Thomas Friedman has a great article up about the foolishness of the likely bail-out of GM:
They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasnâ€™t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: â€œWe have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?â€ If we give you another $25 billion, will you also do accounting?
One of the puzzling things is that most of GM’s non-US operations are profitable, and most of those are prospering with the sort of cars that consumers in the US now want. Development costs are minimal – all the cars have great safety features, ‘clean’ emissions, etc. so there’s little tweaking to do – the cars are fuel efficient, and they’re even pretty well styled. The only stumbling block is cost, though production costs in Europe can’t be significantly higher than in the US (otherwise GM wouldn’t need the bailout. I guess hiring a container ship to start importing Vauxhall Astras is too innovative without a fat pot of government cash to pay for it.