Wednesday, November 19, 2008

Bailouts explained

Advocates of bailouts might point to the Chrysler bailout of 1979 as a way of justifying an even more massive bailout of GM, Ford, and Chrysler today. It could work if....

....manufacturers use it to rework their cost structure, as Chrysler did--famously firing thousands of middle managers and reworking their product lineup. Now let's compare with today; unions and executives are more or less working to prevent the kind of re-working that Iacocca did today.

So my verdict; this "bailout" is like the loan you foolishly gave to your brother "Vinnie" (or other relative of your choice). "Vinnie" spends more than he earns, and by giving him $1000, you postponed the day he'd learn that a McDonald's janitor doesn't need a new car and three trips to the bar each week, right?

Same basic principle with the Detroit 3. You might as well throw $25 billion down the toilet.

3 comments:

Anonymous said...

Some things to read or watch on our request for funds to support our automotive industry:

Bob Nardelli’s Senate/House written testimony at http://blog.chryslerllc.com/blog.do?id=537&p=entry

Mark Phelan’s article, “6 myths about the Detroit 3,” in the Detroit Free Press at http://www.freep.com/apps/pbcs.dll/article?AID=2008811170379

and a Chrysler video “Straight Talk About Assistance” at http://www.youtube.com/watch?v=uPODSNAbkOU

Thanks. Patti, Chrysler

pentamom said...

Corporate PR spam? Now I've seen everything.

Bike Bubba said...

I'm kinda flattered that they noticed there.