17 February 2009

You simply won't die

the company of cats

GM simply won't die. It's very inconvenient. I'm not sure how it was decided that giving them money earlier would resolve or even significantly postpone their troubles. Best option was and still is a government organized bankruptcy. They'd have even been better off giving the workers the money directly. The people who would lose their jobs from GM shuttering plants and suppliers all over the country would at least be able to move on and have some cash in their pockets to tide them over while they did it.

I hate to break it to Detroit, but they're not that important anymore that we have to do what they say or our economy will collapse. GM (and Detroit itself) has been going downhill for the better part of two, maybe three, decades. The economy as a whole wasn't sliding backwards that entire time.

This large economics textbook case for fiscal and monetary policy also should produce a few choice words on the favouring of poorly organized and run companies with billions of dollars as opposed to directly pumping money into companies that need only access to capital (in the absence of it from the bankers) to grow or to maintain against short term losses. Pumping money into bad companies is a correlated problem to what helped cause the problem in the first place: pumping money into bad loans.

2 comments:

Bazarov said...

So America never had any intentions of free-trade, huh? Not that I'm necessarily for free trade, but this being the country where free-attachwhatever is supposed to be good, what happened to free trade? It's government subsidized junk being pumped out now, that nobody's buying apparently. Ahh...what a great country. It's starting to look as if this empire might just collapse. What a scary thought.

Sun Tzu said...

I don't mind so much if the empire part collapses. Just so long as the country itself remains in some fashion. At least enough that I have some place decent to live, if we go down, we're taking a bunch of "roommates" with us. Come to think of it, I actually don't mind a little anarchy either though.