Ever try to put new ears on an old elephant? Just savor that thought for a minute. How would one do that? It’s kind of like what the big automakers are asking us to do. They like every other business in America are looking for a bailout. With one major caveat; because they diversified they employ millions not only directly but indirectly and the failure of any one of them, will have ramifications for the entire economy not just the Board of GM, Ford or Chrysler.
For those of you with a short memory, this is the same thing the banking industry said to get us to ante up 700 billion plus to bail them out; looks like it is going to work in both cases. Despite the fact that the banks used the funds to give bonuses to CEO’s and dividend checks to share holders. Additionally that first bailout is finding its way to sources and people we had no idea would be part of the deal. Such as lobbying firms set up to procure funding for groups looking to get a piece of the action taking care of the new housing the government will soon find itself owning. One can only imagine what Detroit will do with the funds!
But the Auto makers, rather unshyly are seeking billons to keep them going and they make no bones about it; help us out or face the music while accepting no blame for the situation that got them into this mess in the first place. The fact that Americans have turned to foreign cars with better mileage and all around quality of manufacture has to be someone’s fault? Can you say, business plan? Or what about, changing to meet your market? In days of old, it would not be uncommon to see a news article on the evening news blaming you the consumer for the big automaker problems. Hey you got a choice; your mortgage payment or buy a new car! Sales were down nearly 30% in October alone according to some reports. Pictures of Dealerships with no customers are not uncommon.
Un like in the past when gas took a nosedive into the just above two dollar range, consumer who previously flocked to get the latest SUV’s with ten and twelve mile ranges per gallon are staying home. Have we all learned our lesson? No, the bottom line is that if they could get credit they would be buying, but they can’t. How long will it take for the money to trickle down to the credit markets that we gave the banks? A very long time; In fact, don’t hold your breath.
The saddest part of this all is that; the very hand the auto makers are looking to for help is the very hand that put them into this mess in the first place. Washington has protected the great automakers for way too many years. When environmental concerns were raised, they shielded the companies from having to make cleaner and more fuel efficient cars for years. When higher fuel economy was needed Congress stretched the standards so the big three could postpone re-tooling and to enable it to get rid of inventory. When foreign competition threatened them, they raised tariffs and protected them. But then along came this thing called the global economy and well the world just got to big to save the big three.
I guess the biggest question any of us should be asking , is what took them so long to ask for the bailout? New ears for an elephant anyone