Here’s why I think that bailing out the big three American Automakers is overwhelmingly stupid:
1. With the bailout, they will not change their behavior and will be just as cash-strapped as soon as the bailout money is gone. Their problem is not just the credit markets, it’s lousy product, high costs and bad contracts.
2. It sets a stupid precedent for the rest of American industry (next will be RV manufacturers, then boat manufacturers, then heavy equipment…)
3. A perfectly good option exists: Chapter 11 bankruptcy. The airlines do it every three years and they’re still around.
Thing is, in NJ, we don’t really care about the big three outside of car dealers’ service departments. The rubble of Linden’s truck plant has been carted away, and Ford’s Edison plant is long gone. There are a handful of parts suppliers, but that’s it.
Now my friends (and customers) in Michigan I feel bad for, but this situation has been going on for 20 years. The fact is that their leaders (and I found it laugh-out-loud that Jennifer Granholm is considered to be an authority of economics) are doing all the wrong things to bring their economy back. They could have been voted out. And they haven’t been.
Just like here.
UPDATE: I don’t often beat Charles Krauthammer to the punch, but here he is saying a lot of the same things.