Bailouts

There has been a lot of news about the American auto manufacturers trying to get a bailout. I think it won’t happen, because people are skeptical. The bank bailout shouldn’t have happened at all – if the banks were weak, they should have been left to collapse. The auto manufacturers employ a lot more people than the banks, and those auto manufacturers aren’t asking for more than even individual banks like Citibank got.

Still, I don’t think an auto bailout would do any good. I think Ford will survive no matter what happens. I think it is really in their best interest not to support the bailout. If Chrysler or GM collapse, the people that buy American would probably buy a Ford.

I’d wager that if there is no bailout for GM, a buyer from China would emerge. As GM makes a lot of autos there, and China could use an avenue to get Chinese autos into other markets, it seems natural that China would take over GM. I have seen a lot more Buicks in China than I ever saw in the USA, though part of that would be due to the fact that the Buicks sold in China have better specs. I wonder if Buick has been kept alive because of China. If I were heading GM, I would have killed the Buick brand a long time ago.

That leaves Chrysler. I certainly don’t think they should get any bailout money. Bob Nardelli heads it – and he nearly ran Home Depot into the ground. Now he is doing the same with Chrysler. Chrysler doesn’t seem particularly viable outside North America. I have seen their minivans in Europe here and there, and old models of their Jeeps in China.

I’d just let Chrysler collapse. If Chrysler collapsed, I’d imagine the people that want to buy an American brand would buy a GM or Ford, and hence GM and Ford would be able to make it through the current tough times without a bailout as they cannibalise the former Chrysler’s sales.

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