Monday, May 18, 2009

Bailoutistan: No Way Out

GM, Chrysler, and Ford* will never be profitable if Dear Leader succeeds in raising MPG by 10 to 35.5 in only 7 years. The obvious answer: The new, Hope N' Change, Government Motors, Trabant! . A car that only Dear Leader could love. Of course, he's never going to have to drive one.

Without massive changes to UAW work rules, combined with serious concessions in wages and benefits, Detroit simply can't make small cars profitably. Not that the Obama Administration has any intention of getting the UAW to make serious concessions. They've been too busy driving capital away from the industry by screwing the bondholders.

So, by dramatically increasing the costs to build small cars via administrative fiat and driving away investors, we've essentially guaranteed that Detroit will emerge from Bailoutistan. Which was probably the point all along.

* Ford, a company that has been trying to get it's house in order and do the right thing by not getting sucked into Bailoutistan, is likely to get royally screwed in all of this. Probably as punishment for not sufficiently groveling before the Dear Leader.