The View From 1776

More on the Auto Bailout

Read Charles Krauthammer’s list of other destructive effects of the Democrat/Socialist Party’s proposed socialization of the auto industry.

Why waste time funneling money to socialist labor unions via GM and Ford, thence to the Democratic National Committee as campaign contributions.  Why not just transfer the auto bailout money directly from the Treasury into the DNC coffers?

Posted by .(JavaScript must be enabled to view this email address) on 11/14 at 11:21 PM
  1. Krauthammer suggests that allowing the big three to go into chapteter 11 would allow them to shed their high cost union contracts, and after reorganization, make them competitive with Toyota and Honda, who have much lower labor costs. Airlines have used this technique to shed disastrous union contracts, so why would it not work with Detroit?

    The fear is if the big three go Chapter 11, there is considerably likelihood that they will not be able to come back, and that they will be forced into chapter 7. If this happens, the ancillary businesses will also fail (dealerships, parts manufacturers, etc.) Because these connected businesses represent something like 50 million jobs, their failure makes the descent into a true 1929 depression for the entire country much more likely.

    This is a tough problem because if Bush and Paulson listen to their "inner socialist," and bail out Detroit, there is no guarantee that GM, Ford, and Chrysler won't keep on with their failed SUV designs and the unions will continue to eat high off the hog.
    Posted by .(JavaScript must be enabled to view this email address)  on  11/15  at  07:46 PM
  2. This is not a difficult choice. Mitt Rmney spelled it out pretty clearly. A bailout will keep the status quo--an auto industry hobbled by unions and government regulations. That is a spiralling road downward, a postponement of failure, an increase in the destructive role of government interfering in business affairs. It would be comparable to re-iterating past instructions to Fannie Mae that they must give out and guarantee more and more mortgages to people who show no ability to make the monthly payments!

    The alternative, letting the auto makers try to restructure, free of restraints, provides the hope that they will survive. Clearly the best alternative.

    Long-term, the American auto makers can survive only if they face the music--bailouts and subsidies may defer the day of reckoning, but long-term, they guarantee failure. Hope is better than guaranteed failure--Simple Common sense!

    It is a mistake to cloud the discussion with the "need" for smaller more fuel efficient cars. There is real competition out there--many auto manufacturers--and if smaller cars are wanted, they will be available from some manufacturer.
    Posted by bill greene  on  11/20  at  01:03 PM
  3. It does not appear that restructuring is possible for the big three. To reorganize under chapter 11, they would need interim financing, but if they go chapter 11, nobody will come in with the required funding. So, they would be gone, and with them all their suppliers and dealers.

    It may be the "right" thing to do, in a strict, Darwinian, market-controlled economy, but it will probably be very painful.

    And how is Detroit's failure to build an efficient, small, quality car not related to the health of the auto industry and the health of the nation's economy? Have you been asleep for the last two years?

    Detroit's brilliant "market-driven" response to the need for a fuel efficient car was to offer to buy the gas of anybody who was stupid enough to purchase one of their gas guzzlers.

    Here's a test for you: (Check one)

    [ ] The cost of gas will remain at $2 per gallon for the foreseeable future. All those environmentalist wackos were wrong in predicting high gas prices. No need to conserve.

    [ ] It would be better for development of sustainable alternatives to oil-based transportation if there were a mechanism to relaibly hold the price of gas above $4 a gallon.
    Posted by .(JavaScript must be enabled to view this email address)  on  11/28  at  02:45 PM
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