Monday, December 1, 2008
Bailing Out Detroit
I'll try to stay calm while warching the new hearings this week. I don't blame the car companies or the unions for trying to get a place at the trough. They'll make their pitch and I'll disagree with them, but I won't get excited. But I'll go bonkers when the congresspeople, especially the ones from California, start asking their inane questions. WE NEED TERM LIMITS!!
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We voted for term limits on legislators from California. SCOTUS said we didn't have the authority to do that and nullified the result.
California has term limits that are applicable to the state legislature. Many other states do as well. They haven't worked as well as they might in CA because the initiative that adopted them is imperfect. They've worked better in other states.
Term limits for Congress would likely require action at the federal level.
In MA, our crackerjack supreme court ruled term limits adopted by initiative to be illegal, once again showing how an imperial court can thwart the will of the people.
My guess is that, somewhere in cave in Pakistan, there is a group planning term limits that cannot be repealed. Somtimes I honestly wonder these days whether they would be doing us a huge favor.
I tell ya, if I get to contributing to this blog very often there are going to be big, black cars in front of my house, and guys in Ninja suits coming out of the woods behind us. :-)
By the way, as a more direct comment to the issue, I present a wonderful bit of wisdom from Peter Schiff of EuroPacific Capital:
With the Big Three auto makers now in a plainly visible death spiral, the automotive bailout debate is kicking into overdrive. The disagreement hinges on whether a bailout is necessary to support an important industry or whether the unprofitable dinosaurs of the past should be allowed to fail as America focuses on an information-age, service sector, and alternative energy future.
As usual, both sides have it wrong. The government should let the Big Three fail not because we no longer need an auto industry, but because we desperately do. What we do not need is the bloated, inefficient auto industry that we have today. By allowing the Big Three to fail, their capacity will be turned over to new owners who will be able to acquire the means of production at fire sale prices and hire workers at globally competitive wages. The result will be a more efficient auto industry making cars that people around the world actually want to buy at prices they can afford. Such auto makers could conceivably be profitable and could become the cornerstone of a manufacturing renaissance in the United States. In contrast, Ford, Chrysler and GM are never ending money pits that threaten to swallow a good deal of our economy.
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You see, in the end it's neither the compassionate, nor the wise thign to do to bail out failed companies (be they banks or car companies). The best thing to do is let them fail, and allow someone smarter or at least wiser to pick up the pieces and carry on.
Needed industries will always exist. The dislocations that come with failure are necessary to make sure that the right people are driving the bus.
No one bails me out for my own stupid investing decisions of the past few years--nor should they. How else would I learn not to do them again? (Not that I will learn, but at least with the fiscal pain the possibility is there, versus being handed a Mulligan and told to try again.)
Tragically, the banks and the government are wed together by a perverse economic philosophy that will continue to harm the world--very significantly from generation to generation--until we're ready to finally and fully bury John Maynard Keynes and his short-sighted ideas with the scowls they so richly deserve.
Were I ever truly a serious candidate for national office I'm sure such ideas would get me shot--too many powerful men depend on the evil pseudo-profits of Keynes' idiocy--but truth is truth, no matter what college professors may try to tell you.
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