Archive: Opinions

I am sure it is politically incorrect of me to think what I do about the proposed auto industry bail out.  I think that even considering it is a travesty.  While executives are flying to Washington on private jets and probably spending millions on lobbying campaigns and television commercials to garner sympathy, they are doing their darndest to obscure the central issue -- these companies have had a bad business plan for years, and now they want us to give them an exorbitant  so-called loan so that they will have more money to misspend without changing that plan.  When they run out of money they will boo-hoo for some more.

If Congress falls for this line of hooey, we all get to throw the money down the toilet, along with the $700 billion we just threw in to bail out financial experts who evidently didn't understand the most basic concepts of finances.  While I get the argument that shoring up the basic underpinnings of our economy will foster an environment in which other industries can prosper, I think these auto executives have a lot of nerve.

When unions were first formed there was a legitimate need to protect workers from industry abuses.  The auto workers unions took that momentum to a point where they pretty much drove the model the big companies use to produce cars.  As salaries and benefits grew out of proportion to what was viable in order to compete with foreign companies industry executives didn't have the nerve to do anything about it.

Meanwhile some of the foreign companies were paying attention to what consumers wanted, and offered the double whammy of better cars, cheaper.  Which business model do you think makes sense?  Better/Cheaper (and sell more) or Lousy/Expensive (and sell less)?

If Congress doesn't get caught up in the emotional baggage of this crisis they will remind our jet-setting friends that there is already a way to emerge from their little problem if they earnestly wish to do that.  It's called Chapter 11.

The downside of Chapter 11 is that a) it's popularly called bankruptcy even though that is not what it is, b) people will lose jobs, and c) smaller companies that are owed money by the big ones will get stiffed.

None of those really has to happen if the process is used in an honest, earnest effort to actually reorganize and build on sound ideas.  Better/Cheaper (and sell more) seems like a good idea to me.  While it will certainly involve pain for individuals and small companies, it doesn't have to be the Draconian solution of major layoffs and unpaid bills.  Theoretically Chapter 11 gives a company government protection while they come up with and implement better ideas.  The goal is to remake the company into a success.  Not to let a failure hemorrhage money that isn't even theirs.  As for the prospect of people losing jobs -- if the auto industry is so loving and caring about that now, how come they weren't doing anything about it last week?

Too bad the auto executives have already decided that 'more of the same but get the taxpayers to fund it' is their solution of choice. 

Hey, I have an idea?  Why don't I fly to Washington on my private jet to lobby for a bailout of fledgling local online newspaper businesses?  I'm not as greedy as the auto executives.  I'd settle for a measly $20 million or so.  After all, this is the Information Age, so we can't let our media go under or the whole Age will collapse!

Oh wait a minute -- I don't have a private jet and the price of a regular airline ticket is almost as expensive.  Without that jet nobody in Washington would let me into their offices, let alone to address Congress.  On my budget I'd have to take them to Subway to schmooze them up for money -- no fancy trips or golf outings on my budget.  I doubt I could even get a staffer to come to Subway with me.  I'd never get a Senator.

I'm tired of people bringing up Michael Douglas's famous Gordon Ghekko character who came to personify greed.  That was fictional greed.  The current economic crisis is the result of the real thing.  Use your head -- what happens in real life when you throw money at greed?

Right.  Chapter 11 for the Big 3 automakers is looking pretty reasonable.  Politically incorrect, but pretty darn reasonable.

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