Friday, February 06, 2009

Dancing the bailout shuffle

Http://m.apnews.com/ap/db_7736/contentdetail.htm?contentguid=Frsq5hkF

The problem affecting the entire industry is overcapacity. But the
individual companies struggling for survival are all interested in
maintaining or expanding their own capacity - even if that means
building false demand by making dealers sit on cars they can't sell.

I think this is called the "bailout shuffle." Step 1: Company goes out
of its way to appear financially sound in order to appease private
investors. Step 2: Company pivots 180 degrees and goes out of its way
to appear financially strapped in order to access government bailout
funds. Step 3: Company pivots back to step 1 in order to convince the
government that the money has been used effectively. Although we
haven't really seen it yet in the car industry, I'm guessing step 4
looks a whole lot like step 2. Repeat until company and government are
both out of money.

1 comment:

Anonymous said...

Nice dance :)