Yesterday, the U.S. House of Representatives approved a twenty-five billion dollar loan to U.S. automakers. The Senate is expected to approve of it soon.
Once again, this is a bailout due in part to the weakness of the U.S. demand sector. The mal-distribution of wealth and income that has been occuring over the last thirty years, and which accelerated under President George W. Bush, have curtailed the abilities of the middle class to purchase new vehicles to the degree necessary to jack corporate earnings and share prices up. This is just one more industry that months ago reached a point of profit saturation. (See the Article Below "Just the Tip of the Ice Berg: The Wall Street Bailout That Isn't")
The other part of the equation is the mismanagement of the industry by its cheif executives. They relied too much on producing gas guzzling vehicles to create profits. When the price of oil shot up, and enough consumers began abandoning the gas hogs, CEO's were caught with their pants down.
See the whole story at, http://www.huffingtonpost.com/2008/09/25/house-loans-automakers-25_n_129145.html
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1 comment:
John, you really need to set up your think tank. You need to get your views out there!!!
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