Money to burn!
http://www.nytimes.com/2008/11/19/business/economy/19ports.html?ref=business
This points to the main problem with the government bailout of the auto biz. Automobiles aren't selling. No one is selling cars. Not Honda, Toyota, BMW, Ford, or GM. If no one is buying, letting the big three limp along is just going to prolong the pain.
Don't take this wrong, though, I'm for the government bailout of the big 3. But it's not a "bailout". It's not even a good loan. I see it as a stay of execution or priming the pump for a merger of two.
As evidence: GM is burning about $1.15 Billion in cash per month, giving them cash through Jan. (as of end of Oct.). So, if we give them another $15 Billion (over half the proposed bailout), that gives them a year (about) to turn it around. They believe that with this cash, they can cut enough to survive until the economy turns a corner. To do so, though, they have to cut their monthly spending. How do you cut $1.15 Billion in spending per month at a mammoth like GM (or Ford, or Chrysler)? You cut staff. You cut vehicle programs. You shutter plants. Bottom line, even with the "bailout", we are going to see a lot more bad news before we see good news.
In my opinion, if the gov. were going to truly "bailout" the big three, it would start buying a lot of American cars and... um, I dunno, bury them in Texas somewhere. Actually, selling American made vehicles to overseas markets would be the fastest way to rebound, but of course, there's a whole different set of roadblocks to that.
As ugly as it will be, we need to give them the cash, but brace yourself, because I'm guessing they'll be back hat-in-hand again.
This points to the main problem with the government bailout of the auto biz. Automobiles aren't selling. No one is selling cars. Not Honda, Toyota, BMW, Ford, or GM. If no one is buying, letting the big three limp along is just going to prolong the pain.
Don't take this wrong, though, I'm for the government bailout of the big 3. But it's not a "bailout". It's not even a good loan. I see it as a stay of execution or priming the pump for a merger of two.
As evidence: GM is burning about $1.15 Billion in cash per month, giving them cash through Jan. (as of end of Oct.). So, if we give them another $15 Billion (over half the proposed bailout), that gives them a year (about) to turn it around. They believe that with this cash, they can cut enough to survive until the economy turns a corner. To do so, though, they have to cut their monthly spending. How do you cut $1.15 Billion in spending per month at a mammoth like GM (or Ford, or Chrysler)? You cut staff. You cut vehicle programs. You shutter plants. Bottom line, even with the "bailout", we are going to see a lot more bad news before we see good news.
In my opinion, if the gov. were going to truly "bailout" the big three, it would start buying a lot of American cars and... um, I dunno, bury them in Texas somewhere. Actually, selling American made vehicles to overseas markets would be the fastest way to rebound, but of course, there's a whole different set of roadblocks to that.
As ugly as it will be, we need to give them the cash, but brace yourself, because I'm guessing they'll be back hat-in-hand again.