SEARCH BLOG: AUTOMOBILES
Nancy Pelosi has come to the forefront of proposing government aid to U.S. automobile manufacturers. Do the manufacturers need a "bailout?" Well, that depends on what you mean.
A little history....
A decade ago the U.S. automobile manufacturers were doing quite well. The economy in general was doing quite well. The U.S. government was focused on regulating and mandating efforts toward the automobile manufacturers. The marketplace would not support a mix of vehicles to achieve higher fuel economy standards. Foreign manufacturers such as Toyota and Nissan and Honda were scrambling to increase the size of their vehicles in order to meet the tastes of the American buying public.
So much for prosperity history....
The dot-com bubble crashed and so did illusory "fortunes." Terrorists attacked the U.S. and the U.S. prepared for war... and went to war. The dollar began to weaken. The Federal Reserve began a series of interest rate hikes and reductions that left businesses and consumers trying to figure out how to plan for the future. The market recovered temporarily only to be struck by the twin forces of unemployment increases and the collapse of the housing market. Consumers went into an economic shell. Financial institutions were hit by consumer defaults on loans. Credit dried up. Then oil prices skyrocketed and gasoline prices followed.
So much for recessionary history....
The government reacted by... passing onerous mileage mandates requiring billions of dollars of capital investment by automobile manufacturers.
The automobile manufacturers in the U.S. were faced with a broken economy, a credit lockdown, and a government, led by Nancy Pelosi and Harry Ried's efforts, intent on manipulating the marketplace by restricting the supply of domestic energy resources while forcing adoption of technology that either did not exist or was lacking a supporting infrastructure or was too expensive for consumers to buy... by 2015.
So, back to the original question: Do the manufacturers need a "bailout?"
The automobile manufacturers need:
- a restoration of credit availability for consumers
- a restoration of consumer confidence in the economy
- a reduction of government mandates and interference in the automotive marketplace
So, Nancy and Harry, you were instrumental in helping to create the situation... what do you think?