Seriously.........?

There was an article in the Washington Post this week titled "U.S. in Control: Its goal to fix, not run firms." Seriously? Does someone actually believe this? I find it very difficult to to believe that at any time during this process of Nationalizing some of the largest industries in the country that there has ever been any intention of reversing what they started. The intention all along has been to take over these companies and make them a government run enterprise. There are several problems with this concept:

1. It is blatantly illegal and unconstitutional and against every principle established for this countries' government and economy. We are the greatest economy in the world because we are capitalist, not socialist.
2. If, and that is a really big "IF", the goal is actually to fix these companies, the wrong people are in charge. You cannot put a bureaucrat in charge of a business. They are not compatible endeavors. These are lifelong politicians and government employees that have no concept how to run an efficient and profitable organization. Which brings us to ...
3. There has to be a profit motive to have a successful business. A government employee, bureaucrat or politician has no understanding of the concept of profit, and profit is what these business have to have in order to be turned around.

Sticking with point number 3 for a moment: As the largest shareholder in the companies that the Obama administration is taking over, they are starting to implement the policies they think are appropriate for the task at hand. The problem, as pointed out in the WP article, is that the administration is trying to use these companies to achieve their political agenda. They are "in the awkward position of balancing public policy goals with the financial interests of taxpayers as investors in these ailing corporations." The overriding problem that everyone seems to overlook is that it is essentially impossible to accomplish these task simultaneously. A couple of examples:

• Affordable housing and the Mortgage industry - look at what the administration has in mind for Freddie and Fannie. Again from the WP:
  

Having committed $400 billion to Fannie Mae and Freddie Mac, the government is directing them to carry out big parts of the Obama administration's Homeowner Affordability and Stability Plan, a $75 billion effort launched last month. The program aims to restructure mortgages that borrowers cannot afford, bolster the sagging housing market and bring down interest rates on home loans.

Does this not sound familiar to anyone? No sense of deja vu? This is how the mortgage industry got in trouble in the first place! If you manipulate the housing market by giving mortgages to people that cannot afford them you are asking for disaster. The Clinton administration encouraged (forced) the same practice resulting in the current problems with the banking and mortgage industry. Giving someone a mortgage they cannot afford will result in foreclosure; bad for the bank, bad for the housing industry, bad for the consumer. Oh, and the mortgage companies that are supposedly being "fixed"? They make money on interest received from loan payments being made. How does a policy of giving away bad mortgages help the mortgage company? The answer, of course, is that it doesn't. There is no sound business reason to offer these mortgages, only government intervention with no profit motive.

But the choices the government is making for the companies potentially stand in the way of returning them to profitability, the companies have said. Executives must choose between making decisions that benefit the housing market or save taxpayer dollars. "These initiatives are likely to have a significant adverse effect on our financial results or condition," Freddie Mac warned in its regulatory disclosure.(WP)

• The auto industry has the potential to be an even bigger disaster. With cap and trade on the horizon and the environmentalist running the asylum, there is a realistic possibility that the new bosses are going to insist on increasing production of low profit electric and hybrid vehicles. Combine that with being connected at the hip with the UAW and the government controlled auto companies don't stand a chance.

The only real chance these business that have been taken over by the government have is the fact that they can continue to count on Big Brother to take money from taxpayers that have actually earned it and pumping it into their company. What happens when that well runs dry? What if Atlas were to Shrug? Read the book by Ayn Rand. It will frighten you to your core.