Thursday, November 20, 2008

Please, No More Bailouts!

It seems that Washington is finally coming to its senses about the pointlessness of throwing good money after bad:

The $25 billion rescue plan for the auto industry, desperately sought by Detroit's beleaguered Big Three, collapsed Thursday as Congress drew the line at one more bailout and Democrats said they wouldn't even consider it until the companies produced a convincing plan for rebuilding their once-mighty industry.

The Congressional demand for a plan to regain profitability is little more than a red herring. There is no way the Big Three are capable of coming up with any kind of coherent plan between now and Dec. 2. The UAW would howl at the concessions on wages, pensions, and health care they would have to make for the carmakers to return to profitability. The automakers are toast, unless . . . Chinese automakers buy them out:

Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports.

This newspaper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.”

The unnamed Chinese government official may be bluffing or floating a trial balloon. If the leak is serious, it is a true sign of the times. Note that Chinese suitors are not necessarily interested in all of the U.S. automakers' business lines, just some of their assets. They are certainly not interested in a unionized workforce.

The U.S.'s creditors are lining up to seize economic prizes as a form of payment for our nation's profligacy. Time to pay the piper.