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This is my effort to share my thoughts with readers about concerns facing our country today.  I believe there is a good chance my grandchildren may be the first generation in the history of this great country not to have a better standard of living than their parents. If so, our generation is to blame. The clock is running out for damage control. .

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Tuesday
Mar312009

Obamamobile Coming to a Dealership Near You

Here's how this will work. The government will force GM and Chrysler into a government designed bankruptcy. Part of that bankruptcy agreement will be a requirement to develop and sell government designed cars.

Of course, Ford, not taking part in the big government run auto industry spin off, will continue to make and sell cars that consumers want. As will the foreign automakers who make cars in the U.S.

When the government designed cars don't sell, the government run companies will offer incentives paid by tax dollars to sell the cars. Plus, the government will put disincentives on the non-government designed cars to stop them from selling. If the government designed cars still don't sell, the government will put a tax and a mileage restriction on the non-government designed cars to slow down the sales and force non-government run auto companies to make more government designed cars. 

This will put the non-government run car companies into financial stress. So, the government will have to run them too.

Is there moral hazard here? You bet. It starts with the idea that GM and Chrysler can't file normal bankruptcy. Why, because, the UAW has the current administration in their pocket. They will not be asked to make any concessions in the government forced bankruptcy plan, but they would be asked to make substantial concessions with an normal chapter 11. Moral hazard. This means the new car companies you own as a taxpayer will start out in the same hole that caused them to go broke. High wages, high benefits, thousands of retirees on the balance sheet. 

This puts your company(taxpayer motors) in direct competition with publicly owned corporations. So you have a company making Obamamobiles with unlimited cash reserves competing with several companies with very limited reserves. You have a car designer, Obama, who wants to tell consumers what to drive. The Obamamobile. He can pull strings to make that car more attractive to consumers. And, to make competitive cars less attractive. Moral hazard? You bet. 

He can subsidize higher wages for Obamamotors than competitive companies pay. Moral hazard. You bet. Wage earners at the other companies will want the same pay. Especially, Ford, who has a UAW contract. The UAW will target the other car manufacturers in the U.S. Telling workers, don't worry, the government will keep your job. 

I, personally, could care less if Obama gave me an Obamamobile. I will never buy a car from a company that is government run. I'm guessing a lot of Americans would feel the same way. So, it's not bankruptcy that will destroy GM, it's the fact that the government will run the company and no one trusts the government to run anything. 

The Obamamobile will take the Edsel off the all-time lemon list.

Reader Comments (2)

Government product is a joke. If you buy a GM car as long as Obama has his hands in the company management, you risk every dollar you spent. Buy a Ford.

And who is going to invest in GM? Who would invest real money in a company managed by Obama?

GM is headed for the tank. They had a chance if they took Chapter 11 prior to taking the first set of bail out dollars.

April 1, 2009 | Unregistered CommenterMAS1916

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July 21, 2010 | Unregistered Commenterbagonhand

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