Paper Tiger Threats – Big 3

Funny the automakers claim that failure to give them bailout money will mean another 2 million lost jobs.

You may or may not agree with me that if the Big 3 fail, some other company(ies) will be sucking up the jobless ex-employee / manufacturing supply of the current Big 3, as the US demand grows for replacement autos and trucks. A perfect opportunity for Subaru, Mitsubishi, Hyundai, Toyota, Honda, Nissan, etc. to take up the slack. If the Big 3 fail, can’t congress just offer incentives for these companies to build business over here?  US profits and taxes are better from reliable new sources as opposed to a failing US group, right?

So when the Big 3 walked in the door and threaten they are world class kick boxers and will kick the American economy’s ass without a bailout- then they are actually deserving of a US kick in the seat of their pants.  They walk in a second time and have no real plan with accountability in place for overhauling their business, removing management, or redefining their product direction. They claim that the problems are because of this economy as much as their nebulous mistakes.

You may have not bought a car in years, but if you look at what the congress did for auto businesses the past eight years, they gave great tax breaks for individuals /businesses that purchased SUV’s and trucks. In a confession to the congress, the Big 3 claimed the purchasing was based on building what  people WANTED and demanded. But no one called the Big 3 out on these tax incentives during the bailout discussions.  To this end, the Big 3  also offered leases for more efficient vehicles at much higher and unattractive rates.  So is this an issue of demand of market manipulation?  Clearly a business in in business to make money and consumer demand is only secondary for the auto manufacturers. SO you could sign a lease for a big Dakota Ram Hemi diesel truck for $180 / month, but a low- end Buick would cost the consumer $2000 down plus a monthly fee of $399.  Which vehicle do you think that average American will sign for? Again, none of these factors are brought up in these congressional bailout reviews.

The point? Let’s call a spade a spade. This is all just big business. What they say is not their goal and not their intention. It amazes me that economists and MBA’s who are looked up to by everyone,  have been granted the best schools and the best of everything else. In the long run, most of these experts seem to have no clear successful performance history, and no punishments. They may get ousted from this role or that post, or bring down a company too fast to be punished, but never before a payment for their time and efforts. Why should we all try so hard to get educated through Ivy League schools  when the real cash is in playing a minstrel show to anyone who will buy in?  They should call groups like the Harvard Business School a branch of the thespian troop.  That would be more appropriate. I am not saying these guys are bad people or wrong, but I am saying that my expectations are that they can run companies and build products that maintain quality. But that is not how the business world works. Quality exists – if at all – to climb and remove your competition. Then, as the last standing company, you force your market into whatever quality gives them the most profit. Looks like this really is the land of opportunity. Classical training is just an obstacle to making a living.

Who can blame the Big 3? As one congressman said something like “We gave $700 billion to bail out the financial sector, and it was misused, we do not want that to happen again with the auto industry.” Then note that  Citicorp was given a  $300 Billion bailout (20 x the auto bailout money) and has no required time in front of these congressional audits. I suppose Citi has better lobbyists.


One thought on “Paper Tiger Threats – Big 3

  1. Interesting and realistic commentary and appropriate end comparison. One cannot help but begin to think this is a charade that is being just a tad overly played at times.
    Actually, this drama has gotten into the theatre of the absurd when Sen Dodd is telling Waggoner to resign, because how can someone who presided over this morass fix it? Dodd, Frank, and Obama,
    Clinton and Rangell are in the exact same positions.
    Obama’s statement about the auto companies reveals he hasn’t a clue as to what has been happening. Since when does government tell private business about its personnel? By the way, which of
    these clowns has ever run a business let alone a corporation? I wonder, what their Econ IQ is, as well.

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