Autos and Politics
What is it with the idea that something is “too big to fail”? Our entire economy, for over 200 years, has been built on the evolution of companies and business in general. That’s natural. Unfortunately, the natural course of evolution is being interrupted by politicians when it comes to the car business.
Bush made the first mistake by lending money to companies that would be better left to the bankruptcy courts. Obama is now compounding it by giving the illusion that he and his team have a clue about how to run an auto company…and using your tax dollars to do it.
Any 7th grader could have seen that the money taxpayers “lent” to Detroit would never get repaid. You actually need to have positive cash flow and profits if you are going to pay back debt. Detroit has had neither and there was no turnaround in sight. It’s called throwing good money after bad in an attempt to appease the current and former employees of these once great companies.
Let the car companies go through the natural steps of bankruptcy reorganization and tell the politicians to stay out of the business of trying to sell cars. These guys have never run anything, let alone a car company, yet they are going to save Detroit?
Those who bought the stock or bonds, in hopes of a gain, would be wiped out. That’s OK. Those people understood the risk.
