Saturday, December 20, 2008

Chrysler and GM: communist companies

Strange things happening in the USA.

The representatives of the people and the Government decided some time ago to have $ 700 billion Dollars available for the financial institutions.

Tax payer’s money managed by the representatives of the people and the Government democratically decided to go to a specific purpose.

The three companies making cars and trucks in the USA, like the banks, went to Washington to ask for money as well.
This was refused by the representatives of the American people.

So they turned to the President of the USA and he gave them yesterday $ 17.4 billion Dollars.
From the money that was democratically destined to be given to financial institutions.

How is that possible in a democratic country?

The money is made available to two of the three automakers, but with a set of conditions.
Conditions that should have been implied years and years ago.
Like better controlling wages and pensions.
As Barack Obama was saying: “They need to reform bad management practices”.

But the automakers have a bad history of making promises and not fulfilling them.
So, what has the President of the USA come up with?
If the carmakers fail to prove viability, which is a positive cash flow and ability to make good on the loans, by March 31, they will be required to repay the Government loans.

How on earth can they live up to those conditions?
It is December 20 already: gives them only 3 months to turn things around.
Impossible.
Keep in mind that a company like Chrysler has closed down all its factories for one month.
Will that generate positive cash flow?
And if they can’t meet the conditions, from what money will these bankrupt companies pay back the Government?

The President of the USA has also been acting completely against his own political convictions of the free market.
He has more or less nationalized the American car companies by becoming stockholder now with absolute power.
Like the companies were in the former Soviet Union.
And we all know what that was leading to.

The President has also created a false competition: automakers like Toyota and Volkswagen have to compete now with Government sponsored companies.




Imagine a car that has an engine that only runs when it is needed.
When it needs to move.
An engine that stops when in front of a red light or in a traffic jam.
This would save a lot of fuel, wear and tear.

Next year Toyota offers such a car for sale on the European market.
Why are the Japanese able to innovate?





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2 comments:

Ted said...

"Toyota and Volkswagen have to compete now with Government sponsored companies".
What Toyota and VW are not sponsored
companies? Give me a break.

Joe said...

Its not innovation. WV had a Rabbit that would shut off at idle and restart when needed. This was at least 30 years ago, so its not new.