Big Three: Too Late to Recover
MSNBC reported General Motors Corp. President and Chief Operating Officer Fritz Henderson saying today that bankruptcy isn’t a viable option because it would further erode consumer confidence in the automaker and “we want them to be confident in their ability to buy our cars and trucks.”
This man does not seem to be in touch with the sentiment of the general public who at this time seem quite prepared to take a big bath rather than continue bailing out failed corporations. Realizing at least a few of their previous faux pas the heads of the big three are once again preparing to appear before congress to request an ever growing sum of bail out money. Henderson conceded that flying to Washington previously in separate corporate jets was “a problem” for lawmakers, and also acknowledged that their plan at the time was not clear. This time the three auto leaders plan to travel the 520 miles to Washington in fuel efficient hybrid cars. Their collective satori may have come too late however as Americans, hopefully including lawmakers, begin to question the wisdom of the meme, “too big to fail.”
Automaker’s demands call to mind the antics of evangelist Oral Roberts who once threatened that “God will take me home” unless the public donated $8 million over the next two months. Well time has moved on and the automakers are demanding more than Oral ever did, much more. Chrysler needs $7 billion ’till year end “just to keep running.” GM is asking for $4 billion “now” as the first installment on a $12 billion loan. These demands are just the beginning, there are additional reqests for multi billion dollar lines of credit sealed with the threat “or we will have to close our doors and shutter our windows.” The obvious problem with bailing them out at all is that once we begin, when do we end? We need to ask about the opportunity cost of a bail out: what else could we do with $34 billion inflatable dollars?
Are the automakers really “too big to fail?” Besides, even if I cannot buy a GM, or a Ford in the future, there will still likely be the Hondas, Toyotas, and Hyundais. In a global market the lions share will go to the producer with the best balance of value and quality, the big three have realized this “too late to recover.”
