• But in here it's so delightful - thoughts on Obama and the weather
• Protectionism: Everybody stimulate yourself!
• I like the pictures
• Mandela, King, Gandhi... Blagojevich
• Shovels are so 1933
• The cutting edge is nipping at its own tail
• Funny Because It's True (yet again)
• Obligatory Gaza
• Being Reasonable--reaction from the Muslim family recently thrown off a flight by AirTrain
• Won't you be my neighbor?
• Snowzilla
• ZOMG! Radioactive coal sludge will kill us all! (updated)
• Quick points on the auto industry bailout
• Slow and Steady
• Foreign policy and international public opinion

• January 2009
• December 2008
• November 2008
• October 2008
• September 2008
• August 2008
• July 2008
• June 2008
• May 2008
• April 2008
• March 2008
• February 2008
• January 2008
• November 2007
• October 2007
• September 2007
• August 2007
• July 2007
• June 2007
• May 2007
• April 2007
• March 2007
• February 2007
• January 2007
• December 2006
• November 2006
• October 2006
• September 2006
• August 2006
• July 2006
• June 2006
• May 2006
• April 2006
• March 2006
• February 2006
• January 2006
• December 2005
• November 2005
• October 2005
• September 2005
• August 2005
• July 2005
• June 2005

« Slow and Steady | Main | ZOMG! Radioactive coal sludge will kill us all! (updated) »

Quick points on the auto industry bailout

A couple of things to consider about the American automobile industry:

First, Matthew Symonds of the Economist, as interviewed on NPR, makes an interesting point.

[Emerging markets Brazil, Russia, India, and China] will have sales this year larger than that of North America...

Well over 60% of GM's sales are outside of North America now...

GM has 10% of the Chinese market, which will be larger than the US market within 5 or 6 years.

That's pretty interesting, and it makes GM sound like a much healthier company than what I'm generally hearing in the discussions of a bailout these last few weeks. Sure, they are bleeding cash and are in trouble in the short term. But the long term sounds a bit different.

And Daniel Ikenson of Cato:

Even if one or all of the Big Three failed, there would still be plenty of strong auto companies operating throughout the United States. The Big Three currently account for slightly more than half of all light vehicle production and slightly less than half of all light vehicle sales in the United States. The rest of the U.S. auto industry includes Honda, Toyota, Nissan, Kia, Hyundai, BMW, and the other foreign nameplate producers who manufacture vehicles here. These companies employ American workers, pay U.S. taxes, support local businesses, contribute to local charities, have genuine stakes in their communities, and face the same cyclical contraction in demand as do the Big Three.

As Ikenson notes, most of us are well aware of the intellectual arguments against a bailout, and we are well aware that in one form or another the bailout is coming anyway. I've pointed out before that capitalists and businessmen tend to be painted as the bad guys in this sort of thing--they don't seem to know how to avoid that. so it's likely that in the public eye, this bailout will end up being the fault of the CEOs. Ikenson says as much, if you read his conclusion closely:

The politicians must know that bankruptcy is the better course for auto companies and their workers (indeed, it could save 100,000 jobs). But they also know who fills their political coffers, and the UAW leadership is opposed to Chapter 11 because its labor contracts would be deemed toxic and abrogated by a bankruptcy judge.

Just some things to keep in mind when the money flows.