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Why the bailout won't save automakers

Filed in archive strategy by leon on December 02, 2008

Why the bailout won't save automakers


US automakers are finishing their restructuring plans as part of their pitch for the the $25 billion in emergency funding but the reality is these companies are losing so much money that it won't be anywhere near enough to save them.

Former GM board member Jerome York has told Bloomberg that they will need lots more. He says just their lending arms will need another $100 billion. As columnist Jack Kelly writes, it's not going to prevent their bankruptcy."The current environment for auto sales is toxic, and is likely to remain so for at least a year. This means that ever more and ever larger subsidies will be required to keep the doors of the Big Three open. Eventually taxpayers will run out of patience, or milk. To avoid discomfort now, we court catastrophe a short distance down the road. If the Big Three sought Chapter 11 bankruptcy protection now, one strong company could emerge from the wreckage. Surely the United States would be better served by having one healthy car company instead of three terminally ill ones. But good sense, alas, rarely makes political sense."

Still, politically it would be difficult to let these companies go to the wall, particularly when they employ so many Americans. Interestingly, Ford CEO Alan Mulally this time is making the trip by car, according to the politico.com blog The Crypt.






Permalink: Why the bailout won't save automakers
Tags: automakers  bailout  2008  2007  creative  bailout+save  save+automakers  bailing+general 

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Related Entries:

Bailout warnings - 04 September 2007

Automakers heading nowhere - 19 November 2008

Automakers flew to Washington in private jets - 20 November 2008

Gouging with the bailout? - 24 November 2008

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