ATLBob

Stop the Bail-Outs, I Want to Get Off

Nice article.

Political pandering aside, the new administration should not entertain any sort of bail-out for automakers, since it would only enable the continued ineptitude of Detroit and delay the inevitable. I suggest that chapter 11 bankruptcy/reorganizat... may be a painful but proper long term solution for the sustained viability of American automakers, providing that they are willing to make the changes to compete in the global economy.

The big 3 automakers problems stem from their historically inept management, failure to re-tool and innovate, and union-driven legacy costs. The big 3 can't do anything without approval of the unions, who have essentially emasculated management.

Anyone remember the 1970's and the oil embargo? Gas prices climbed radically, shortages were everywhere, and long-lines were the rule whenever you were lucky enought to find a station that actually had gasoline. American automakers talked the talk about transitioning from huge, gas-guzzling V-8's to higher quality, fuel-effecient vehicles, but they never walked the walk: they failed to deliver on their promise in any meaningful way. They made token improvements while foreign automakers offered effecient/quality/high MPG products and grew marketshare at the expense of the 'big 3'. They watched as the Japanese, German, and Korean automakers opened factories in the US and made effecient, quality cars here using American workers. Fast forward to 2008 and look around at any parking lot or look around on the interstate, and what do you see? Tons of bulked-up, gas-sucking big 3 SUV's and pick up trucks.

Einstein once said that to continue to do the same thing repeatedly and expect a different result was the definition of insanity. If the new administration and Congress provide a bailout for Detroit, then we'll know that Forrest Gump's Momma was right: Stupid is as stupid does.

Citibank - On Guard! - Cramer's Stop Trading! (9/12/08)

IMHO, Sears Holdings is more of a real-estate play than a retail play, since both Sears and KMart are well-worn and past their prime in the retail world. Eddie L is a pretty smart guy and picked up lots of commercial property at 'blue light special' prices when he took charge.