Is this what we really want?

So let me see if I got this right.

We don't like the cars produced by our own country's automotive manufacturers. We don't like them to the extent their very existence is in doubt, such is demand.

But we also think our country needs an automotive industry. We therefore believe we must act to save them, to keep them from going out of business.

How to do that? Well, there are a number of ways:
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1. New car incentives - buy a new car and get cash back or cash off the purchase price
2. Warranty incentives - extended warranties, or in this case, warranties backed by the US Government
3. New management - Maybe if we install a management team we like better than the current one we'll start seeing cars we want to buy.
4. Shotgun weddings - Force them into relationships with other companies. Bigger is always better, right?
5. Oust the owners and give the company to their lenders

But I have to ask, which of these makes sense? If there is, I have to admit I don't see it.

Think about it for a minute. Every one of these ideas entails using our own money to try to get us to buy the cars we ourselves produce. I don't know how to make sense out of that.

Ah, but you say it isn't all our own money. Much of the money to be used here is fresh money printed by the US Government.

True enough. It doesn't all come out of our own pockets. Not today at least. Some of it is created. As long as the dollar is strong in the world markets - which is another way of saying as long as the world has faith in US currency - we can print new, fresh money to give to our failing companies.

But the test of that faith is whether the rest of the world stands behind our decision to print new money. After all, they buy our debts with their own currency. The test is whether they continue to buy those debts. At some point they might decide there are so many dollars around (larger supply) that dollars are not scarce and therefore not worth as much compared to their own currencies.

And it's not as if we're not giving them incentive to do that. After all, we're using their money to entice ourselves to buy cars from companies which compete with companies of their own countries.

Now what about if we go about changing ownership and/or management? Well lets see. Do we think we ourselves (the US Government) can do a better job making cars for ourselves?

And what about taking the company away from its owners - that's you and me - and giving it over to it's lenders? Well the owners are people like you and me who have pension plans and 401(k) plans and pensions. It's lenders are... largely the same group of people. Only now we'll all have ownership in companies whose products we don't want to buy in place of the loans we'd already made to those companies.

I'll keep thinking about this. Surely there must be a good reason to do this.

And by the way I'm not making any of this up. All of the above schemes are in fact in play today as part of the US Government (that's you and me) plan to bail out US auto makers. You can read it for yourself in this AP news article.

Source: http://www.myinvestmentblog.com/what-we-really-want

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