Friday, December 12, 2008

Where did that backbone come from?

Color me impressed. The GOP has found a backbone and said HELL NO to yet another bailout of a failed industry. I honestly did not think this would happen and am quite pleased with the outcome.

So now the question is will George W. Bush come to Jesus in his final days as President and also say no? Or will he throw one last middle finger up at conservatives by siding with Harry Reid and Nancy Pelosi and sending GM a check nonetheless? Given the past 3 months of socialism engineered by Bush, I'm not holding my breath for him to do the right things.

But then again as GOP Senators showed, there is always hope.

And let's say that GM gets the money. Does anyone think this company can realistically survive when the money runs out? Are there millions of Americans out there just waiting to buy a Buick that will run to the dealership tomorrow if the check is in the mail to Detroit? GM has been dying a slow and painful death for decades. Only reason it is still alive is due to the SUV craze of the $10 oil 1990s followed quickly by the the housing bubble which gave the lower middle class access to HELOC money which allowed them to buy $60K Escalades and sustained with the 0% financing and $0 down programs of the past couple of years.

That's all over. The guys making $12 an hour with a 500 FICO is not goig to get the $60K loan to buy an Escalade like he could 3 years ago. Without these people, there are not enough people who can afford to buy a $60K Escalade or a $40K Suburban, the vehicles that make money for GM. The only things the lower middle class can now afford are the compacts and subcompacts. Unfortunately for GM, it loses money on those cars. They are a loss leader for the company.

So eve with this bailout, it is only delaying the inevitable. The Big 3 will become the Big 1, with Ford possibly surviving into the long term. That is reality, and it's time everyone - Bush, Obama, Reid, Pelosi - started accepting this new reality.

Yeah but Ed you are such a heartless prick, what about the millions of people who will be left jobless in Michigan and Ohio? To that I say, yes I am a heartless prick. But be that as it may, remember once upon a time Pennsylvania was dependent on the steel industry. And that industry, like the auto industry, was bankrupted by unions in the 1970s. Yet here we are 30 years later and the state is doing just fine. Pittsburgh and Philadelphia are not ghost towns last I checked. Michigan and Ohio will figure it out too.


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