I Guess Twice is Nice....

Lots of "hub-bub" going on lately about the auto industry bailouts. I haven't heard anyone really come up with a great reason why we need to bail them out. However, I have the best reason as to why we should not. We will be paying twice for this mess.

The first time we pay will be when we supply the big three with a 34 billion dollar "bridge loan". Then we will pay a second time when they inflate the cost of their vehicles to pay back that loan with interest (profits need to be made somehow).

The bottom line is that the big three are not profitable, and on their current course it is doubtful they will ever be profitable. Especially profitable enough to pay back the loan. So, it is more likely they will need to change everything including their pricing packages on their vehicles. Just as corporations do not pay taxes (i.e. they flow through to the consumer), corporations do not pay interest. All of the principle and interest for the "bridge loan" will get channeled into the cost of each vehicle. Even if the loan does get paid back, it is not likely that we the tax payers will ever see a benefit from the proceeds. Just as the proceeds from the repayment of the Savings and Loan "bailout" in the 90's did not yield the taxpayer any substantial benefit. One this is for sure. If they get federal funds, I certainly will never purchase a new vehicle from the big three again! This is a capitalist society, not marxist.





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