Steve Funk

Default Risk of U.S. Automaker Debt: Too Big to Fail?

All the standard cliches' here about "dumb executives" and marketing mistakes are arguments that ignore the macro environment of the auto industry. I have worked with GM executives and they are some of the brightest and best trained you will find. I have also been in a key GM plant years ago during an important strike during an election year. The plant manager was paged for an "urgent phone call from Washington" and the strike was over in an hour. Let's not forget the Justice Department decree against GM in the 60's. That was truly the beginning of the end. The government has has their hand in every major shift in the auto industry, and we all know how adept Senators are at business. I think this article is spot on, as in the past, the future of the auto industry will be determined by Washington, not the skill of industry managers. Since the current trend is psuedo-nationalisation and government arranged marriages, why not force Honda and Toyota to absorb the Big 3?