In my previous entry, “US Auto Manufacturers And The Dodo Bird – Birds Of A Feather?”, I examined the current economic situation of the Big Three automakers in Detroit in regards to what led them into this predicament and what parallels can be drawn between them and the history of the Dodo bird. In this piece, I want to discuss the idea of bailing out these three failing automakers and why it’s not a good idea. As we’ll see, this all boils down to the basic economic concept of supply and demand.

At its most basic, the fundamental problem facing GM, Ford and Chrysler is that not enough consumers are buying their cars as people are understandably opting to buy more reliable and better built foreign cars, some with warranty coverages that were almost inconceivable a decade ago. The continual decline in car sales, among other factors, has resulted in all three manufacturers ending up with massive debts and with little capital to cover even basic operating costs. This is why GM, Ford, and Chrysler are now pleading with the Canadian and American governments for financial aid as without the injection of new capital, they’ll have no choice but to file for bankruptcy. And yet, what will the granting of public funds really accomplish in terms of addressing the problems these companies face? Will the granting of billions of taxpayers’ dollars actually rescue these companies from financial collapse? Click here to continue reading »”Why Bailing Out The Detroit Big Three Automakers Is A Bad Idea”

Watching the events leading up to the swearing-in of President-elect Barack Obama as the next American president, I can’t help but notice the curious reaction of Americans to the impending inauguration ceremony. Indeed, both the reactions of the public and the maneuvers of the Obama camp lend to the notion that we’re not so much witnessing the swearing-in of a political leader, but the coronation of a new king.

There’s no question that the last eight years has seen an erosion in both the strength of the American economy, but also it’s influence on the global stage and for a people that pride themselves as being the envy of the world, that’s an understandable hard pill to swallow. Usher in a young-ish, charismatic and eloquent political figure and it’s not hard to see why the general American public is currently swooning on Obama’s every move. Add to this the fact that Americans have had themselves represented on the world stage by a man who continued to butcher the English language as if it weren’t his native tongue, and Obama’s lyrical use of words becomes unquestionably a breath of fresh air. Click here to continue reading »”Obama’s Big Day – An Inauguration or a Coronation?”

I posted on my blog a couple of days ago a fake car advertisement I found on the net which mocked the notion that public taxpayers should bail out the so-called “Big Three” US auto manufacturers. In that post, I mentioned that I wanted to share my perspective on this whole idea regarding public funds being used to bailout corporations who are falling under hard times. But before I do that, I want to discuss why exactly these “Big Three” car manufacturers are in need of help in the first place since I think that’s an important factor to consider in any discussion on whether these corporations deserve such aid from the public. And as the title and corresponding image for this post suggests, we’ll see by the end of this piece whether or not these “Big Three” corporations share a common fate to that of the Dodo bird.

Essentially, the fundamental reasons why these three manufacturers are now teetering of the brink of extinction is because of Click here to continue reading »”US Auto Manufacturers And The Dodo Bird – Birds Of A Feather?”