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5/21/2009
NOT SOCIALISM: GANGSTERISM

You may have missed this blog post at American Thinker a couple of days ago. Rush read it on the air and it got a little play - not nearly enough as it should, however. This “Letter from a Dodge Dealer” brings home in stark, human terms the cost of Obama’s power grabs and points up a fact that many may have dismissed or simply not recognized; when you’ve got a gun to your head, you’re even willing to destroy your family to save your own life.

That gun is being held by Obama’s auto team as it struggles to keep as many UAW jobs at Chrysler as possible regardless of whether the businesses involved get hurt. Case in point; George C. Joseph, sole owner of Sunshine Dodge-Isuzu in Melbourne Florida, a business that had been in his family for 35 years, who received the bad news that Chrysler was yanking his dealership agreement as part of their restructuring under the forced bankruptcy of the company ordered by the Obama auto team.

Mr. Joseph says that his dealership was “financially strong” and was seen as having “great respect in the market place and community.” He added, “We have strong local presence and stability.”

This was not enough to save Mr. Joseph or any of the other 788 dealers who are being dropped by the automaker. Beyond that, the “terms” of the break with Chrysler would no doubt have made Al Capone proud:

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

This is happening all over the country as this Chicago Trib article from May 17th explains:

But inside the 789 Chrysler showrooms to be cast aside, fear is starting to set in as dealers try to figure out what to do with expensive inventories that weren’t selling well even before the Auburn Hills, Mich., automaker entered bankruptcy protection last month.

“They’ve told us that the inventory is our problem,” said Keith Hollern, one of the owners of a Dodge dealer in Windber, Pa. “Want to buy one? We’re having a fire sale.”

Dealers borrow money to buy their inventories, then repay the loans and make a profit when the vehicles are sold. But Chrysler sales were down 46 percent the first four months of the year, so many dealers have been paying interest for months. Even if the vehicles are sold at cost, dealers still lose thousands in interest payments.

Chrysler doesn’t have the money to buy back the vehicles, said company spokeswoman Kathy Graham, but it also doesn’t want to leave dealers in a bind or see the inventory flood the market at bargain prices.

So it has signed a deal with GMAC Financial Services, Chrysler’s new finance company, to float loans to dealers that Chrysler plans to keep can take on the 789 dealers’ unsold inventory. The deal, though, doesn’t include about 4,000 2008 models still on the lots.

We are talking about around 44,000 cars that would need to be bought back. Are you trying to tell me that Obama can find the tens of billions of dollars to bail out his union buddies but can’t find one red cent to help the small businessman? Where is the logic that you must bail out the auto maker but allow the company that sells those cars to perish ignomiously?

Obama’s corporatism does not mean he is friendly to business but rather only to those businesses that can do him political good. Mr, Joseph asks the $64,000 question:

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

It can happen because at the moment, the opposition forces are scattered, dispirited, and engaged in a fruitless quest to determine who is a “real” conservative and who is an Obama loving, free market hating, wimpy, squishy RINO.

It can happen because we are barking up the wrong tree when we accuse the Democrats of practicing socialism. Any Chicagoan recognizes what’s going on as pure gangsterism - the application of power through the use blackmail, threats, and pure muscle and the devil take the Constitution, the rule of law, and simple fairness.

It can happen because we’ve elected a president who aggrandizes power unto himself while running roughshod over individual rights.

It can happen because we are allowing it to happen. We are too busy, too worried about the economy, too frightened of the future, and too complacent about the idea that “It could never happen here.” It’s happening now and not enough of us are raising our voices in protest. Not enough of us are demanding that our politicians be held to account for meekly accepting Obama’s fait accomplis.

What can we do about it? Hope that most of Obama’s ruinous interventions can be reversed once people wake up to the fact that this is not about saving the free market, or curing the economy, or stimulating production, or anything else save the naked application of power by presidential fiat to further the ambitions of one man and his party. The automatic complaint that the right never protested Bush power grabs will ignore the fact that, while overreaching in many cases I believe, the Bush administration was seeking to restore a balance lost in Congressional power grabs of the 1970’s and early 80’s. Bush was not seeking new powers (in most cases) but rather to restore power to the executive lost when Congress usurped several presidential perogatives, especially relating to national security. Not a “unitary executive” but rather the restoration of the same powers exercised by presidents in war time from Washington through Nixon.

What Obama is doing is much, much different and on a scale that makes Bush look like a presidential power grabbing piker. The incredible amount of debt he is piling up has a purpose; to ensure federal intervention in the economy for the foreseeable future. It will also, no doubt, make more people dependent on government for their livelihood - a good reason to vote for the party that will promise to keep the spigot open and the dollars flowing.

The tea parties are a good start but obviously not enough. Obama is moving too fast, his reach will soon engulf bankrupt states like California and probably New York eventually. Only voters can stop him and the Democrats from turning this country into something that is unrecognizable to those of us who still believe that the Founders intended America to be different and not a pale imitation of some moribund European social demcracy.

We feel for Mr. Joseph. But Obama’s got the muscle to do pretty much anything he pleases. And that includes holding a gun to the head of Chrysler and making them an offer they can’t refuse.

By: Rick Moran at 10:41 am
20 Responses to “NOT SOCIALISM: GANGSTERISM”
  1. 1
    Val Prieto Said:
    11:07 am 

    But Obama’s got the muscle to do pretty much anything he pleases. And that includes holding a gun to the head of Chrysler and making them an offer they can’t refuse.

    This is based on the premise that Obama wants to do what is right.

    I believe Obama uses his power exactly how he wants to.

  2. 2
    steveegg Said:
    11:57 am 

    So much rich reading material, so little space in the comments to work with. First, I must quibble with what to call it - it is actually both socialism and gangsterism. The older and wiser among us see more than a passing similarity to Cuban-flavored Communism, enforced at brute force.

    It’s clear we’re being hung separately, yet the powers-that-be are busy scrambling for the “who gets eaten last” honor. As one of the dwindling number of broad-based conservatives, it is distressing.

    Thanks for pointing out the difference between the inch Bush took and the mile (or is it light-year?) Obama’s taking.

  3. 3
    Chuck Tucson Said:
    12:14 pm 

    Meh. Just like all those people who agreed to take out mortgages they couldn’t afford, maybe Mr. Joseph should have read the fine print in his franchise dealership agreement.

  4. 4
    michael reynolds Said:
    12:21 pm 

    What a load.

    Either Chrysler was going to go bankrupt and entirely out of business leaving EVERY Chrysler dealer out of business.

    Or, the USG was going to step in with loans and support and save not just UAW jobs but many Chrysler dealers.

    Those were the choices. All dealers out of business or some dealers out of business.

    Of course Republican free marketeers preferred option “A.” Which makes complaints about the fate of this dealer ridiculous. You are simultaneously decrying government intervention and seeming to ask for more and concluding from this mish-mash that Obama is a gangster.

    Incidentally, the only reason a lot of these dealers have stayed in business over the years is state government intervention on their behalf. They’ve been regulated into business to the detriment of the parent company. The dealers being dropped are being dropped because their business no longer makes sense for Chrysler and probably hasn’t made sense for a decade or more.

    Gangsterism, socialism, communism, fascism, Islamism . . . I’m losing count of the “ism’s” your party has tried to affix to Obama. He’s naive, no wait he’s not, he’s smart, stupid, radical, just like Bush, a racist, a terrorist, too angry, too cool. . .

    It would probably help if you could unify your name-calling efforts. It wouldn’t help you beat Obama but you’d look slightly less ridiculous while trying.

    1. Chrysler would have gone bankrupt but had a plan that the government rejected. It could have been the greatest plan in history and it still would have been rejected because in case you haven’t noticed, Obama thinks he can remake the auto industry and independent companies are not part of that plan. It isn’t that chrysler is sloughing off dealers, its that the stock buyback would be a pittance compared to what the feds have paid out already.

    2. I worked for a car dealership for a time and I know the difficulties involved. Smaller outfits were being squeezed by the big lots while the supplier always favored the biggies because they moved product. The “intervention” of which you speak was mostly to protect consumers - not dealers.

    3. How long are you going to try to convince everyone that Obama is just a moderate, nothing radical about him? And btw, I saw this Chicago style political mind before he was even given any chance at all. These threats of blackmail, muscling banks, and other gangster tactics are straight from the Machine’s way of doing business. And Obama has said continuously that it’s not all about the economy, that he is using the Bush crisis to remake America. That’s not radical? Try again.

    ed.

  5. 5
    Eddie Said:
    12:34 pm 

    While I am not happy about the UAW bailouts and other sordid matters of Obama’s policies, I have little sympathy for this guy.

    Is it the government’s fault that Chrysler could not get its house in order for decades? Is it Obama’s fault that they manufacture cars people do not prefer in comparison to Toyota, Honda, Hyundai and Ford?

    If he had been smart, he would have diversified his car holdings (we have multiple Chrysler/VW/Honda (or some combo of) dealerships in my area) or even got out when he had a chance years ago (of course, its the government’s fault that he seems to have a lack of business acumen and ability to pay attention to trends on the horizon).

    Even more, as much as I despise the unions for what they have done to this country since the 60’s (and continue to do so in the case of the teachers), the UAW has now conceded pay and benefits very close to what non-union auto workers get. While the prospect of labor extortion is favorable at some point down the line, I do not see it happening for 5-7 years. So the UAW took a significant haircut, at a time when the Wall Street folks refuse to do so and were still amply rewarded by Bush and Paulson and now Obama and Geithner. That is what we should be angry about, not some dealers who could not read the writing on the wall and now want a handout.

  6. 6
    busboy33 Said:
    12:45 pm 

    “HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?”

    Isn’t this the definition of a free market?

    So the restructuring plan screws over the dealers. If it didn’t, it would screw over the UAW. Somebody was getting screwed — why does the dealer deserve to be protected while the factory workers don’t?

    I’m not defending the screw job in any way. But thats the deal that Dodge got when they begged for money from the government. Notice the government didn’t seize control, so as Rick pointed out this isn’t remotely anything like socialism. Nobody would lend them cash (because its a free market nobody had to). The only way they could get the loan was to take a deal with craptacular terms — because that’s what the market dictated.

    Should Dodge have closed a highly profitable dealership? Probably not. Did the Administration tell them “Und now you vill close the capitalist pig dealer #1,724. You vill be as cruel as possible, jah? Ve vill hear ze lamentation of his vomen!!”? I doubt it. More likely the Administration told them as part of the deal they had to close dealerships . . . and Dodge chose this guy. Why? Ask Dodge.

    It seems like the other option would be to have given the company billions, and then said “do whatever the hell you want” — isn’t that what the (last) Administration did under TARP? And didn’t everybody here complain that just giving them money without any conditions was unbelievably stupid?

    Aside from the specific victim, I don’t see the complaint. I recently got downsized (aka fired) from my teaching position. I thought it sucked, especially given the (true) reasoning that I got the axe and not some of the other professors . . . but because the school was bleeding money somebody was going to get sliced, and it turned out to be me. If it was somebody else, they’d feel the same way.

    Somebody was getting the axe in this situation. The issue lies with Dodge, not the Administration. Dodge is treating its dealers like crap — so Obama is a gangster?

    I’m just not following the logic.

  7. 7
    Neo Said:
    1:43 pm 

    “President Obama told human rights advocates at the White House on Wednesday that he was mulling the need for a ‘preventive detention’ system that would establish a legal basis for the United States to incarcerate terrorism suspects who are deemed a threat to national security but cannot be tried,” Sheryl Gay Stolberg writes in The New York Times.
    “The two participants, outsiders who spoke on the condition of anonymity because the session was intended to be off the record, said they left the meeting dismayed.”
    “Obama was succinct about his reversal, according to one person at the meeting, who spoke on condition of anonymity because the meeting was private: ‘He said, “I was a constitutional law scholar. Now I’m commander in chief,” ’ ” per The Boston Globe’s Joseph Williams.
    Now he is a goof. Trying to out do his VP. Who in their right mind goes before a group of Human Rights folks and talks about a “preventive detention” system ? This is what Gulags were invented for.
    Perhaps he forgot about this part of the Constitution (since he gave up being a “constitutional law scholar”) .. The privilege of the writ of habeas corpus shall not be suspended, unless when in cases of rebellion or invasion the public safety may require it. Anybody seen any “rebellion or invasion” ? Thought not.

    Its one thing to imprison combatants under the aegis of the “Law Of War” but quite another to create a “preventive detention” system uner the aegis of US civil and criminal law.

    Has the man lost his mind ?

  8. 8
    KenGirard Said:
    3:54 pm 

    So lets look at the other alternative: Chrysler declares bankruptcy, and all the dealers are with out a dealership.

    You talk about the unions getting bailouts. How many union guys are currently with out a job? Last I heard Detroit was pretty much a ghost town, and both of the car plants in my neck of the woods are going to be shut down.

    Did Obama personally pick who was keeping a franchise, and who was loseing one… or was it someone at Chrysler? I am pretty sure it was someone at Chrysler looking at the number of cars bought and sold at each franchise who made the choice.

    Right down the street from me there are 15 store fronts that have not been rented out since they were built a little over a year ago. From what I understand the owner of the strip mall is about to let the bank take it over, so that he can keep the other 3 he owns as they still make him money.
    What Chrysler is doing is kind of like that. Droping off the ones that don’t earn as much of a profit, so the ones that are still running can make an even bigger profit.

    The guy says 50 people will be unemployed… Figuring a minimum of $100,000 a month to pay them, that means that he needed to be selling… what? 50-60 new cars a month to turn a profit? When sales are down nearly 50%, do you think he is making those kind of sales? So he is losing money, just like all the other dealers…. but if we close some of them, then the sales will go to a different dealership, and that might be enough to turn a profit and keep those employees employeed there.

  9. 9
    michael reynolds Said:
    9:59 pm 

    Rick:

    There’s nothing even a tiny bit radical here. Chrysler was going broke because they made lousy cars, had too many dealers, and we alone among major auto-producing companies pile all the health costs on private companies.

    The only reason there will be any Chrysler dealers a year from now is because of Obama and the American taxpayer. In what universe is it radical to try and save the workers (including the workers at dealerships) from the staggering, decades-long incompetence of Chrysler management?

    Radicalism? Gangsterism? Puh-leeze. Let’s remember that Chrysler and GM went broke under the Bush administration. Just another GOP mess we’re stuck cleaning up.

  10. 10
    busboy33 Said:
    10:18 pm 

    @ Mr. M:
    Respectfully, you’re really sounding wacky on this.

    “How long are you going to try to convince everyone that Obama is just a moderate, nothing radical about him? And btw, I saw this Chicago style political mind before he was even given any chance at all. These threats of blackmail, muscling banks, and other gangster tactics are straight from the Machine’s way of doing business.”

    Yes, you spotted this radical blackmail, muscling and gangster tactics. And its illustrated here because. . .

    “That gun is being held by Obama’s auto team as it struggles to keep as many UAW jobs at Chrysler as possible regardless of whether the businesses involved get hurt.”

    NOT that the Administration isn’t simply giving out the money the company begged for with no strings — that the Admin makes not trashing the UAW jobs or contracts contingent on the loan.
    If the Administration was only willing to give them the money on the condition that they seek to nullify the UAW contracts, would that be “radical gun-to-your-head gangsterism”? Baloney.
    Is the Administration forcing Dodge to do ANYTHING? Y’know, “gun-to-you-head gangster” forcing? “Do this or I will hurt you”? Absolutely not. Dodge don’t like it . . . Dodge can not take the deal. They’re perfectly free to get a loan form another source. Of course, they’ve so throughly fu@ked their company up that nobody wants to lend them money, but that’s entirely on them.
    Your imagery implies that if the “victim” doesn’t agree with the gangster, then the gangster will actively harm the victim, abusing them until they can take no more. You know this . . . and you also know that’s not even remotely true here. You know it because you’ve written in the past about how the Federal government works, about how if you want X, you may be required to do Y. Want funding for your schools? Then you’ve gotta meet a certain test score level. Want fonding for your roads? Then your DoT will be held to restrictions in how and who it awards conteracts to. Don’t like it? Then don’t take the money. Radical gun-to-you-head gangsterism? Given that every single administration has operated under similar rules since the dawn of this country, its clearly not “radical” at the very least.
    The “radical gangsterism” for you is that the Administration puts the UAW “over” the dealers. Fine — you think the valuations and priorities should be different. Instead of just disagreeing, instead of “Obama really should throw the UAW under the bus and here’s why”, you resort to hysterical name-calling. Haven’t you written multiple posts about how this approach to policy debate is self-defeating, embarassing, and indicative of a bankrupt mind?
    Feel free to call me an idiot — its been too long. But did I misread you oter posts, misread this post, or some other option?

  11. 11
    tjbbpgobIII Said:
    10:58 pm 

    I suppose when all is said and done, with Chrysler and General (Government) Motors, that I will just walk down to the nearest GM dealer and drive away in my new GM pickup truck, since it’s already paid for.

  12. 12
    Surabaya Stew Said:
    12:25 am 

    It has been my understanding that Chrysler and GM have been itching to free themselves from many of their dealers for many years now, and the major reason they have not done so until now has been the incredibly high cost of closing a dealership. If we take this Dodge dealer as a typical example, the $3 million in inventory is only a small fraction of the total cost in paying back all the expenses associated with a franchise of this nature. All the loans, business improvement expenses, real estate, lost income, retraining, taxes, etc., would probably bring up the average cost of fairly compensating all parties for closing down a typical dealership to over double the inventory value!
    When you add in the 1,100+ GM franchises (plus an unknown amount of Ford dealers to be closed in the future), we could be talking well over 10 billion dollars here. This is in part due to the restrictive state laws that dealers have pushed to protect these dealers, but probably the larger issue is the self-defeating nature of the franchise business business model in a declining market for American cars.

    Of course it is impossible not to feel bad for the employees and owners of the nearly 2000 american auto dealerships to be shut down, but isn’t that part of the risk associated with running and working in any business? It certainly does seem unfair that some people are getting bailed out while others suffer, but is some sort of extraordinary government compensation really justified in this case? Haven’t we suffered enough government intervention yet? Don’t we want capitalism to do its job again?

  13. 13
    Shaun Mullen Said:
    5:37 am 

    Two points, one already made:

    (1.) Chrysler worked hard to run a once proud company into the ground by offering a product line long on big SUVs and pimpmobile stylings while many foreign automakers passed it by. Yes, Obama is a Big Socialist Meanie, but none of this would be happening if Chrysler (and GM) hadn’t decided that making money was more important than making a competitive product. That was exactly backwards: You make money by offering a competitive product.

    (2.) The dealer networks of Chrysler and GM have been a big part of the problem in that they took whatever crap that the companies sent them with nary a murmur of dissent. Maybe — just maybe — things would have turned out differently if the guys who had to ask their sales manager if they could throw in the undercoating for free (wink, wink) had pressed Chrysler and GM to diversify.

    On second thought, fuggedabout it. You’re right, Rick. It’s all Obama’s fault.

  14. 14
    UNRR Said:
    5:43 am 

    This post has been linked for the HOT5 Daily 5/22/2009, at The Unreligious Right

  15. 15
    John Howard Said:
    7:05 am 

    In what universe is it radical to try and save the workers (including the workers at dealerships) from the staggering, decades-long incompetence of Chrysler management… which grew out of, and continues to grow out of, the staggering demands of workers and government on their economic viability?

  16. 16
    c3 Said:
    10:41 am 

    Many good points here from “both sides”. I don’t like the term “gangsterism”. For me, this comes back to a sentiment I had prior to the election; Barack Obama has “liberal sensibilites” (that’s not a pejorative term.). In this case of “deconstructing” a large automaker, I would assume that Obama would tend to focus on job loss/preservation versus small business impact. Not that he wouldn’t consider small business impact but it wouldn’t “resonate” as much.

    As a related matter, it reminds me of so many recent news stories on “old industry” communities dying. Inevitably, someone from the local economic development task force/committee/office would emphasize that “we will succeed because we have so many highly-skilled workers”. In other words, the presence of these workers will, almost by definition, create new businesses. To further compound this they will generally cite the “buzz word” industries (i.e. “green technology”).

    Businesses aren’t created because “they have to”. (And I suspect it will hard to “create a business” based on having to pay its workers something approximating $40+/hour.

  17. 17
    Anon Said:
    1:45 pm 

    There are plenty of actual criticisms to be made of Obama, but this one is just silly. It’s well known and understood that Chrysler and GM would like nothing more than to get rid of a lot of dealers, but have had trouble doing so due to many state laws that are very much anti-free-market.

  18. 18
    bobwire Said:
    2:31 am 

    Rick sez “How long are you going to try to convince everyone that Obama is just a moderate, nothing radical about him?”

    Rick, Obama is not a non-moderate. You will eventually have to eat this, as you do not relish homelessness. Strawmen you can get behind.

  19. 19
    John Said:
    3:14 pm 

    I cannot figure out how stealing certain blue sky dealerships, a right to sell Chrysler products as new products, bought and paid for by individual dealers from Chrysler, is going to help Chrysler either sell more cars or manufacture cars cheaper or better. Dealerships do not cost Chrysler money. Dealerships buy cars from Chrysler for resale to the public. Dealers have no effect on the cost of design/construction of new cars or on Chrysler’s economic woes. These decisions could not have been decisions driven by economic ones to lower Chrysler’s production costs or to enable it to sell more cars. Something else other than good business choices drove this decision. Sounds more like a typical government decision to me. It will be interesting to learn more of the story as time rolls on. Bet it leads back to government.

  20. 20
    Evidence Emerges that Chrysler Dealer Closings Were Politically Motivated « Romanticpoet’s Weblog Pinged With:
    4:55 am 

    [...] wrote a piece on my own blog a while back when Chrysler dealer George Joseph wrote a letter published on AT about his own [...]

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