Auto Bailout — I told you so!
FULL DISCLOSURE: I own two Toyotas.
I told you over two months ago that the $700 billion would be just the beginning. It looks like the first ones to belly up to the Socialist Mother’s teat is the auto industry. They want $25 billion to bail them out; most think it would cost far more than that, but that seems like a round number to get the milk flowing. As you can guess, I am firmly against bailing out the auto industry. Let’s take a look at why they have failed:
- They make a product no one wants anymore, i.e. gas-guzzling vehicles
- They were not diversified enough, i.e. only made money off trucks and SUVs
- They make a poor quality product
- They let their costs get out of control
- They didn’t keep up with market trends, i.e. smaller, more efficient cars
These sound like fundamental business mistakes to me. Businesses fail all the time and, almost every time, it is because of mistakes made by management, and usually it only takes one. The Korean restaurant in my town had a great product that many people wanted, but they couldn’t keep their costs under control, so, guess what, they went under! When you make five major mistakes, you can expect the results to be even worse.
All that said, I am sure that our newly-minted Socialist government will bail out the auto industry, too. If nothing else, you will hear all about how we bailed out Wall Street (mostly GOP donors), so it would be unethical not to bail out Detroit (mostly Democratic donors), and this will break the will of those few conservative stalwarts left in the GOP.
So, the only question remains… who’s next? Rick Moran has a good idea!