by Pete Kotz
on Fri, Oct 31, 2008 at 2:20 PM
The problem with bailing out Wall Street is that it sets a precedent for every poorly-managed company to come hat in hand. And when it comes to bad management, you'll find no better benchmark than GM.
Reuters reports today that company is requesting an additional $10 billion from taxpayers in anticipation of its merger with Chrysler. This comes on top of the $25 billion the government has already pledged in low-interest loans. Ford, naturally, wants a similar welfare package.
Governors from Michigan, New York, Ohio, Kentucky, Delaware and South Dakota have joined GM's lobbying campaign, as has the Business Roundtable, a group of the country's most powerful CEOs. So far, the Bush administration has refused.
At the risk of cursing my soul for eternity, I'm inclined to agree with Bush.
No doubt GM's collapse would be catastrophic. Though such stats are always exaggerated to make a point, the Chrysler merger alone is expected to kill upwards of 140,000 jobs when suppliers are included. And as The Tennessean writes today, GM's troubles are already delivering a beating to local dealerships.
But providing more welfare to GM should at least come with the slight possibility of getting it back some day. That dog doesn't only suck at hunting; it never even leaves the porch.
Thirty-five years after the first oil crisis, GM remains remains wedded to the low-mileage, high sticker price sale. When I turn on the TV, I don't see commercials for inexpensive cars that get 30-some miles-per-gallon. I see the fabulous new Cadillac Escalade hybred, which boasts of 20 miles-per-gallon in the city -- as if that's an achievement -- and a $40,000+ price tag. (See ad above.)
So this is GM's plan for profitability? Convince broke people in the middle of a depression that they need a $40,000 truck that gets shitty mileage?
I don't know about you, but it seems to me that no amount of money could stop morons like this from going under.