Sunday, November 16, 2008

GM is not too big to fail!

There is an effort to say that the U.S. government must save the American automakers from themselves; socialize failure, without consequences.


In the 1970s the price of gas was going up, and the American consumer needed to get a car from Japan for fuel efficiency. They discovered that the imported cars didn't start to fall apart after the 3 year or 60,000 mile barriers that KO'd cars from the 'big three (GM, Ford and Chrysler).' This was the first indication that there was a systemic problem at the 'big three.'

The market, and government, had their first opportunity to restructure GM via the bankruptcy system in 1989/90, and didn't; about five years after the taxpayers had underwritten the restructuring of Chrysler.

Here we are again facing the fact that GM, Chrysler and Ford, like Wall Street, can't find their own backsides with both hands; even while sitting on those very same hands.

Yes, it will be painful to allow GM, Chrysler or Ford to fail, but throwing money at these companies has not been successful, let alone painless.

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