As you probably know, Chrysler has reported its best quarterly profits in 13 years, has just introduced a very nice new Dodge Dart compact sedan and continues to gain sales and market share. GM has also been highly profitable with a string of solid product hits, though it has not gained share working with just half of its former eight U.S. brands.
As you also know, both of these iconic American car companies were upside down four years ago and likely would have been dissolved - along with millions of good U.S. jobs - had both the Bush and Obama administrations not decided to invest taxpayer money in saving them.
Now, with election season heating up, we'll be hearing much from both sides on the GM and Chrysler "bailouts." Democrats will rightly claim credit (though it began under Bush) for saving the U.S. auto industry and millions of jobs. Republicans will correctly counter that they did it all wrong (stiffing private investors, destroying thousands of dealer businesses for no good reason and handing Chrysler to Italy's Fiat) and for the wrong reason (to save the UAW).
"Let them fail," conservatives crowed then, and still. "That's how capitalism works." But there was no private capital in late 2008 for business loans or bankruptcies, so federal support was the last resort. Ford had sufficient capital to weather the crisis only because it had run out of money two years earlier, when it still could (and did) mortgage itself for working capital.
"Let them fail," conservatives crowed then, and still. "That's how capitalism works."
There has been no end to political rhetoric about creating new jobs, but little knowledgeable discussion around saving those millions of auto (and industry-dependent) jobs that we already had. What very few outside the industry - including financial gurus and media pundits - understand is how this industry is a huge, fragile, interdependent house of cards.Permalink | Email this | Comments
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