Many people have been watching Detroit’s auto execs and UAW’s Gettlefinger, begging Congress for a bailout or what they call a “bridge loan”.
Members of Congress from both parties basically let them have it, right on the chin. Did you hear how House members scolded the auto Ceos for coming to Washington begging for money in the private jets?
I was happy to see that I was not alone in not wanting to give the auto companies tax payer funds. I have argued consistently that the auto companies should be allowed to restructure under bankruptcy protection and come out leaner, more viable and therefore sustainable.
Giving the auto companies’ money right now, without any restructuring, will be just throwing the money away since they will just need more and more to prop up an unsustainable business model.
That business model has to collapse; there is no other way. This is the only way UAW labor contracts can be voided and pension costs moved to the U.S. government for payment. Pension plans should disappear altogether and 401(k) s used instead.
Of course, Michigan politicians are fighting for a bailout because most of their supporters are car people. Mitt Romney, whose father was president of American Motors, has called for a “managed bankruptcy” and outlined how it can happen without “too much” damage to the economy.
The damage to Michigan would be great but once done, a re-birth would bring prosperity back. In the meantime, Michigan can diversify its economy from decades of an auto-only economy that did provide prosperity for many (in my family) but now cannot sustain a whole state.
My only fear is that in the new Democratic dominated Congress under Barack Obama, the Democrats will again open the money spigots without demanding “fundamental restructuring”, in essence, supporting a dying horse.
Since many Democrats currently are against an auto company bailout, my hope is that those same Democrats will remain fiscally responsible and not sink into their intrinsic socialism. I am also betting that Obama is just not a knee-jerk socialist but someone that gives these issues some serious thought and consults heavily with people in the know.
Giving the auto companies’ money right now, without any restructuring, will be just throwing the money away since they will just need more and more to prop up an unsustainable business model.
That business model has to collapse; there is no other way. This is the only way UAW labor contracts can be voided and pension costs moved to the U.S. government for payment. Pension plans should disappear altogether and 401(k) s used instead.
Of course, Michigan politicians are fighting for a bailout because most of their supporters are car people. Mitt Romney, whose father was president of American Motors, has called for a “managed bankruptcy” and outlined how it can happen without “too much” damage to the economy.
The damage to Michigan would be great but once done, a re-birth would bring prosperity back. In the meantime, Michigan can diversify its economy from decades of an auto-only economy that did provide prosperity for many (in my family) but now cannot sustain a whole state.
My only fear is that in the new Democratic dominated Congress under Barack Obama, the Democrats will again open the money spigots without demanding “fundamental restructuring”, in essence, supporting a dying horse.
Since many Democrats currently are against an auto company bailout, my hope is that those same Democrats will remain fiscally responsible and not sink into their intrinsic socialism. I am also betting that Obama is just not a knee-jerk socialist but someone that gives these issues some serious thought and consults heavily with people in the know.
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