General Motors (NYSE:GM) has become so fat trying to save it would be the equivalent of cutting apart a mobile home to free the monstrously obese woman clinging to a bucket of fried chicken inside.
Yes, the federal government can extend a huge bailout to Detroit and the companies that have been sucking at its overweight teats, but sometimes cutting the fat lady out of a trailer does much more harm than good.
Unless you change her eating habits and her over-consuming lifestyle, the weight will not disappear on its own. Who is to say she will not have a heart attack on the way to the hospital or bribe the ambulance driver to stop at McDonalds (NYSE:MCD) for a six-pack of burgers and a chocolate shake?
Corporate liposuction
Just like most of the nation, I too view GM as one of America’s great corporations. The company epitomizes everything that made this country great, at least over the past few decades. Right now, on the other hand, it represents some of the nation’s greatest problems.
GM, just like its union-fed employees, wants something for nothing. The American taxpayer did not get the automaker into this trouble. Its management and its union concessions did.
You and I are not the ones that promised to pay defined retiree benefits for hundreds of thousands of past workers. We are not the ones that promised to pay wages to a “bank” of workers we no longer need. And we are not the ones that produce inferior products few consumers demand or are proud to own.
We all know, if you or I ran our businesses the way GM is run, we would have been on our butts a long time ago. And most certainly, there would be no congressman pulling strings to hand us huge sums of money to fix our senseless mistakes.
In America, we have two choices that must be made today. We can take the easy route and write a check to Detroit and its supply chain, essentially putting off the auto industry’s problem until the next recession.
Or we can make the hard choice and let GM fight for its life in bankruptcy court, just as the free market is dictating. Yes, this would propel America into a deeper recession and unemployment would almost certainly reach double-digit proportions. But most importantly, it would ensure that 10% unemployment, like Europe has become used to, does not become the accepted norm in America.
Temporary pain, permanent improvement
If we cut GM loose, we will endure a lot of temporary pain, but the nation’s future will be much brighter. The wounds will heal. The job market will rebound. And a new, much more profitable industry will emerge from the ashes.
We already have a huge segment of the nation’s population trapped in the gutter thanks to overly ambitious social welfare. Now America is about to make an even larger mistake and embark on what will essentially be permanent corporate welfare.
It is a mistake that will haunt this country and its growth potential for generations. If Bush signs any legislation into law, the corporate nation will never look the same.
Life support is for bodies that have a chance at healing and getting stronger, not for fat ladies that will continue to eat themselves to death.
It is time to pull the plug on GM and see what happens.
Disclosure: no positions
