I am going against the tide here, but I do think the loan to the automakers should be approved. It's peanuts compared the amount of jobs at risk. The current auto crisis is an outcome of the mess on Wall Street. General Motors would probably have been ok had the credit markets not frozen. This had two disaterous outcomes for the domestic auto makers. It shut off the opportunity to raise capital (Ford leveraged most of it's assets about 18 months before the crisis so it has sufficient liquidity) and the resulting economic downturn caused people to stop buying cars (the run rate went from 17 million down to less than 11 million in one year). I'm pretty sure that even the best economists and forecasters did not foresee either of these.
As for the products, I drive an '08 Chevy Silverado and it's an incredibly good product. I know someone mentioned they are driving a Toyota Yaris. Why did you buy that? Probably because gas was somewhere between $3.50 and $5.00 a gallon at the time. What did you drive before that? Probably something bigger. We Americans feel we should be able to choose what we drive and when gas is not expensive, we prefer to drive larger less fuel efficient vehicles. If you watch vehicle sales as they are reported at the end of this month, you will probably find that America has already shifted back to larger vehicles. The domestic industry should not be scoffed at for building "gas guzzlers". Toyota was smart enough to open a brand new plant in Texas to build "gas guzzlers" just as the gas prices started escalating, so clearly none of the automakers saw the gas crunch coming.
Another little known fact, Toyota is registering an incredible amount of new Tacoma pick ups over the past 18 months. Wonder why? It's because they are buying back the old models from customers at an amazing rate. The frames are so bad that I understand they check them by hitting the frame with a ball peen hammer and if it penetrates through the frame, they buy it back if the customer will buy a new one. I think that if you check you will find that Toyota recalled more vehicles than they sold in the US last year. Anyone hear of the engine sludge problems they had?
Chevrolet on the other hand is winning awards for quality and styling. The new Malibu was 4th among ALL vehicles in quality rated by JD Power. Ahead of it were a Mercedes, a Lexus and a Porsche, all costing more than double what a Malibu cost. Or what about the Chevy Volt that is coming in 2010 that I am hearing may get a fuel economy rating of 100 miles per gallon? Clearly I'm a Chevy man. I like that each vehicle that the domestic "Big 3" produce employs significantly more Americans than the Imports that are assembled here (because many more parts are imported, not because they are more efficient).
I know we are all sick of hearing about and paying for bail outs. AIG running off to party at resorts with taxpayer money should be cause for jail time in my opinion. But I think a $25 Billion loan to the domestic auto industry which (in my humble opinion) does have a pretty good chance of being paid back, is a better investment in America than most in a time when we all would benefit if the economy gets better.
Again, just my opinion.
