Now the Government Wants to Go Long the Auto Industry?

It seems that the Dems are cooking up a plan for the Federal Government to now own stock in the US auto industry.

Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

At least the banks have okay balance sheets and have decent cashflows from fees and deposits. They can easily afford to pay the dividend on that premium stock that the government now owns. The US auto industry however is in simply in the crapper and are just looking for a place to die. You know they will be back at the federal loan window when this batch of money runs out. This industry is being smashed by Japanese competitors, have billions in debt on their books, and actually sell a product that no one currently wants.

This investment is the ultimate example of throwing good money after bad. The problem with the auto industry is that the UAW has guaranteed pensions and high wages for their members and it is killing these companies. It now costs billions of extra dollars just to build the exact same thing that a competitor does. I mean there really isn't much difference between a Chevy Cobalt and a Toyota Camry other than the price. So there there is no reason to buy a Cobalt in the first place if it costs a few thousand more.

What these companies may need to do is go bankrupt so that they can renegotiate these wage and pension plans and sell some of their US plants off to the Japanese. They should also reduce the ridiculous amounts of car models they currently make. GM has like 5 different Camry clones on their website and all of their cars look squat and boring other then the Cadillacs. A leaner and meaner GM and Ford coming out of bankruptcy would be much better prepared to take on the Japanese and compete on price and quality without having a wage and pension anchor tied around their neck.