Wednesday, November 12, 2008

Government Cheese Spreads

Another bailout for another industry, this time the Big Three.

I hear a lot of people saying that this has to be done or GM, Ford and Chrysler will go bankrupt but I don’t hear any of these people also explain why this is the worst of all possible outcomes.

The Big 3 will remain at a significant competitive disadvantage if they cannot get out of their long term pension liabilities with the UAW. The worst of all possible outcomes is having to do this again in 15 years.

Bailing them out just allows them to continue implementing a failed business model that will have to be abandoned eventually anyways. As much as it will suck for all those retired and soon to be retired UAW members who have been relying on their pensions to see them through retirement, it has to be done sooner or later.

If the Big Three were smart, they would take part of the money and give it to the UAW and say here, you manage the pension fund for now on.


  1. If you're a Michigander, it's gonna hurt. But let this be a lesson of what happens when a union goes too far. That and not enough innovation from the Big 3. Henry Ford would be rolling over in his grave. Tough times all around...but I don't support a damn bailout!

  2. I grew up near Gary Indiana and steel mills started going belly up no one came to rescue them. What was left when the dust settled was a leaner industry that can compete globaly.