Greetings and happy new year fellow heartlanders.  Sorry I haven't posted in awhile but I have been busier than I wanted to be with the holiday season this year, which was replete with the highs of children's wonderment and the lows of a funeral of an old friend, capped off by today, the anniversary of my own brothers passing. 

I'll share some thoughts on grief, my profound respect for Funeral Directors and religion, both of which are really at the top of their game in times like these.

On top of all that I had my own personal issues with General Motors, in the form of a transmission replacement on the Suburban.  Sheesh, nothing like kickin a guy when he's down.  Anyway, following is post I began before the feces hit the oscillator...

Bye bye Miss American Pie

Drove my government funded Chevy 

to the government built levee

and they both fell apart...

Apologies to Don McClain....

Bush kicked the can down the road but the problem remains.  I hate to see any companies go out of business so if push comes to shove I'm for a "bailout" - - of sorts.  It has my pragmatic problem solving angel in a death match with my purist free market angel. 

Basically, if it's a short term, strings attached bridge loan to get them back on their feet with reasonable assurance they'll make the necessary changes to achieve sustainability I'm all for it.  But if it's a blank check to perpetuate the status quo, like the ones we keep cutting to failing schools - - no thanks.  Given the governments track record at making problems worse by throwing money at them I am not hopeful. 

The argument that we can do without public schools is open for debate but the idea that more money helps is a closed matter.  Private schools, and home schools for that matter, always outperform public schools. Why should we expect a different result from the automobile industry, and doesn't the fact that they are in this mess prove them an unworthy credit risk? 

A couple of helpful stats forwarded by a reader:
-General Motors sold 9.37 million vehicles worldwide in 2007 and lost $38.7 billion.
-Toyota sold 9.37 million vehicles in 2007 and made $17.1 billion.

That was the second best sales total in GM's 100-year history and the biggest loss ever for any automaker in the world.

-For Toyota, that was roughly $1,800 in profit for every vehicle sold.
-For GM, it was an average loss of $4,100 for every vehicle sold. 

The question that this business model should warrant government subsidy answers itself, to anyone with 4th grade understanding of arithmetic, problem is, we're dealing with congress. (memo to self: pitch new reality game show idea to Fox, are you smarter than a congressman) The better question is whether we really need a domestic automobile industry that can't survive on it's own merits.  Worse still, the folks fixing the problem aren't even asking that question.  For them it's not a matter of how but only how much.  

There's also the a matter of trust.  On a Tuesday in September we were told with hyperventilating urgency that A) we had a serious financial problem and B) it HAD to be fixed by Friday or C) the economy would collapse.  Is this Chicken Little crying wolf er what?  When B or C did not come to pass how much confidence are we supposed to have in the original premise of A? 

I'm undecided as to which is scarier, that they were lying or just so wrong.  The whole idea that they actually thought something could happen that fast in Washington gives us a real clue to their cluelessness.  The more I watch Washington during this "crisis" the more I'm convinced me, a typical reader of this site, and a player to be named later, with a few good cigars and bottle of small batch bourbon, could fix this thing in an afternoon.

I don't think it's entirely fair to lay all the blame on the car companies.  There's plenty of blame to go around on this one.  Yes, one can fault unions for demanding compensation beyond what the market bears but not without blaming management for agreeing to those unsustainable contracts.  Some of the salaries shown at various websites seem more than a little out of whack.  Call me crazy, but there is something wrong in a society where a high school educated autoworker earns twice that of their high school teacher with a masters degree and 20 years experience, my wife for example. 

I said before bankruptcy would be the best alternative and the Wall Street Journal tends to share that opinion...

In short, Detroit and the public has little to fear from a bankruptcy filing, but much to fear from the corrupt bargain that is emerging among incumbent management, the UAW and Capitol Hill to spend our money to avoid their reality check.

Todd Zwycki, WSJ Dec 16, 


Just as much, if not more, blame can be laid at the doorstep of Congress, for regulations that ignore other market realities.   It is quite disingenuous, for example, for Congress critters to accuse Detroit of making "cars that no one wants" when they themselves impose MPG standards and various other requirements.  Even worse is there deliberate domestic energy policies that renders us slaves to foreign suppliers, all for the sake a of the wildly disproportionate influence of the environmental lobby.  

Don't get me wrong.  I've been known to hug trees too, but if you take an honestly critical look at the ideology of today's environmentalism it could easily be mistaken as a blueprint to destroy capitalism.  

Congress role is to ameliorate the competing factions of big labor and big business, all while taking reasonable steps to protect our environment.   Truth be told our air and water are cleaner now than they have been in decades.  Also true is the union workers are doing better than ever.

Then how is it that the engine of capitalism, business, the one that underwrote all the successes for both the unions and environment, is taking the biggest hit in this crisis?  In a word - - government.  Can it be any wonder why they are on the brink of bankruptcy?  Sometimes things really can crumble under their own weight but the car companies have been piled on for years.  The weight crumbling them isn't necessarily all theirs.

All this discussion is for naught because we already know the unions will get what they want beginning Jan 20.  The UAW political action committee pumped millions -- $1,918,450 this election cycle alone into the congressional campaigns of Democrats - - and only $12,500 into Republicans, according to opensecrets.org.  If you think this fix isn't already bought and paid for then I want to introduce you to a clean politician from Chicago, and Santa Claus, and the Easter Bunny....

GM provides health benefits to over a million people today and only 15% (150,000) are current workers. Big Labor just bought a president so don't hold your breath waiting for concessions. The Democrats in Congress are a union subsidiary and wouldn't dare reopen the labor agreement - even if they wanted to. And neither will Obama.