Tuesday, November 18, 2008

The problem with few answers

While I still wrestle with whether or not a bailout for the American auto industry is a good or bad thing (I still lean toward it not being a great idea, but I've moved toward it being something of an unfortunate necessity), part of my overarching problem is with this whole approach toward how we're tackling this mess.

Not that it doesn't utilize some form of Keynesian economics and involve government intervention to bring stability to the markets, but rather that, in all actuality, it doesn't seem to be doing a really good job of doing just that.

Take the auto industry ... if we award G.M. $25 billion to help it through its admittingly difficult economic situation, what exactly will change? I don't doubt something must be done, but nothing will change if we keep the same players controlling the shots. I think everyone can agree that the problem with G.M. (or Ford or Chrysler) is that they're management has a documented history of making extremely poor business decisions given the circumstances of the market.

Whether or not you think it's because they caved in to unions with regard to pensions for retirees or because they've habitually put out vehicles that are low quality and not moving on the market, the point is those decisions came from existing leadership within those companies. I just don't have a ton of confidence that if give them more money they'll make better decisions.

Truth be told, the $25 billion we're talking about now is a drop in the bucket. The company needs roughly $10 billion to survive the year and would invest the balance in shutting down facilities with hopes of long-term savings. Neither one of those uses of the funds actually get the company to doing anything resembling changing its ways.


Blogger jmSnowden said...

I think we (tax payers) should get stock in return. With such a block, management might be voted out. On the off chance they recover, we can put the profits into other needy causes.

just a thought.

11:31 AM  

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