Archive for the ‘Economy’ category

Too big not to fail

March 27, 2009

As noted below (in December, on an earlier version of this blog), I was in favor of helping GM get through this mess, within limits. GM and the country have reached that limit. Throwing at it the amount of money it probably needs, on top of the ridiculous amounts of money the government — that is, the taxpayers — is or will be tossing around, is just too much. It will be tough for GM to reorganize under bankruptcy but it will be tougher in the long run for all of us if we go into even more debt as a nation.

And while we’re at it, if we’re going to regulate anything, let’s ban the phrase “too big to fail.” It’s truly become an excuse to not face the market music. This is not a slam on GM or any other company. Sometimes a company can make all the right moves and still fail. But just as a business can ride high on the market (I’m assuming good products and services here), it must accept the consequences when the market changes. If it is unable or unwilling to adapt, so be it.

“Too big to fail” has essentially become “too big to care” or “too big to change.” What it means today is that a company became, in effect, too big to succeed. It lost its way, for whatever reason. Companies let employees go when they are unproductive and/or unaffordable. The taxpayers have to do the same for companies.


Detroit and Washington

March 17, 2009

The Senate was dead wrong in turning down the American auto companies. Now senators get their spines back? And for what? To seal the coffin for American icons GM, Ford and Chrysler? Way to go.

The financial system needed help. And the car companies do, too. This whining about rewarding bad choices, calls to let them fail and citing polls is a joke. Most of them — i.e. congressmen and senators — have made bad choices, haven’t exactly been succeeding lately and polls say people think they’re a failure but that hasn’t led to their resignations. And most of them are rich so it’s easy to “take a stand” on something that what hurt them much anyway. Too bad they can’t be so principled when it comes to the right to life!

mmusa is no big fan of Michigan or Granholm, but she was right on in calling the Senate vote unAmerican:

But where does it stop? is the cry. Right here. No other industry in America is so pervasive. After this, let it go. If the financial markets can function smoothly and the car companies have been helped, then it’s up to management and workers to get things going again. But if the car companies are hung out to dry, everybody loses, except for those in Washington.