Almost lost among the momentous events of the GM denouement are the international trade implications. GM, of course, is a multinational company. In 2008, according to GM's annual 10-K report, GM made almost half of its $148 billion in revenue outside of the United States.Err, make that they made lots of money on cars they used to build outside the US.
GM had recently informed Congress that it planned to produce roughly 50,000 subcompacts per year in China to sell in the U.S market in the near future. However, on Thursday, UAW President Ron Gettelfinger said that GM had agreed not to import the cars from China and to produce them in the United States instead as part of its deal with the UAW.Because they're now bankrolled by anyone holding a dollar in their hands*, there's no reason to make decisions based on profits. Instead, they will make decisions based on political forces. After the unions and the state consume and digest GM and Chrysler, they'll begin to eye Ford hungrily. When they see Ford do things not in the interests of the unions, laws will be passed, marketing budgets increased, and all manner of tricks will be played to crush Ford and bring them under the control of the state.
Because that's what fascists do.
* - Lots of people are making the mistake of claiming that taxpayers will be supporting these companies. That is errant nonsense. The deficit is being funded to a large part by the Fed. They are printing money out of thin air to pay the bills. As they do so, they are inflating away the value of the dollar. Anyone holding dollars or dollar-denominated investments will be paying for this.
2 comments:
Lots of people are making the mistake of claiming that taxpayers will be supporting these companies
Thank you for repeating this. Holders of U.S. debt are paying for this, including holders of federal reserve notes (=dollars). The more people blather on about taxpayers, the longer this will be obscured.
"So now what happens to Ford?"
Well, with any luck, once the zombie corpses[1] of whatever GM and Chrysler get turned into finally rot and fall apart (see the history of British Leyland for a likely scenario of how I think it will all go down), Ford will pick up some choice pieces from the wreckage being dumped at fire-sale prices by a deeply embarassed government. That's assuming that Ford avoids government entanglements. Given the train-wreck that they are witnessing with their two biggest domestic compentitors, I would hope that they have the sense to keep quiet and maintain their distance.
[1] Aside from misunderstanding where the money is coming from, I think a lot of people are misunderstanding the status of GM and Chrysler. They are already dead, and have been since about February (which was about when they would have gone bankrupt if left to their own devices). What happens to them no longer matters, aside from the fact that it is costing us all a fair bit of money. They are dead, and their corpses are being animated by the parasites and carrion beetles that will ultimately consume them. They just haven't stopped moving yet.
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