Last month, Detroit’s automakers pleaded for handouts from Papa Government. Ford, General Motors, and Chrysler essentially engaged themselves in plain collusion, begging for their own version of a bailout. Really – how is this anything other than plain collusion? It is rent-seeking at its finest.
If the collective wisdom of millions of investors and investment funds has written off the General, and the about-to-be-thrice-bankrupt Chrysler, what moron would consider those companies a good investment idea?
Well, in addition to the morons at General Motors (GM wants to buy Chrysler), you might not be surprised to learn that the financial geniuses in Government, who preside over a $10 Trillion Deficit, want to invest more of your earnings in companies that are failing. House Speaker, Nancy Pelosi (D-CA) views loan guarantees to Detroit automakers as a good thing, specifically she says, “We consider this a major investment in innovation.”
Recall: all investments are subject to market risk. past performance is no guarantor of future results and other fine-printed gobbledygook that appears on every investment portfolio’s prospectus. Every single person who invested in General Motors, or AIG, or Lehman, or any other businesses took a risk. They took a risk that they might lose everything, in hopes of earning some profit. And now, it’s time to pay the piper his due.
Some people argue that, if we’re going to bail out Wall Street banks because they’re Too Big To Fail then we should also bail out General Motors, Ford, Chrysler, etc. Nobody seriously entertains the idea that the government shouldn’t be bailing out any businesses. Ever.
This is not an investment, it’s corporate welfare. It was corporate welfare to bailout Wall Street, and it’s corporate welfare to bailout Detroit.