The government decides that we have no choice but to bail out the automobile companies. Before taking office Obama supported the bailout. In my humble opinion, I believed the auto companies should have turned to the bankruptcy courts. Now, President Obama is clearing the way for states such as California to significantly increase mileage standards for cars.
So let’s examine this. The big three are forced to sell a lot of small cars at no profit or a loss for each profitable vehicle like a Cadillac they sell so that their fleet average fuel economy will meet CAFE standards. The result of this government meddling is that the big three are unprofitable, so they have little or no money to invest in the next generation of cars. Because they are on the brink of insolvency, the government steps in and bails them out with billions of taxpayer dollars. Even with that, it may not be enough and the auto companies may require more. So what does our government do now? It opens the door for states to tighten the noose around the necks of the auto companies by increasing the mileage standards.
So now the auto firms will have to sell even more small cars at a minimum profit or loss for each profitable Cadillac they sell, in a down economy no less, practically guaranteeing that the auto companies will come back to the government asking for even more bailout money.
The inexperience display goes on in Washington. How long can we stand it?
