Continued Auto Madness

Its been hard to support George Bush for the past eight years. He is our guy, but it's no wonder he has an approval rating that reflects three out of four are unhappy with the job he has done. Yesterday's bailout of the American auto industry has many of his erstwhile backers scratching their heads. An EDITORIAL in today's Wall Street Journal neatly sums up the effect of the program:

Friday's taxpayer bailout of Detroit's auto makers isn't the worst moment of the Bush Presidency, but we'd put it in the top 10. President Bush will now avoid getting the blame for letting the companies declare bankruptcy on his watch. In return, he's essentially handing over GM and Chrysler to the political ministrations of the United Auto Workers and the green lobby, as mediated by Congress. Taxpayers are likely to own a piece of this Corvair for years -- and tens of billions of dollars -- to come.

If the auto makers are to avoid the stigma of bankruptcy, they must still make the required cuts, including substantial UAW givebacks, that will allow them to develop a viable business model. These requirements should have been part of the bailout package, but instead were included as strongly-worded suggestions, which the UAW quickly rejected. By granting this loan, the task of sorting out the auto makers mess becomes the job of the new administration. Rather than pursuing cost reductions, the new Administration and Congress may decide instead to focus instead on greening up the product line. This could get expensive for the taxpayers.

On the personal front, I met with the dealer yesterday as part of my buy-a-new-car campaign. As you will recall, I had decided to re-focus my efforts on a 2008 model due to a lack of 2009's and the thought that I might get a better price on a 2008. While the dealer had a few 2008's, they weren't exactly what I wanted. Moreover, the price on a 2009 was actually the better deal than buying one of the leftovers. So we agreed on a price for a 2009 subject to them finding a car in the dealer network. This could take a week or so, which is fine with me. Overall, if this deal closes, I will end up with the car I want at a decent price from the local dealer that I preferred. All in all, a good ending.

One of the things I learned through all this is that while the Detroit auto-makers are caught up in a game of financial Russian roulette, their competitors are still doing business at an impressive clip. It will be interesting to watch how the Democrats deal with the stubborn UAW. I hope that they do better than George Bush.