First banking, now cars again. One wonders how many industries Obama will have to nationalize before it becomes apparent that if he wasn’t a socialist before, he has become one whether he wanted to or not:
General Motors Corp. said Friday it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009 if the U.S. economic slump continues and it doesn’t get government aid. The automaker said its cash burn for the quarter accelerated to $6.9 billion, and government aid will be “essential” because of the slow economy and credit crisis.
The move comes hours after Ford Motor Co. said it lost $129 million for its third quarter and will cut about 2,260 more white-collar workers in North America as the industry tries to weather the worst economic downturn in decades. As U.S. and global economies have rapidly deteriorated, auto sales have nearly shut down.
GM said government aid is “essential” to help the U.S. auto industry through the downturn.
This comes as absolutely no surprise to me, as a few months ago, a friend called me up about some automotive paper that he’d been offered which was paying almost 20 percent annually. The only risk was that the automaker wouldn’t go under before the end of 2009. We kicked it around for a while and decided that it was probably too risky.
This was before the Freddie and Fannie fiasco. Now, we figure they’re probably paying 30 percent, but he’s not even interested enough to bother calling and finding out. If you are having trouble understanding the Austrian concept of misallocation aka malinvestment, investing in American automakers making more cars in 2009 is about as perfect an example as one can ever hope to find.