GMC 6 months before bankruptcy

As you may be all aware, GMC is months away from bankruptcy as it is clearly explained in this news from the Chicago tribune:

http://www.chicagotribune.com/business/sns-ap-auto-bailout,0,1282115.story

We can even say that USA´s big three are all on the edge because of this financial crisis which resembles a lot the one that occurred in 1929. Huge personal debts led to the collapse of the house purchasing market. So far so good for lack of regulations in the economic which is NOT rational whatsoever. Some old story again. Have hey really learned the lesson there?

Hence, in the case of car companies, their car manufacturing activity is making some small profit and many are flourishing well. However, their dramatic conditions are the result of their financial sectors since car companies started to open finance divisions who would lend money to people who were not capable to buy a new cars and this means most middle class people. Our fantastic capitalism was built on a bubble which nobody dared to slow down. But as with any elastic band, there is a limit which no polician had the courage to manage. 

Now, the big question is this one: should the taxpayers save the sinking ships?

According to the rules of liberal capitalism that was for so long advocated to be the most efficient system, the answer is a definite NO. Let the forces of the economy, somewhat following the same rules as the ones from nature, decide and if the company is not profitable, it has to go broke. Survival of the fittest. So many medium and small size companies did go through bankruptcy because they were not able to consolidate their huge own debts. But when it comes down to huge multinational, why should there be different rules?  

In the case of GMC, if we let them go broke, this means that Opel, Saab, Scania, Holden, Isuzu, Suzuki, etc are going to disappear as well. From the human point of view, around 100 000 people would loose their jobs and I am not counting the surrounding service companies. In a city like Toronto which depends for its economy largely on US and Japanese car manufacturers, this would be catastrophic. But why should the Canadian government help the car industry when it has never helped the train one which is based in Montreal and which is really Canadian owned?

A lot of top University think tanks have applauded the fact that governments would save the brokers, finance companies, private banks and now the car makers. This means that these people are for nationalization of economic activities. I did not know that the socialist ideology was better. We were told for so many years that the private sector would always offer a better car, airfare, energy service, train ride and even hospital operation because the client's wish would always prevail. Maybe yes for car making but surely false for transit systems since the best train service is still offered by a public owned company. 

If governments save companies from disaster, then these should then be owned by the taxpayers and if the governments are not doing it, this will be a criminal fraud against the poeple.

I have nothing against helping car companies recovering from the errors of the finance sectors.

In fact, any manufacturer should never have the right to go in to finance. This may sound hard, but they have proven unworthy of our trust, the people's trust, those who bring the true wealth.

However, when it comes to help US car companies, I do show lots of reserves. As it has been pointed out by one Chinese CEO whose car company is offfering now a hybrid car even before the US car makers: "US companies have been making a car the same way for 70 years now". Moreover, they have not been able to reach:

1- reliability levels of Japanese car makers

2- performance levels of European car makers and I include there the French and Italian car makers capable to improve their quality dramatically and which offer car which are really fun to drive. Have you drive a Citroen lately ?

Hence, I would advise the government to loan money to car companies ONLY related to ambitious Research Projects leading to improved and cleaner cars and this should not include those ugly ridiculous luxury 4X4 used mainly in cities which are nothing else than trucks driven by people who stupidly feel less threaten by being capable to intimidate others. Lets take this occasion to move away from petrol and keep it for plastic material which could replace metal which is becoming scarce. I myself have identified many possible simple ways toeven make  engines cleaner with water and magnet systems but they need proper investigation.

Finally, lets become less egoistic, I would also ask the governments that for each penny put into a car company that they put as much into efficient fast mass transit systems such as very high speed trains.

Luc Rolland