by Dan Calabrese, Real Clear Markets: Apparently the rest of America just doesn’t understand. So says the Detroit News, the Detroit Free Press, Detroit-area talk show hosts and business and political leaders of all shapes and sizes. Mean old America. Criticizing the Big Three automakers without having our facts straight or understanding the car business. The car business is indeed difficult to understand from outside the Detroit bubble. It is difficult to understand hundreds of billions of dollars thrown at people and things that contribute nothing to the generation of revenue. It is difficult to understand how a company can believe it deserves to survive, in spite of the consumer market’s mass rejection of its products . . .To survive in business, you have to make a profit. Period. Nothing else matters. General Motors, Ford and Chrysler don’t do that, so they deserve to die. But if you want to understand why they don’t make a profit, all you need to do is look at two schemes concocted along with the United Auto Workers – the Voluntary Employee Beneficiary Association (VEBA) and the UAW Jobs Bank. The two entities work in different ways, but they have one devastating fact in common. Both require the automakers to pay billions to people who don’t do any work for them.
. . . No, Detroit. It’s you who doesn’t understand. Not because people haven’t been trying to warn you for decades that you were marching headlong into economic suicide, but because you didn’t want to hear it. And now your automotive bubble is about to explode and destroy you with it. Congress would be insane to help sustain the way this industry does business. It is utter madness. . . . [Full Story: Apparently America Doesn't Understand Detroit]
Tags: auto industry, bailout, labor unions, UAW, US Congress To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!
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