...that starving Chrysler for cash--no taxpayer funded bailouts--and just letting it be liquidated--was probably the right solution in the beginning. The company currently has 54,000 employees. Probably 20,000 of them are going to lose their jobs as the result of the bankruptcy anyway, so the actual direct increase in unemployment might have only 34,000 jobs. Of course, there would be the indirect loss of jobs--suppliers, dealers, transporters, local government in the towns where there were plants or offices, etc. Let's say those job losses amounted to another 100,000 jobs. The total job losses for letting Chrysler flatline would have been in the range of 150,000 jobs.

That sounds like a lot, but 150,000 jobs would have only increased the reported April job losses by 27%--from 539,000 to 689,000. Those job losses wouldn't have all happened in a single month, so the lost jobs would have been quite manageable.

The flip side of permitting Chrysler's liquidation would have included...

• The secured lenders would have been repaid far more than the 29% they were pressured to accept--probably more like 50 cents on the dollar. Remember, to the extent the banks incur huge loan losses, we taxpayers have been pumping money back in to retain reasonable capital ratios. In reality, we paid for the loan losses, not the bank's shareholders.
• The taxpayers would have avoided pumping close to $15 billion into Chrysler.
• The Pension Guarantee Corporation would have significasnt calls on it to pay for Chrysler retiree pension benefits, but no where near the amount it cost to keep the company alive. Of course, we taxpayers fund the PGBC, as well.
• The rule of law for lenders wouldn't have been trampled. It would have become clear that their loan agreements are enforceable, unlike the way it is now where the government stepped in before the courts took over and simply pressured the lenders to accept far less than called for by their contracts.

There were probably other positive results, as well. But we are where we are. Chrysler employees will still be paid about $20 an hour more than their counterparts assembling foreign cars, and they will retain their rich fringe benefits and loose work rules. In the meantime KIA Motors is opening a new non-union plant in western Alabama which will create 20,000 jobs. The locals there are ecstatic that KIA chose Alabama over Michigan to build a new plant and will work like the devil to produce high quality cars at a profit.

Fair? No...it's an egregious gift to the UAW that carries significant costs and sets terrible precedents that will impact lending decisions by banks for a long time. Our government's actions have created serious questions regarding how reliant lenders can be on our rule of law. Legislation and our judicial system won't be able to overcome the damage that was done to keep Chrysler and GM alive anytime soon.

All funded by you and me.