Big Two not Three (Auto Bailout)

(from Rob Matson) A major point that has been overlooked in the "Big Three Bailout" is that we are really talking about the Big One bailout. Ford is not asking for money and foresees that it can turn itself around. That leaves two - GM and Chrysler. But what about Cerberus? If we consider that this one company owns the better part of both GM and Chrysler, then our BIg Three have now become just one. When I consider the amount of funds that are being "invested" in our automakers, I have to worry. It seems that the media and as well as the government are misleading the public and perhaps themselves.

So let's take a fresh look at the current situation with this new knowledge in mind. In total, requests are for $39 billion for Chrysler and GM or in truth - Cerberus. The projection is that repayment could begin in five years. In order for this to happen, the economy will have to make a huge turn around and these companies will have to enjoy sales nearing their all-time highs. What if this improbable scenario doesn't happen? Will we invest more dollars? It is likely we will and it is more likely that this company knows it. If we have made a nearly $40 billion investment, would we give up on that investment in lieu of loaning an additional $10 billion? Not likely. 

What we have to ask ourselves is this: Could it be more beneficial to America, in the long run, to invest those dollars elsewhere? While our educational scores fall lower and lower against foreign counterparts, so do our standards of quality in the automotive marketplace. Have our automakers done anything in the last decade to show that they are willing to step up efforts to better compete globally? I don't think so. If we, the taxpayers, take a look at this investment as investors, I do not believe we would want to take this plunge. I can't imagine any investor that would. 

SInce we are not willing to let these companies collapse due to the number of jobs affected and the prospect of having only one U.S. automaker left in the game, we have to consider the common factors and take some action. Ford is managing to keep its own head above water, the other two - or rather one is not. Just as any other investor would do, we must ask some questions and attach some conditions to our investment. Why is Ford succeeding and the other failing? What decisions and payouts are being made by and to Cerberus that have influenced the failure? What exactly do GM and Chrysler plan to do DIFFERENTLY in order to be competitive globally?

If we cannot get good answers and provide good solutions, then we must consider that these or THIS company will fail eventually regardless of our investment now. Would we ultimately be better served to let the nature of business take its course? MIsmanaged companies fail, it happens all the time. Why should this one be any different?