Tuesday, January 13, 2009

GM Bailout Success-NOT!!!

A GM exec said that the failing automaker might need more than the billion of dollars Bush already gave to them. (Read article here) What a shocker that is? Is anyone surprised? Here is another government bailout program that set the taxpayers back billions of dollars only to find out it did not work. This is our government at work.

Everyone who reads this knows how I feel about the "end around" Bush pulled on the American people. Congress, to their credit, rejected this insane idea, one that is soundly rejected by the American people. Of course, to a lame duck President who faces no re-election, what does he care what America thinks?

The reason why the government fails repeatedly is because they have one answer to any problem: throw money at it. Unfortunately, as history proves, money is not the answer. Regardless of the amount, money will not fixed a broken system. Until the fundamental issues are resolved, money only multiplies the size of the problem.

Take the educational arena. The federal government has spent close to $2 trillion in Title 1 money to educate our children. Yet every study when compared to the rest of the developed world shows how we lag behind. In short, we have a bunch of morons coming out of the school system. We spend the most money yet get the least return. That is our government for you.

The TARP money is another example of government incompetance at work. Congress agreed to $700 billion that was to be used to bailout the financial institutions. Yet, they have no idea where the money was spent. First, as we see, there was no easing in the credit markets since banks still arent lending. Then, Bush takes some of that money and gives it to the automakers. What a farce.

The bottom line is that GM and Chrysler (nobody is sure of Ford) are broken companies. They are buried by poor union contracts which have huge legacy costs. Of course, notice how Gettelfinger, the Union head, says there are unfair concessions in the agreement that need to be removed. While I dont blame the union for getting all they could, after all, management agreed to all of it, I do believe it is a major reason for their inability to be competetive. Also, management totally missed the shift in the industry away from gas guzzlers to more fuel efficient vehicles. Money will not alter that reality.

GM is a failed company at the moment. According to the tenets of American capitalism, companies like that either change their business model or go under. It is that simple. The fact that the government stepped in proves only one thing: they only prolonged the inevitable. A failed company is not fixed by giving them a lot of money. This entity, once a pillar of Americana, is now ready for the scrapheap. Unfortunately, the political leaders feel the taxpayers cannot survive without it.

Thanks President Bush for costing us another $15 billion. Our kids appreciate that.

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