The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to take a hands-on role in the companies it is bailing out — a level of government involvement in business not seen since the Great Depression..." - NYTimes.Under pressure from the Obama administration, GM CEO Rick Wagner was forced to resign. Socialism's march through this once great nation continues unabated, with the people blinded by hope and self-delusion into thinking that the federal government has the ability to manage the return to profitability of the auto industry. Nothing could be further from the truth. While there are a variety of possible scenarios, what I see unfolding over the mid-term is this:
The government takes an AIG-like ownership position in GM, dictating the production of vehicles that do not appeal to the domestic market, let alone to auto buyers in Europe, Asia or Russia. Future Chevrolet's will be green eco-boxes that post great fuel economy numbers, but cost thousands of dollars more to produce than their highly-efficient internal combustion rivals, making them much more expensive on the sales floor - even with generous federal vouchers issued to encourage their purchase (subsidies that our sons and daughters will spend a generation trying to pay for).
Cap&Trade cars will not return GM to profitability as long as gas remains reasonably priced and the American public prefers mid-size cars and trucks, cross-over vehicles and even SUV's. Realizing that Obama's Car Czar has dictated the production of a product that is "ahead of its time" and too enlightened for the masses, the federal government will then mandate a gas tax to maintain the price of a gallon of fuel at $4+ for the duration. The concept will be extended to all industries that rely upon fossil fuel - government dictated taxes that make normal production and use prohibitively expensive, in favor of "green" alternatives.
The increased cost of doing business will further decrease output and GDP will continue to slide, while wages stagnate and consumption falls further still.
But looking back to the auto industry, which will become fully-owned by the federal government within 18-24 months, expect by the end of Obama's first term to find the auto industry to be brain dead, run out of some creepy bureau in Washington named "The Vehicular Output Office" or something suitably GreatDepressionistic in its hue. Obama wins a second term because the Republicans are still too chicken to shoot the fundamentalists who've so contaminated and corrupted the ideals Reagan stood for, and the Party fails to field a viable candidate.
By the final year of the Obama administration, the means of production may be in the hands of the working class, but no one will have any money to buy the pairs of two left shoes and battery powered "cars" costing $42,000 each that Detroit is pumping out. Enter, at this point, when it doesn't seem like it could get any worse, a private sector representative reminiscent of JP Morgan when he saved the financial system of the US. He'll come with a plan and an investment cartel and the goal of re-privatizing the domestic auto industry so that we can get back to making the cars that America wants, and not the rolling-mechanized-green-lobby-PR-boxes that some members of the radical environmental lobby believe it their duty to secure.If you're a classic car fan, better to enjoy them now, before the enviro-Nazis confiscate them and give you the choice of a Tesla Roadster or a Tata Nano.
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GM and Chrysler's plans are not viable. They never will be to the UAW decides to play ball. Bluegrass Pundit
ReplyDeleteI agree.
ReplyDeleteSeems a little unfair to me. GM and Chrysler get all the money they want from the government but no other car manufacturer has that advantage. I don't see the government giving out money for US Nissan or any other one. They need to rename it to "Government Motors", that would fit a lot better.
ReplyDeleteTake care, Julie
Firstly, remember, this is a post about Wagoner being pushed out, not the bail-out in general.
ReplyDeleteSecondly, Nissan Peugeot have gone t their governments for support, and the only reason Ford hasn't is b/c 3 years ago it saw the credit crisis coming and was able to get an immense line of credit that it's gradually been drawing down.
What seems crazy to me is the notion that the government knows better how to run any industry than the most experienced people in that industry.