When Uncle Says No

Boy, what do you do when you find yourself in a heap of trouble and your uncle won't help?

We don't know, either, but the U.S. government has denied GM's request for ten thousand million dollars in order to "merge" with Chrysler. We haven't commented on this before now because we figured it was all made up. There is no reason GM should buy Chrysler. Well, no good reason. We bet if this does happen, GM will just end up shutting down Chrysler's production.

Anyway, the issue here is no loan from Uncle Sam to merge two dying companies. What happens next?

Referenced article

NY Times: U.S. Rejects G.M.’s Call for Help in a Merger

Comments

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[Joel Sunde]

Our car companies should tighten belts and budgets, reduce wages, and recruit creative ideas --- Think of themselves as brand new companies and let the unions squeal until new solutions are found!

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[Greg Thibodeau]

Like anything in life, if you are not allowed to fail you can never truly succeed. My own successes in life are built on the many lessons I have learned and the understandings I have gleaned from the times I’ve failed. So true is this simple fact of life, that it translates to simple economics. If an individual business or industry is to succeed, they must be allowed to fail. Business entities and industries in a truly free marketplace use the lessons of failure to build a more competitive marketplace, product and services.

Free markets behave like the natural laws of physics. Take water for example, water always seeks the lowest level. The pull of gravity on a liquid is enormous and forever. Try to dam the river, the forces of gravity are so constant and strong that over time the dam will fail, always has and always will. Call it what ever you want, but trying to shore up, bail out, or subsidize ailing US auto manufacturers is like damming the river, the forces of inefficiency, government regulation, horrendous labor contracts with the United Auto Workers Union, and executive level management greed will be so great that over time they will fail. Subsidizing, propping up, and bailing out any business or industry almost certainly guarantees inefficiency, lower productivity, higher prices, shortages, reduced quality and sub par services.

So, with this I say let them fail or succeed on the basis of free market economics. Failure would allow them the reorganize under Chapter 11 of the US bankruptcy code. A bankruptcy filing allows them to restructure their debt, union contracts and executive compensation packages. I say this with the caveat that the US auto industry is not solely at fault here. Our US Congress and the EPA have single handedly continually changed and added new regulations that place an overwhelming burden and hurdles for these companies to overcome. As far as an Obama presidency, I can only see him maintaining and expanding these oppressive regulations. My hope is that in the future, the people of this country will elect a conservative congress that will see and understand the damage these oppressive regulations forced on these manufacturers and repeal or attempt to restrict themselves from further damaging this industry. With free market economics, the big three will emerge as lean, technology driven, productive manufactures of high quality, highly demanded US automobiles. Why, they may even emerge as the big two or even the big one!

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[charge controller]

GM should not buy Chrysler. They sould merge and keep the mills going. Merging would make more sense than GM buying them out.