense scrutiny of the people trying to clean it up.

What gets lost in all the noise is the hard fact that someone’s going to have to pay down this debt. It doesn’t appear that Wall Street honchos are going to cough up a nickel. Franklin Raines isn’t going to return his $45 million bonus. That leaves average working Americans to pick up the tab. That means a century or more of diminished economic growth, personal opportunity and personal wealth. It means more taxes, more inflation, a drop in the dollar’s value and a drop in our standard of living. And, adding insult to injury, Barack Obama wants to add an astounding 600,000 new government employees to the federal payroll. That’s insane. With pensions and benefits, it instantly adds another trillion dollars to this year’s federal budget, which is already a trillion in the hole. And it adds another trillion every year going forward forever. At what point do the wheels come off this gravy train? It appears that the only thing that can stop our government from spending money it doesn’t have is for the rest of the world to push our government into bankruptcy. And even then, our politicians and bureaucrats won’t be suffering one bit. That will be left to the taxpayer.

Bernie Madoff exemplifies the prevailing ethic on Wall Street - investors are merely marks. It’s all about the transaction, protecting the transaction and making money from the transaction, investor be damned. Madoff went a bit further than the average broker or manager.  But, the losses that his investors bear are a trifling compared to the trillions eradicated in the mortgage-backed securities catastrophe engineered by so-called ‘legitimate’ players like Bear Stearns and Lehman Bros. Who’s the greater evil?

Bernie Madoff was well protected. No one, not even the SEC, could touch him. His clout with regulatory agencies was considerable and he worked his connections effectively. What brought the Madoff operation down wasn’t the investigatory zeal of any governmental agency, it was the collapsing stock market and the inevitable run to redemptions. But then, the big investment bankers, broker/dealers and bank holding companies were equally well protected and well connected. Madoff is a parasite. But that characterization can be applied to much of Wall Street and the banking industry given the awful mess they alone created and the way they’re now conducting themselves with taxpayers’ bailout money.

In that context, Bernie Madoff is not unusual in many respects. He is the logical extension of the largely unethical practices that make up too much of the day-to-day activities on Wall Street. What goes on has been dressed up in many guises, but it’s all the same. It’s the transaction - whether the investor makes money or loses money is immaterial. The broker-dealer, the underwriter, the investment banker or the adviser is focused only on the transaction itself. It’s the transaction that creates revenue. Everything else is eyewash.

Given the stupendous disaster created by mortgage-backed securities, no one seems to remember the mutual fund scandal and the hedge fund improprieties of just a few years ago. And before that, it was the derivatives scandal, preceded by the collapse of Long Term Capital Management. There has been an endless procession of financial chicanery stretching back 100-plus years. But, everyone does forget, and Wall Street counts on it. Eventually, the sheep forget about the wolves and go back to grazing. The hunt begins anew.

The size, scope and sheer audacity of the improprieties are expanding. There’s not even a pretense of transparency or accountability. Even pretending to be ethical and aboveboard has become inconvenient and boring for some of the players involved. To Wall Street, the rest of America are just marks, nothing more. Bernie Madoff just took it one step further.

Former Clinton Labor Secretary Robert Reich recently appeared on a Discovery Channel program that attempted to explain economics and capitalism. Reich, a seemingly well-educated man, kept referring to capitalism as simply dressed-up greed. In his fevered mind, there appeared to be no place for capitalism in the world, because it was based on greed. He referred to the writings of Adam Smith as proof that greed was the underlying motivation for capitalism - not personal achievement or bettering one’s life, not even providing the best for one’s family. It was just simple greed. Reich is not an idiot, but he is a demagogue. He’s entitled to his opinions, but when they are amplified and broadcast across the country, his extremist views influence others. The program provided no opposing views or commentary. This insult to our open, free-market economic system went unanswered, as do many other such insults.

Contrast Reich’s opinions with the observations of Alexis de Tocqueville, a French writer and political scientist who toured America in the early 1800s. He was struck by the incredible energy and vitality of everyday Americans - simple men and women who worked doggedly at improving their lot in life. He observed that this was possible only in America, because only in America did hard work pay off for the common man. Therefore, it wasn’t ‘greed’ that motivated Americans over the last 200 years, it was the possibility, the certainty, that if they worked really hard, no one could take their newly found prosperity away from them. It energized them, it gave them hope for a better tomorrow. And yes, a very few people became very rich doing so. But, the more important point is that hundreds upon thousands became very prosperous - much more so than if they’d remained in Europe. It was the growth and political stability of a solid middle class that distinguished America from any other nation at any other time.

This has always been the central argument against capitalism — the poor are exploited by the greedy rich. In Europe, the poor had been exploited by the rich and powerful for centuries, well before capitalism existed. And, there were proportionately more poor people in Europe during the 1800s than in America. They were held back by social barriers, denied education and opportunity, prohibited from relocating to areas with better economic conditions. This was the reality of life in England and Europe. Slavery was abolished in the United States by presidential decree in 1861. But only after pressure was applied by other European governments did Russia finally abolish serfdom for Ukrainian peasants in 1862, freeing hundreds of thousands from centuries of bondage. The lack of opportunity and incentive was a fact of life for millions of Europeans.

In America, those who escaped the rigid social and economic structure of Europe were becoming landowners, opened small businesses and sent their children to universities. This was impossible anywhere else in the world and in many places is still impossible today. What America’s largely classless society was able to accomplish was the marvel of the modern world - a relatively well functioning capitalist system with minimal interference by aristocrats, autocrats and bureaucrats. Was it perfect? No. Did excesses and failures occur? Yes. But, it’s still the best system ever devised by man. The irony is that the liberal elite who preach against a free-market economy and capitalism have benefited most from its bounty.

Take Robert Reich as an example -  he attended Dartmouth College and won a Rhodes scholarship to study in England. The Rhodes scholarship was endowed by Cecil Rhodes, a capitalist and diamond merchant. Reich then taught at Harvard University, the wealthiest educational institution in the world. Harvard endowments exceed $45 billion, most of them gifts from capitalist alumni. At Brandeis University he was the Maurice B. Hexter Professor of Social and Economy Policy at the Heller School of Social Policy and Management. He’s currently a professor at UC Berkley’s Goldman School of Public Policy. Maurice Hexter, Florence Heller, Richard and Rhoda Goldman are philanthropists who endowed the institutions that paid Reich’s salary. Where did their money come from? Capitalism. This ingrate, along with his former girlfriend Hillary Clinton and thousands of other liberals, have no problem taking money from capitalists only to turn around and bite the hand that feeds them.

But then, this is what liberals do. They resent the fact that someone else has worked harder, worked smarter or had the good fortune to accumulate wealth. Envy is a powerful emotion. It’s corrosive, destructive and insidious. Envy, dressed up as public policy, is what threatens free market capitalism. Demagogues like Reich and Obama have used envy to whip up class warfare, turning it to their own advantage. Socialism is their choice of socio-political structure, not because it’s inherently better than capitalism, but because it can be easily controlled by a small elite. That’s right: Socialist activists like Reich and Obama firmly believe in their own superior intellect and abilities, and they’re more than happy to impose their ideology on the rest of America. The average American can’t seem to grasp this. Why would someone dedicate their lives to telling other people what to do? There doesn’t seem to be any profit in it. And that’s the key - Americans are so conditioned to a direct linkage between effort and material reward that the desire to accumulate personal power is totally foreign.

They don’t understand it because they’ve never lived under despotic rulers or communist totalitarianism. Josef Stalin murdered millions and destroyed entire civilizations. He controlled the Soviet Unions economy with an iron fist. As the supreme ruler, he could have any material thing he wanted. And yet, he lived like a pauper. This is unfathomable to the average American. Unfortunately, Americans will need to get used to it. Obama’s monstrous plan to grow government means that all Americans will be working for the government, whether they understand it or not and whether they like it or not.

Reich, Obama and other well-educated liberal elites have no problem taking money from capitalists to feather their own nests. They have no problem taking money from taxpayers, either. Using our tax dollars, they will build a utopia in their own image and likeness. And, they’ll do it in the name of ‘fairness’. At some point, Americans will wake up and find themselves yoked to a huge and unyielding machine that sucks the life out of them. But it will be too late. Betrayed by liberal ideals, Americans will have allowed the most despotic form of government to take hold. They will have thrown away their freedoms and their future.

The Obama administration, not yet fully installed, is already calling for radical changes to what it brazenly characterizes as the ‘failure’ of free-market capitalism. Given their way, Obama and his handlers would institute FDR-era programs liberally mixed with Johnson-era social engineering and the hopeless, self-limiting ideology of the Jimmy Carter era. This toxic cocktail would be forced down the throats of every American, even those who believe that bigger government is not the answer, and that we should rely on our own ingenuity and hard work to get out of the current economic disaster.

There is no doubt that Wall Street screwed up. Their greed and avarice blinded them to the enormous risks they were peddling to banks, investors, pensions and governments. It’s incredible that the CEOs and chairmen of Lehman Bros., Merrill, Bear Stearns and other big investment houses didn’t fully understand what was going on inside their own firms. Apparently, the need for transparency goes much deeper - into the very innards of these organizations. It’s strange that there are no arrests, no indictments and no large-scale investigations of the mortgage meltdown, the credit squeeze and the resulting economic catastrophe.

It doesn’t take a financial wizard to observe that mortgage-backed securities were created from pools of shaky borrowers, given an unrealistic rating and then sold around the world as investment-grade instruments. What’s even more difficult to imagine is that the same people who created these toxic securities bought them for their own accounts. Once again, it doesn’t take a wizard to observe that the executives didn’t know what people in their own organization were actually doing. Given these simple observations, one can only conclude that Wall Street executives taking home billions of dollars had no idea what they were doing, or just didn’t give a damn.

The alternative explanation is even more unsettling. One can also postulate that Wall Street execs understood fully what was going on. They understood fully the risks to the world’s markets and the potential damage to the American economy. But, they were making billions of dollars and their greed blinded them to the inevitable consequences.

Does this make free-market capitalism a failure? No. The basic concept is still the best possible system ever devised. But, it does bring into question the quality and scope of enforcing laws and regulations as they apply to Wall Street, banking and lending. There is also the matter of whether corruption, graft and influence peddling has compromised oversight and enforcement. This isn’t a Republican or a Democratic problem. It wasn’t created exclusively by either party or during any one administration. This is the result of a general erosion in ethics and personal responsibility. Wall Street is merely the canary in the coal mine.

The 20th century was certainly America’s greatest age - the first half, at least. The bitter and divisive Reconstruction Era of the 1870s and 1880s transitioned into a more or less cohesive national perspective on America’s place in the world by 1900. The Spanish American war, concluded successfully just two years earlier, gave American military leaders confidence in their abilities to wage war on a global scale. And so, when World War I erupted, president Woodrow Wilson wasn’t intimidated by Germany’s U-boat attacks and quickly mobilized a huge army that effectively won the war in Europe and elsewhere. World War II was a repeat performance on a larger scale. America emerged from WWII as a superpower. The armed forces executed their missions superbly. But it was the home front that made overwhelming victory possible - the manufacturing might of America’s relatively new steel and automotive industries, as well as shipbuilders and munition makers, was the key strategic factor. It wasn’t the Roosevelt administration or government bureucrats who were responsible for developing this overwhelming advantage. It was America’s entrepreneurs and business leaders. For example, under direct Army supervision, aircraft makers were turning out one B-17 bomber every four days. Under direct Ford Motor Company’s supervision, the output was increased to one B-17 bomber every four hours. America didn’t become a superpower on just the courage and dedication of its military personnel. Our military entered combat with more armor, more firepower, more munitions, more fuel, more food and more technology than any other armed forces on land, sea or in the air. It’s a position of strength we’ve never relinquished.

After WWII, the former Russian Empire, run by Josef Stalin and his thugs, emerged as an unintentional and adversarial superpower. They were a brutish, unsophisticated and xenophobic bunch. Soviet Russia was a superpower only in a military sense, and even that was questionable. Much of the government’s resources were consumed in keeping their own citizens under control. Russia’s non-military economy was a tiny fraction of even a war-ravaged Europe, much less that of the United States. In the end, Soviet Russia collapsed not because it couldn’t maintain an iron grip on its subjects and not because it couldn’t compete technologically with US weapons systems. It collapsed because America could out-manufacture and out-spend the Russians 10 to 1 and they couldn’t keep up.

Ronald Reagan realized this when he was developing his political platform in the late 1960s. America’s manufacturing muscle was our de facto arsenal of democracy. Not only did we have the latest and best weapons systems, we had more of everything than anyone else. Once he was elected President, Reagan put his strategy into action. Without firing a shot, Ronald Reagan was able to destroy Russian rule over its conquered neighbors by simply outspending the Soviets on every level. They couldn’t keep up. And once their economy  started to crumble, the political machinery unraveled as well. Soviet Russia was unable to keep an iron grip on its conquests. Millions of Belorus, Ukrainians, Poles, Czechs, Slovaks, Kazakhs, Georgians, Armenians, Lithuanians, Latvians, Estonians, Finns, Prussians, Ossetians, Turkmen, Azerbaijani, Tartars, Uzbecks and a dozen more ethnic groups now had a chance at freedom and self-determination.

Our manufacturing sector was responsible for ending the Cold War. Unfortunately, that manufacturing sector has been under attack for the last two decades. Poorly considered free trade policies, unscrupulous trading partners like Japan, India and China, the raping of corporate assets by trial lawyers, unrelenting pressure from environmental groups and a massive expansion of government have combined to deal a mortal blow to domestic manufacturing. Our own government has carried on a relentless assault, literally driving manufacturers out of business, some of whom were critical to national security. For example, our government drove the last domestic manufacturer of hand grenade detonators out of business by allowing non-US companies to bid on US military contracts. The only company in the world that can supply those detonators is located in Switzerland. When the US invaded Iraq, the owners of that private company refused to supply grenade detonators to the US and any other country that entered the war as part of the coalition. This is only the tip of the iceberg. No one knows how many mission-critical parts and pieces are manufactured in countries that aren’t particularly concerned with our national security. And no one within the government is talking.

From a military and national security perspective, it’s absolutely stupid to put American companies out of business and outsource critical technical components to China, Japan, India or just about anywhere but here. The US military relies heavily on foreign sources of microchips, memory and logic controllers. It is unbelievably easy to compromise weapons and communications systems with a little bit of re-engineering that’s almost impossible to detect. This is not paranoia. The China government sanctions and funds daily cyber attacks on Department of Defense servers from so-called ‘military academies’ and institutes within China. And, China has already leapfrogged American Internet technology by embracing TCP/IP and mobile protocols at least two generations ahead of our current versions.

From an economic stability perspective, it’s absolutely stupid to beggar our skilled and unskilled manufacturing workers by pitting them against workers in other countries who live and work in unbearable conditions. Unemployed Americans in the hundreds of thousands create economic instability and political problems. In their desperation, they fall prey to demagogues and panderers who promise them hope and handouts in exchange for their votes. If the government is going to ‘invest’ in America, the first place to make that investment is in revitalizing the manufacturing sector, and specifically, the repatriation of defense manufacturing. Every nut, bolt and screw should be made in America, not because it’s a trade protectionist urge, but because it truly protects the country to do so. Given the astounding level of waste, greed, corruption and inefficiency in government, rebuilding our domestic manufacturing capability is a low-cost, high-return investment.

Champagne corks are popping in Detroit’s most exclusive clubs and watering holes. George W. Bush, anxious for a positive lift at the end of his presidency, skirted Congress and even his own Treasury Secretary to dole out taxpayer funds to money-hungry carmakers. For the moment, GM’s chairman and his hapless crew can hold on to their jobs, while across town Chrysler’s crippled top management breathes a sigh of relief. The $14 billion dollars is a stop-gap, a temporary plug for a sinking ship. Imagine what that $14 billion could have done in the hands of thousands of small entrepreneurs and business owners. But, that’s neither here nor there. The management and non-union staff of the domestic carmakers aren’t really going to benefit much from the handout. Neither will George Bush’s legacy or the American taxpayer.

Given that labor unions will be the single largest beneficiaries of the auto bailout, UAW president Ron Gettelfinger acted like a typical union ingrate when the handout was announced. He figuratively spat in George W. Bush’s face, defiantly announcing that the union will sacrifice absolutely nothing in exchange for the money. This in spite of the fact that Bush’s gift merely suggested some concessions. Gettelfinger went on to say that his union would revisit the deal once Obama and the new Congress were installed. This isn’t suprising. It’s not even outrageous by union standards. It’s a cancer that’s been growing for decades. And with Obama in the White House and Democrats controlling Congress, the UAW and its sister unions are poised for a comeback.

The unions have in fact given up absolutely nothing, while asking everyone else, including their own members, to make sacrifices, however modest. It’s important to understand that the union organization itself is a separate entity. UAW president Ron Gettelfinger’s salary and benefits are not being threatened. Neither are those of union local presidents, union administrators, benefits planners, money managers and other union employees. The dues-paying ‘members’ are employees of the carmakers, not the union itself. And they do need to be reminded of that occassionally. It’s not the UAW or the AFL-CIO that created their manufacturing jobs. It was a for-profit corporation.

One can always condemn the unions for their reprehensible behavior and the fact that union leadership encourages the rank and file to work as little as possible for the highest pay rate possible. But, the blame for that union attitude rests squarely with GM, Ford and Chrysler management, as does pretty much everything else that ails the auto industry. It’s the short-sighted, self-serving and chaotic management style of this insular and clannish business community that’s wreaked havoc with hundreds of supplier companies, the lives of thousands and now threatens the greater economy.

At the height of the bailout crisis just days before the Bush announcement, GM management ordered its EDS supplier to prepare a company-wide email blast that all bonuses and raises for 2009 would be cancelled. Once the Bush bailout money was announced, that email blast was cancelled. In other words, the taxpayer money would allow GM to continue with business as usual. One would think that given this is taxpayer money, those bonuses and raises would be curtailed as a responsible measure to safeguard the public’s interest. No way. That’s not how Detroit works.

GM and Chrysler will burn through the money that the labor unions allow them to keep in about 60 days. They will return to Washington for another Oscar-winning performance. One would think these captains of industry abhor the notion of groveling in front of Congress for money. Nothing could be further from the truth. Don’t assume that these guys are entrepreneurs or capitalists. They are neither. These auto execs are bureaucrats and politicians as skilled as those facing them in Congressional chambers. They don’t have the vision, the guts or the leadership skills to pull these automakers out of the mess they themselves created. They have the savvy and decision-making skills of a potted palm. And the American taxpayer is going to make sure that they, along with their union counterparts, enjoy the ride.

Wall Street is synonymous with capital formation - raising money from investors worldwide to fund the growth of corporations. Wall Street is also synonymous with finance - raising money from investors worldwide to lend money in the form of bonds to business and government. And, Wall Street is synonymous with securitization - taking capital or lending risks and breaking them up into bits of paper that individuals or institutions can purchase. In all of this, Wall Street itself takes no risk - all of it is borne by investors in one form or another. Wall Street firms make money from the transactions, the creation of the paperwork and the buying and selling of stocks, bonds, commercial paper, derivatives and so one. Wall Street firms make money whether the markets go up or down, whether the dollar is rising or falling, whether the economy is growing or shrinking. The only thing that affects the well-being of Wall Street firms is volume. The money made on a huge volume of transactions is what keeps those billion dollar bonuses going.

Wall Street is all about the transaction. The people running these firms, the people offering Americans investments don’t really care if their customers make any money. It’s all about the transaction. It’s about getting a piece of the action, a little bite out of that stream of cash. It’s how they make their money. That’s why Wall Street is constantly inventing new ‘products’ to sell investors, each one more toxic and risky than the previous one. And in each case, there’s a cut for somebody on Wall Street. Unbelievably, these are the ‘legitimate’ offerings. In addition to these decidedly predatory and parasitic practices there are the out and out frauds who work alongside the ‘legitimate’ broker-dealers, advisers, investment banks, underwriters, analysts, ratings agencies, traders and the rest of the Wall Street apparatus.

Bear Stearns was infamous for its cozy relationships with shady stock promoters, bucket shops and boiler rooms who regularly fleeced small investors. Bear Stearns handled the securities paperwork for these frauds because they weren’t licensed to do so on their own.  Bear Stearns took a healthy fee for its part. The profits from the transactions were so lucrative the firm was willing to take the heat and scrutiny from the SEC and the New York Attorney General’s office. The shady operators would go in and out of business, in and out of jail, but Bear Stearns just kept on handling their paperwork. This kind of mentality permeates Wall Street.

Unfortunately, the various watchdog and governmental agencies that are supposed to oversee Wall Street aren’t doing their respective jobs. Wall Street doesn’t need any more regulation. What’s needed is for those already charged with the responsibility of oversight to actually do their jobs. Bernie Madoff is a prime example. It doesn’t take much of an imagination to speculate that Madoff was able to manipulate, intimidate or buy off individuals within the state, federal and industry regulatory entities that could have spotted this scam many years ago. How someone so visible can conduct a Ponzi scheme of such magnitude for decades is unfathomable. But then, of course, it’s all about the transaction. Was anyone else getting a piece of the action?

The auto industry is a tempting carcass that even the vultures won’t consider. Typically, when a corporation the size of GM founders, corporate raiders of every stripe flock to the scene. They’re after the assets or the cash flow or sometimes the tax losses. Hedge funds and private equity groups would be sniffing around, looking for a great deal. That’s what happened to Chrysler. Cerberus Capital made a lowball offer for the ailing automaker once word got around that Daimler-Benz was willing to give it away. Unfortunately for Cerberus and its management, this was not a flip-and-strip. And even with a capable cost-cutter as CEO, a top-to-bottom reorganization will take many years and many billions of dollars. Throw in a disastrous turn in the economy and you have some real trouble on your hands. Ford and GM are also being pummeled in this recession. Sales are off by billions of dollars.

As of this date, the market value of GM and Ford stock combinedis roughly $9 billion. That means anyone with $9-10 billion can offer existing shareholders cash and effectively own both corporations. The combined annual revenues of both corporations is over $200 billion. One would think that vultures would have been circling for the past two years as both GM and Ford hemorrhaged cash. But they haven’t. In fact, Bill Gates or Paul Allen could easily write a check  out of their household accounts. No Middle East sheik, no Asian billionaire or Russian mobster has even considered a move. Kirk Kerkorian, the Vegas entrepreneur and investor, has taken a beating in his attempts to buy into GM and Ford.

What’s keeping the turnaround artists, the LBO experts and the private equity groups away is the lack of available credit and collapsing vehicle sales. Both combine to create an incredibly difficult and complex financial situation. Anyone considering a play to control either Ford or GM would need billions in low-cost borrowing in order to accomplish a restructuring - something both firms desperately need. And everyone is standing pat, waiting for something to happen. The $36 billion the carmakers are requesting is just a band aid. It will never be repaid because the Big 3 haven’t even earned $36 billion all told in the last 10 years. Consider it a gift from the American taxpayer. Congress should consider simply guaranteeing a $30-50 billion loan to anyone with a plan that shows they can do a better job of running GM or Ford than present management. Let’s ask Warren Buffet.