The Debate On Bailouts Pretty Much Ends....

Two Years After Being Bailed Out, GM Posts It's Largest Profit Ever...


    Yep, the word came out yesterday that General Motors is pretty much back, leaner and meaner than ever.. The automaker recorded profits of $7.6 Billion, the biggest profit they have ever had.  Only two years ago, GM was on the verge on bankruptcy, when they were bailed out.  While we don't advocate the government jumping in at every turn, the fact is that if done right, a bailout can work....


     To us, the key to whether a company should be assisted is first, if there are limited numbers of large firms in that industry, second, if the industry as a whole is shown to be profitable, and third, if the company in question can adjust it's business model to show it can be profitable as well... Banks and carmakers have long histories of being able to make a buck, so they were worth betting on, with established customers...


    There's no doubt the more important part of GM's recovery was reshuffling their business model, and it's worked. Unions haven't been jumping for joy the past few years, but they're getting a nice little bonus now for their concessions: profit sharing bonuses to the tune of $7000 EACH.... Sweet, and that's how it should be, with every employee having a vested interest in their company's success...


   Hopefully, the Obama Administration has learned a thing or two with GM... Gimmicks like Cash For Clunkers doesn't work.  Allowing America's manufacturers to make themselves profitabe again does.  Sometimes, it takes a little cash to tide them over, but if it's a good loan, it's a winner for everyone.  The business stays open and thrives.  They pay back the loan with interest, and taxpayers actually MAKE MONEY back.  It's not picking winners like Solyndra - it's righting the ships that lost their way, and bringing them back. 


   GM will never be the giant they used to be, but that's good in a way.  Detroit's bubble blew up 2 decades ago.  However, they can be better now that they're not bolted down by so many union restriction. That's the point: if it can be saved, save it.  In hindsight, the bank and auto bailouts worked. All the major corporations are still here,  they're making profits, and soon, many will increase their payrolls. It will eventually allow Americans to be less dependent on their government, and all the social programs can be shrunk. It'll take time.. We're only on Step Two. 


.