Last week the grim reaper was at GM’s door.It had bled nearly 2.5 billion dollars in the last quarter and had just enough cash on hand to get by till the end of 2008.
That was the signal for GM’s arrogant and incompetent management to go with hats in hand to Washington to seek a bailout.The Democrats, led by Nancy Pelosi and Harry Reid, were sympathetic but want to wait for a signal from the new President elect before they set the wheels in motion for a bailout of the auto industry.
There is a very strong reason not to proceed with this.
THE WORLD IS NOW AWASH IN CARS.Atleast sixteen million more cars are being produced than there are customers for them each year.And more cars are being added each day.In effect, cars are becoming commodities and profit margins are under assault from a worldwide glut of cars.
So no matter what cost cutting is carried out at the margins, the industry will be starved for profits and will be living from hand to mouth for a long time.In effect,the plight of the steel industry about two decades ago has moved up the food chain.
This validates the marxist analysis of capitalist contradiction.That the ruthless efficiency practised by capitalist economies carries within it the seeds of its own destruction.
If Shakespeare were alive today, he would write “Our fault, Dear Brutus, lies not in our stars but our ruthless eficiencies’
So, the more we worship profits the more we plant the seeds of our destruction.