What would you do if your neighbor came rolling up to your house, driving a brand new Ferrari, and asked to borrower 100 bucks because he is broke. I’m willing to bet you’d tell him to go fly a kite. The analogy could be drawn to the big 3 auto manufacturers that were pleading their case for a bailout in congress this past week.
Today officials out in Washington D.C. decided to send the the CEO’s of Ford, GM, and Chrysler back to Detroit empty handed. For good reason many members of congress were a little upset with the presentation that was delivered in proposing a massive auto industry bailout. Leaders of the Big 3 insisted that each of their companies are in desperate need of taxpayer money to keep the daily operations running and prevent a complete failure or even bankruptcy. The plea for this bailout came at the hands of executives that had no concrete plan of repaying the money or viable proposals to restructure their organizations. One would believe they would’ve had plenty of time to draft something up while flying to Washington on Corporate Jets! How can a company that is bleeding money right now, justify spending thousands of dollars flying to capital hill; let alone ask for money because they’re broke! As I wrote previously, is it time to say Goodbye Ford, GM and Chrysler?
Many American taxpayers are struggling just to put food on the table, pay their mortgage, and fill up the gas tank, none of them are getting any kind of bailout. I’m not completely opposed to helping retool the failing U.S. auto industry, but clearly there needs to be some changes at these organizations, the first of which should be cutting the corporate jet expense and taking coach!
I have to ask the question again, would you generously give anyone money that is claiming to be broke after they just stepped off a private jet?
*If you like this article please swing by my blog FixThePig and voice your opinion on this and other similar topics. Thanks
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Comments: 10
You want to know why the big-3 weren't terribly interested in investing in small cars for the last few decades? It's because they couldn't actually make a profit off of them. At least when it first came out, the chevy cobalt was actually sold for a loss (it still may be but with the new union contracts it may even make a tiny, tiny profit). The Japanese carmakers, even in the plants in the US, didn't have to pay the Union wages, so small cars were actually profitable.
I'm glad they voted it down. I wish they'd voted down the $700 Wall St bailout, and I'm a financial advisor. Where do you think this money comes from? The government is in the whole already...all this is doing is creating new money. In other words, inflation. And we have to pay it all back with interest.
Let these companies fail. That's how capitalism works. If you're willing to enjoy the benefits of capitalism when times are good, then you have to be willing to endure the hardships when they aren't. It's a natural part of the business cycle, it's been going on forever and it's going to KEEP going on forever. All you can do is position yourself to ride it out as well as possible.