Thursday, November 13, 2008

How Hard Is This?

The government is considering a bailout (handout) plan for the automobile manufacturers. Presently, the numbers being tossed around are $50-$75 billion. This tells me that the final tally would be at least double that. Is this a wise investment? Will the government get a return for it's effort? The idea is that we (the taxpayers) will own a portion of these companies in exchange for the money.

Are you kidding me? Why do we want to own a part of losing enterprises? The Big Three showed themselves to be antiquated companies who's time has went. My vote on this idea is to turn them down.

We all know the automobile industry is in chaos. The Midwest is being hammered with the potential closings of the automobile plants. Nowhere is this sector thriving. Or that is what we are led to believe. There actually is expansion happening presently in the automobile industry.

Toyota and Honda are both building, not closing, new plants in the South. These two companies already had a strong manufacturing presence here. However, since they chose to put their facilities in "right to work" areas, they are not at the mercy of the unions. Their contracts with the workers are reasonable. They are able to compete based upon the present conditions while the Big Three are handcuffed by contracts signed years ago.

So, the unions are at fault. But they are not the only ones responsible. The management at the Big Three is equally at fault. They completely missed the shift in the industry. While the country wanted fuel efficient vehicles, these companies churned out SUVs. Oops.

Where does this leave us now? Do you think that tens of billions of dollars will make these guys any smarter? How will the money help them sell a product which nobody wants? It will not. Also, do you think the Union will suddenly get benevolent with the contract it negotiates? Fat chance. These people will argue, fight, and claw for whatever they can get.

Mark my words: if the government gives the money to these companies, they will burn through it in 12-24 months. We will face the same situation again in a couple of years. The money will serve no purpose but to delay the inevitable.

Our history is filled with companies that were powerful only to disappear as the years went by. That is how capitalism works. When someone builds a better mousetrap, the one with the old technology suffers. At this time, the Big Three are not the ones with the better mousetrap. Time for them to go.

How come solutions are simple except to the government? The politicians who are in office answer to one group: lobbyists. They care little about the American people or their money. It is the lobbyist on Capitol Hill who are in power. And you can be that the automobile industry lobby is very strong. We will see them placated at the expense of the American taxpayer. Remember this when you watch the professional liars on television telling how they are going to save the backbone of America.

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