Mitt Romney has had some free time the last few months and it appears he has spent that time thinking up a solution to the auto industry situation. I agree completely with Mitt, the best way to fix Detroit is to let it go bankrupt.
"Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check."
"The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk." (Click here for the article.)
I have heard many say that the government bailed out the banks so they should bail out the auto makers. My response is that two wrongs don't make a right. The bank bailout was a mistake and the auto bailout will be an even bigger mistake. Unfortunately the government has started down a slippery slope that may be too difficult to get off before nationalizing the entire economy.
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I think we should let them go down the tubes. Not because loan guarantees are so bad, but simply because they will never again be successful regardless of the economic situation. The National Post has reprinted an article from the Detroit Free Press which points out that the North American automobile producers have overtaken the Asian car manufacturers in every aspect of technology from safety to fuel efficiency, yet Canadians and Americans still buy Asian products. It is the same with almost every product on the market. Just check out the source of manufacturing for most items in Wal-Mart or Canadian Tire. We, the buying public, have killed the big three because of some perverse idea that it is stylish or hip to buy foreign. Well, when all the jobs are gone and the welfare rolls are overflowing, I wonder how hip we'll all feel then.
P.S. My present vehicle is from one of the big three and it has ever been thus. I also check labels and buy from North american producers where possible, regardless of price.
It's neither stylish nor hip to buy foreign. It's pragmatism. The big 3, over the last 15 years, have produced crap. If they produce what people want to buy they will succeed... but they need to restructure in order to survive.
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