USA: The Newest Banana Republic?

One of the conditions that defines a “banana republic” is a cavalier disregard for the rule of law by those in power.

While ordinary citizens might pay a price for bad decisions or bad relationships - or, simply, bad luck - wherever they live, in a modern, civilized society, at least, they can usually have a measure of faith that wrongs can be righted and that what they have won’t be arbitrarily taken away from them without compensation or a means of redress.

Sadly, while few would have considered the possibility that America was in the banana republic category only a short time ago, developments like those described in the following post from Bob Brooks’ Prudent Money blog, “The Car CZAR has Spoken,” suggest that is no longer the case:

Treasury Secretary Tim Geithner - AKA the Car CZAR, the Bank CZAR, etc.

CZAR - One having great power or authority. Also - also tsar or tzar (zär, tsär) A male monarch or emperor

I wrote a blog Monday about my friend Scott Lau, whose Chrysler dealership has been in the family 42 years and was just forced out of business due to the Government’s “surgical” Chrysler bankruptcy. I interviewed Scott yesterday about his story on Prudent Money. As I was preparing for the show, so many things started to dawn on me about the whole Government involvement and Chrysler.

First, let’s consider Scott’s dealership for a moment. Here is a business that has been a family operated small business for 42 years. It has been a solid business with a great business plan. It has been profitable through the years and was weathering the financial crisis. When it was all said and done, I believe that Preston Chrysler Jeep would have survived the financial crisis. They made the necessary adjustments.

Preston Chrysler Jeep is not closing their doors because they are not a good dealership. They are not closing their doors because they were in trouble financially. They are closing their business of 42 years because the Car CZAR has spoken. Chrysler gave them and 800 plus other dealerships the pink slip and said we no longer have a contract with you. There were no calls from any Chrysler representatives to Scott’s dealership.  There was a UPS letter delivered to the back door of the parts department.

This is a healthy small business with no debt that was forced to shut down because the only product that they sell and service was taken from them due to Government direction through “structured” bankruptcy. Preston Chrysler Jeep is not the reason that Chrysler and the rest of the automotive industry is in trouble. This dealership was nothing more than a small business participating in the American Dream.

The Government is destroying capitalism in a methodical fashion. There was a reason that Chrysler and GM didn’t go bankrupt in December (before we threw billions of dollars of taxpayer dollars down the toilet). Think about it for just a minute. If Chrysler or GM would have gone through bankruptcy in December, there wouldn’t have been as much Government involvement. Instead, the Car CZAR continued to pump billions of taxpayer dollars into these failing companies in order to keep the lights on. This gave the Car CZAR ultimate control. The Government controls the destiny of these automotive companies. Now who answers to who? Just look at what they are doing to the banking system.

You know when you borrow money from a loan shark you give your life away. There is no difference here. So, the Car CZAR has spoken and Scott and the rest of the employees at the dealership that have served this area faithfully were simply on the wrong side of the Washington power grid and out of luck. So much for the American Dream.

So, who is this Car CZAR? Well let’s look past the man, Steve Rattner, who was appointed to head of the task force. Instead, let’s take a look at who makes up the task force.

Members (according to Wikipedia)

• Co-chairs:
  - Treasury Secretary, Tim Geithner- National Economic Council Director, Larry Summers
• Secretary of Transportation
• Secretary of Commerce
• Secretary of Labor
• Secretary of Energy
• Chair of the President’s Council of Economic Advisers, Christina Romer
• Director of the Office of Management and Budget, Peter R. Orszag
• Environmental Protection Agency Administrator
• Director of the White House Office of Energy and Climate Change
• Senior Advisor on Auto Issues at the Treasury Department, Ron Bloom

You really just need to stop with the first name to see where the power lies. It seems that Tim Geithner remains the man behind the curtain.

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