[Homestead] Bailing out the auto industry

Clansgian at wmconnect.com Clansgian at wmconnect.com
Tue Nov 11 11:11:12 EST 2008


> >Hanky Panky so far seems to be dumping as much money as possible on his
> friends in the financial industry.

That seems to be exactly what is going on.  Folks of Hank and Ben's mindset 
are like the economists who cannot grasp the concept of oil depeleting to the 
point that it cost more (in oil) to get it out of the ground than you get by 
pumping it.   To them it is always a matter of supply and demand, you can't run 
out of oil because the price will always increase to the point that demand 
falls.  That is only true until you come to the point that it takes more energy 
to produce it than you get from the process, but that reality doesn not fall 
into the economists' paradigm.

Like that, Hank and Ben see the entire world through financier's glasses.  To 
them, the only chance for GM is for the banks to be flush enough to lend them 
the money.  Giving money directly to them makes no sense in that midset.

But the big factor we are dealing with here is what Kunstler calls the 
"psychology of previous investment".  

Having had a finger in the pie of the the computer phemonenon of the past 
twenty-five years, when rapid improvements were being made in the hardware, many 
a time I was present when someone was asking the local hardware man I did 
business with about upgrading:

"You've got a 286 based machine.  To increase the memory, increase hard drive 
space, and upgrade the video capacity, it will take $800 of parts and you 
will still have an outdated machine that won't run the current softare.  But I 
can sell you a new 386 based machine for $1200 and it will do you for several 
more years."

"No .... no ... I can't do that.  I've got $2000 invested in this present 
computer and I can't just throw that away so sell me the $800 of parts to upgrade 
it."

The blather I was hearing on the radio in the shop today is a massive whining 
of how many people are involved in the auto industry and we can't just walk 
away from that many jobs.  So we are willing to put tens of billions in a dying 
industry because of the mindset of "previous investment."

Nor is there any real prospect of retooling GM and Ford to be Toyota 
knock-offs.  The industy is dying.  That (borrowed but otherise non-existent) $50 
billion ought to be going for rail and busses.

James



More information about the Homestead mailing list