American Auto Industry Doomed
If you own US auto stock, sell.
If you work for a US auto maker, find a new job.
If you own a US-made car, start shopping.
The government is about to destroy the US auto industry, and it will cost billions of dollars.
Apparently, the White House and Congress are trying to invent an auto czar position to “oversee the restructuring of the industry [Wall Street Journal].” That means that the problems that led to the current crisis will get worse and the possible solutions to the crisis will be outlawed.
Here are the problems contributing to GM’s problems, in particular:
- Union auto workers make more than doctors, MBAs, college professors with Ph.D., research scientists, or small business owners
- Retired auto workers make even more than working auto workers
- Laid-off auto workers make 80 percent of what a working auto worker makes
- Idled plant workers make 70 percent what active auto workers make
- State laws prohibit closing auto dealership even though GM has 4 dealership for every Toyota dealership
- Idled US auto plants cannot be sold or leased
- Rick Wagoner is an idiot
Each of these problems was caused by a Democrat special interest group, and the Democrats will not permit the problems to get fixed. Bank on it.
The solution to the US auto problem is simple: bankruptcy. A well organized bankruptcy will void UAW contracts, sell off idle capacity (to start-ups, if we’re lucky), and tell the retirees to live like other retirees instead of like the idle rich.
I am writing my Congressional delegation to tell them to oppose any bailout of autos that does not include bankruptcy. Do the same, or the US auto industry is toast.
*UPDATE* Larry Kudlow has more:
We will not bailout our way into prosperity. Nor will we spend our way into prosperity. Somebody has to stand up and yell: It’s time to cut tax rates on the supply-side. That will reinvigorate growth and infuse new spirit into a demoralized economy.
Bingo!
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Thanks for the call to action, Bill, but I’m afraid your points are too sensible and informed to be taken seriously by Congress. It’s almost impossible not to be fatalistic about the outcome of the bailout hearings. At this point, I’m not sure I can even muster the optimism to hope for the best while expecting the worst.