General Motors stock fell 22% today after “analysts downgraded the stock”:http://online.wsj.com/article/SB122633261247513857.html. The company is now worth less than $2 billion. Deutsche Bank even said the stock will fall to $0/share, meaning they think GM will be worthless. I could have told you that when I was 10 after my parents bought a Chevette.
General Motors and Ford are “begging for a federal bailout”:http://online.wsj.com/article/SB122616278065311225.html so they can stay in business and Democrats are working to give them their bailout. This is an example of my disagreement with the Democrats on economics. They’re doing it to save up to 500,000 jobs in America. Obama supports a bailout if they use the money to re-tool to build more fuel-efficient cars so they can better compete.
It’s a noble effort, but who are we kidding? GM and Ford built crappy products for the last three decades without regard for competition and instead launched a false patriotism campaign to “Buy American” and Americans fell for it. It only postponed the inevitable and benefitted Toyota and Honda, who were forced to work that much harder and build better products so they could sell them to Americans resistant to buy foreign cars. So Detroit and Americans, trying to help the country and fight the laws of capitalism, ended up inflicting more damage to the country: they weakened themselves and strengthened their competition.
Why do we think that GM and Ford going to suddenly start building better products now?
If they do die, there will be a lot of unemployed people in this country. That’s not good, of course, but the good employees will be able to get jobs at Toyota or Honda. The best employees could start new car companies (buying the equipment of Ford and GM for cheap prices). The executives of GM and Ford would be left out in the cold, but that’s okay because it’s their own fault.
But this is all moot because the government will give them the money. And the Democrats will be blamed when the companies continue to fail.