Off late, the MoTown three have been spending money in pursuit of more money. If we to follow the Op-Eds of NYT or other leading dailies, we can see everyone from Michigan senators to right wing Nobel prize winning economist talk about why Detroit need to be rescued. And why this has to be done in spite of the fact that there has been no innovation, careless spending, wrong investments and arrogant/extravagant attitudes of the auto companies. We have been threatened that closure of even one of the auto companies, will start a downward spiral, bring all three down, bring their suppliers down followed by dumping of all their existing unsold cars - causing a further $400b loss. So bankrutcy is not an anwer because it will ultimately lead to liquidaiton unlike in airline sector.
This is all true. And yes. I am dead against rescuing the Detroit guys. After all, their irresponsibility, lack of care for climate change, arrogance in spending - even after Honda & Toyota started dominating - is simply mind boggling. But let me keep my prejudice aside for a moment. After all, these car companies were just serving American dream. It is not that they didnt innovate, but there werent that smart. And I believe that the bailout package given to them is not to just continue with their status quo, but to reorganize and re-energize their operations. If the Fed is willing to rescue Bankers with hundreds of billions of dollars, a $25b bailout for GM/Ford/Chrysler is not that bad at all, if it could save employment.
The bailout could come with very strict terms and in phases. Chrysler need to be sold to GM. And GM has to stop producing all the various models which the company itself is probably not aware of. Ford needs to given an ultimatum to return to profitability within a year or massive restructuring and downsizing by 50%.
Yes, socializing losses is harmful. But the car companies are more of victims right now as their death has been hastened, though it was imminent. It is not the time to treat them different from the bad Bankers, who have brought about this meltdown with unnecessary innovation.
This is all true. And yes. I am dead against rescuing the Detroit guys. After all, their irresponsibility, lack of care for climate change, arrogance in spending - even after Honda & Toyota started dominating - is simply mind boggling. But let me keep my prejudice aside for a moment. After all, these car companies were just serving American dream. It is not that they didnt innovate, but there werent that smart. And I believe that the bailout package given to them is not to just continue with their status quo, but to reorganize and re-energize their operations. If the Fed is willing to rescue Bankers with hundreds of billions of dollars, a $25b bailout for GM/Ford/Chrysler is not that bad at all, if it could save employment.
The bailout could come with very strict terms and in phases. Chrysler need to be sold to GM. And GM has to stop producing all the various models which the company itself is probably not aware of. Ford needs to given an ultimatum to return to profitability within a year or massive restructuring and downsizing by 50%.
Yes, socializing losses is harmful. But the car companies are more of victims right now as their death has been hastened, though it was imminent. It is not the time to treat them different from the bad Bankers, who have brought about this meltdown with unnecessary innovation.
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