Oh, General Motors
(Image via Reuters)
Reuters reports:
”General Motors Co said on Tuesday it is increasing production for the second half of 2009 after a surge in sales ignited by the U.S. government’s “Cash for Clunkers” incentives program.
The No.1 U.S. carmaker said it would build 60,000 more vehicles than planned for the third and fourth quarters by increasing overtime, adding shifts at several North American assembly plants.”
Ever hear the one about the restaurant owner who expanded his building and hired a larger staff during the circus? Yeah, well shortly after the circus left the restaurant went under, leaving all at the unemployment line and a disgruntled owner in disbelief.
This artificial spike in sales cannot last forever. As we all saw, the $1 billion that C4C was originally given dried up extremely fast. After the new $2 billion evaporates what then? Do we keep subsidizing the ailing companies? I don’t think even this congress will have the cojones to extend it much further.
If GM were to increase their production and employment under normal free-market factors, this would not be an issue; however, this fabricated sales increase has now supplied a false sense of growth. After the funds run out, GM is left with an increased number of cars and a larger number of employees to pay. As noted a couple months ago, THEY CAN’T AFFORD IT.
Now one might say, once the C4C program runs out GM will decrease production to normal levels as well as staff hours… Right, I’m sure they will know exactly when to draw back, and even if they did have that knowledge I’m sure they wouldn’t anyway with the government back-up. So GM, when the circus leaves, who’s going to fund your company?
What is a billion dollars? Trillion+ dollar deficits, $787 billion package, gigantic omnibus… the arduous list perseveres. But hey - guess what? We are not stopping anytime soon. The dominating Democrat government thrusts on to pass the two mother-of-all bills: Cap and Trade and universal health care.