What are we getting into, or not into as the case may be
First off, based on its first iteration, I didn’t like that it was being labeled a “bail out of Wall Street”. Honestly, if we did nothing then it was everyone was going to take it in the shorts; Wall Street, Main Street, Blue Collar, White Collar, Capitalist, Socialist. The frame work was good, free up the capital markets. Were the details all worked out no, and the devil is in the details. Then what do you know, the politicians get involved. They want to help the families who are going through foreclosure. Then they want to help the perpetually failing Auto industry. What is next? Poorly run businesses go out of business.
In this case a major part of the problem is legacy costs. All the pension benefits being paid to two generations. Did they earn it, well yes, it was part of the contract. The worker fulfilled thier end of the bargain but guess what. The Auto Company of the 60s and 70s wrote a check that the auto company of the new meliium cant cover. And to be honest they never will. To be competitive they need to do something about legacy costs.
Another major issue is the Unions. Why is it that “foriegn” car companies are doing better buiding cars in the American south than the “domestic” car companies are doing in the American north? Besides legacy costs, Unions. They are jacking up wages. Get out of the way. Let wages settle to a market rate for the area. Let the auto companies get back on thier feet, assuming they can transition to a stable of autos for the new melinium, and deal with the fact that the good ole days of Detroit are over.
No comments yet.