If GM and Chrysler Don’t Make It, Well That Was the Plan All Along
Remember those big auto bailouts? Did you know they were never really intended to save Chrysler or GM? At least that’s what Newsweek Senior Editor Dainel Gross says (h/t Mickey Kaus)…
By the time the government got there, the companies had essentially failed. A year ago, the choice facing the bondholders, shareholders, and executives of GM, Chrysler, Citigroup, and, to a lesser degree, Bank of America, wasn’t between accepting government help or accepting the offer of other suitors; it was between Washington, D.C., and liquidation….Sure, there was brave talk of reviving these once-proud brands and returning them to their rightful place in the pantheon of American corporations. But from the outset, I’ve believed that the interventions were simply efforts to delay liquidation rather than to avert it altogether, to provide a breathing space in which managers could find homes for valuable assets (other companies) and find chumps to absorb the losses from bad decisions (that would be the taxpayers)….Apparently, Gross’ sources aren’t betting on GM or Chrysler becoming profitable again, ever. And the bankruptcy of a government-owned manufacturer, the event that will bring an unevadable public challenge to progressive economic ideas of more government and more spending being solutions to everything, continues to draw closer and closer…
It’s frustrating for taxpayers that the banks and car companies in which they have stakes aren’t performing better. But Washington isn’t to blame for the change in the competitive landscape. The struggling companies we now own are taking losses because, for years, they engaged in the types of business practices that cause businesses in their industries to lose market share and rack up losses—and to seek government help.
” But Washington isn’t to blame for the change in the competitive landscape.”
No, but they are to blame for throwing our good money after someone else’s bad.
There are perhaps some lessons in Britan’s takeover of the auto industry in the late 1970’s. All of the smaller manufacturers, such as MG, Triumph and a few others, were brought together as BMS (British Motor Corporation). They were completely gone in about 3 years.
I think the most pungent lesson is that the government could not stand up to strikes.
Perhaps China will buy GM, Chrysler, and baseball, hot dogs and apple pie while they’re at it. We’ve already seen Hummer and IBM’s notebook PC business (renamed Lenovo) head across the Pacific, along with hundreds of other lesser-known brands.