It’s a really complicated problem and I have no idea what’s going to happen but I don’t think you are thinking this part through enough:
“The United States will offer billions of dollars in special tax subsidies for clean-energy research, but it’ll also pass laws preventing automakers from selling profitable cars.”
Gas prices are going up. THere is no way around that. Americans are not going to be able to afford to fuel the huge trucks and SUVs that have been profitable for American car makers. At least not in the current configurations. So they are either going to have to buy smaller more fuel efficient vehicles or car makers are going to have to make large vehicles more fuel efficient. It seems to me that the government has recoignized this and as major share holders they have said that this is the direction GM and Chrysler have to go. THis is a move I think the companies would have had to make anyway. One reason these companies were in such trouble was that after last years high gas prices no one was buying their huge vehicles.
Let’s assume you’re right about the secular direction of gas prices over, say, the next 10 to 20 years (and if I had to bet, I’d bet you are right; though I am not at all confident about it, hence my lack of participation in the futures market for this commodity).
I believe the question is what is the best mechanism for deploying capital, talent, physical assets and so on to maxmimize wlefare in the face of this reality, among the many other channging realities we face. I believe that, as an incredibly rough generalization, allowing the free play of markets is a better solution than government direction. To be practical about this, you would have to assume that private investors, not just the management of GM, would fail to react to ever-rising gas prices. I think there’s a pretty good case that any likely management of GM, locked in as they are to a dysfunctional corporate culture, legacy obligations, brand weight and so on, would not do this very well. This is why bankruptcy, and more generally the market for corporate control, is such a critical feature of a vicariously adaptive market.
I’m just saying that I don’t think the government was wrong to ask for more fuel efficeincey as a condition for the bailout, that big gas hogs was a niche market that wasn’t going to exist much longer, even if it was profitable in the past.
I think the real question is, would unstructured bankruptcies by Chrysler and GM pushed the economy over the edge into full blown global depression. I have no idea. The collapse of lehman Brothers started a bank run. GM Chrysler and Ford are all tied together in a big parts web much of which would have gone down with GM and Chrysler. Ford might have gone too as a result. There would be a whole bunch of people—maybe more than a millon who would be thrown out of work and an even bigger segment who would lose their pensions…. Would that have had wider cosnequences? Would that have cost the taxpayers more than the $100 billion spent in bailout? Like I say, I don’t know. I guess you think we would be in a slightly less dire situation than we are now, plus the deficit would be $100 billion less.
what ones mighty big car company is small mouse
even opel is gone.i was proud we where part of G.M.
mi parents 11 year corsa has a sticker opelGM
obama say i wan to add more jobs create more jobs
now huge amount of people lose there jobs
seem to me other lie of obama
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