Saturday, December 27, 2008

Michael Campbell on the Big 3 Automakers Bailout

Michael Campbell was on fire this morning! You can listen to his full editorial here (@ 34:50).

Here's a key part of what he said:

How incompetently run would a business have to be to not qualify for government aid? Cause that's not on the table right now. We're not accepting or rejecting businesses based on how incompetently they've been run. Helping failing or failed businesses is nothing new but it seems particularly acute this year. And with the granddaddy of them all, promising up to seven billion dollars in Canada for three major American car companies.

I'm used to governments blowing money. Anyone who has read an auditor general's report knows all about that, whether you want to acknowledge it or not. But this one, this promise to spend $3 billion dollars right now, as much as $7 Billion in the future and that still may not be enough to bailout the shareholders, the unions, and the executives of the Big 3 Automakers is just so BIG.

Take a moment and think about that kind of money. And we're doing it with virtually no debate whatsoever. Politicians who know nothing of the credit crisis or business or finance, politicians who saw none of this coming are now going to give money to the same management teams who took their companies to the brink of disaster. As if they can get them out of it.

But still, no political debate. Not from Jack Layton, who in my opinion, in terms of economics and finance, is the most unsophisticated leader in national politics since Audrey McLaughlin. No debate from the Liberals, who are vying with the NDP for support of the CAW. And no debate from the Conservative government who are still reeling from the breathtaking miscalculation of Stephen Harper and Jim Flaherty that nearly brought their government down. We are so incredibly poorly served by our national parties.

But before all you politicals light your hair on fire, consider this: How much would $3 Billion, maybe up to $7 Billion, maybe more ... how much could it buy in terms of health care, education, solving the homeless problem, you name it?! To borrow from the late senator, Everett Dirksen, "A billion here and a billion there and pretty soon we're talking about real money." Well, we are talking about real money here, maybe as much as $7 Billion+ worth.

Now let me make one thing clear. If you support this bailout, why don't you man-up for a change? Why don't you man-up and put your own money down? Why don't you buy the stock of GM or their bonds? There's nothing to stop you. Nothing but common sense.

I'll tell you, throwing money at these 3 failed automakers in an environment that will see a profound drop in vehicle sales this coming year sure doesn't top my investment list for 2009.

But what I find really grating is that this is all about political connections and clout. It's about campaign funds and courting the CAW.

My only worry in this debacle have been the dealerships and part manufacturers who do run good businesses. They have hitched their ponies to the wrong wagons but here's the big problem: I don't have any confidence that the money is going to do the trick. Not when we are on the cusp of a dramatic fall in new vehicle consumption. That seems clear.

1 comment:

David in North Burnaby BC said...

"I don't have any confidence that the money is going to do the trick. Not when we are on the cusp of a dramatic fall in new vehicle consumption. That seems clear."

And certainly not when the Old 3 continue to crank out SUVs, enormous trucks and lousy, overpriced cars while showing no sign of stopping, unless one counts the Chevy Volt, which for all the hype, still doesn't have a firm launch scheduled.
Insane to pump good money into such black holes, to do so with taxpayers money should be criminal. It should simply not be legal. >;<