Less is More

Okay, not always. But lately we’ve been hearing about a lot of cases in which people who have only taken out mortgages they can afford and then conscientiously made their payments are getting nothing from the government, while the people who behaved like idiots will be rescued by some new bailout program that the rest of us (including the responsible homeowners) are going to have to pay for. Of all of the complaints we’ve been hearing about the President’s recovery package, this is the only one that really holds any weight, in that we really are punishing the responsible citizens to pay for the idiocy and greed of the criminally inept – and I’ll admit that as much as this annoys me, I don’t have any better ideas. But I’m not going to complain, because the Ford stockholders are getting it much worse than I am…

If you’ve been following the developments in the auto industry bailouts, you already know that Ford Motor Company has, so far, declined to accept any of the Federal funds that are keeping GM and Chrysler alive. What you may not have realized (I didn’t until I read the linked article) is how badly they are being shafted in return. You see, unlike the competition, Ford is not getting to weasel out of its debts or its union contracts, and will have to make payments that the other two companies are getting forgiven. As a result, they are going to be operating at a significant disadvantage for a number of years to come, lowering both their ability to turn a profit and their stock price – because they did not engage in any criminally stupid financial decisions…

Of course, Ford is also being spared the pain of having to close factories, eliminate entire divisions, fire even more people, and take orders from government flunkies that their competition is being exposed to. And it’s hard to feel sorry for a company that effectively dug its own pit (over-committing to giant SUV models when the price of gas was rising, eliminating the popular Taurus line when it was the best-selling car in its class, falling behind the curve in solar, gas/electric, clean coal and hydrogen fuel cell technology, etc.) and then jumped into it. Still, it doesn’t seem fair to the investors (public and private) who not only put their money and faith into the company but have also continued to stand by Ford in these tough times to be penalizing them for the company’s relatively competent management practices…

In the long run, of course, it’s going to come down to development, production and sales of products that the general public actually wants to buy that will determine which of the Big Three lives or dies. Ford appear to be on the right track, with increasing emphasis on alternate fuels, low-cost (both to purchase and to operate) models, and more efficient operations and methods, while GM is being forced into some brutal (and questionable) decisions and Chrysler is being purchased by Fiat. But I still have to wonder how long it will be before companies stop even trying to behave in a financially responsible fashion and just do as they please, knowing that the Federal government will ride to their rescue if they make too many bad choices…

And how much longer the taxpayers who are picking up the tab for this kind of idiocy will be able to carry the load…