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February 9, 2009

The Law Of Intended Consequences

Har har...

General Motors has announced that it plans to invest $1 billion of US taxpayer money into its Brazil operations.

In selling the steady stream of bailouts to the US public, both the Bush and Obama administrations have argued that American jobs will be saved or created by taxpayer-funded gifts to failing companies like GM, AIG, and Bank of America.

As of this morning, no US government official had a reaction to the news.

Update - story appears to be false. (original link has been pulled).


Posted by Kate at February 9, 2009 10:51 AM
Comments

I wonder how Dumbonomics will react to that plan?

Posted by: Western Canadian at February 9, 2009 10:49 AM

Obama is just doing what he told Joe the Plumber he would do . . . spread the wealth around.

He didn't say it would be just to Americans . . . he believes in international socialism.

Posted by: Fred at February 9, 2009 11:04 AM

Has anyone else noticed the striking resemblance to Boob Raes' inept regime?

Posted by: sasquatch at February 9, 2009 11:05 AM

"both the Bush and Obama administrations have argued that American jobs will be saved or created by taxpayer-funded gifts to failing companies like GM, AIG, and Bank of America."

Still Bush's fault I guess.....

Posted by: tim at February 9, 2009 11:09 AM

"My first job is to say thank you to those who voted me. Those who didn't, I'm going to get your vote next time." -
Alfred E. Obama quote
He's going for the Brazilian vote.

Posted by: Ghost of Ed at February 9, 2009 11:13 AM

What people fail to realize is that capitalism works. Even when governments become socialist or communist, capitalism works by reducing economic activity to those areas that are still profitable. The remainder goes underground or moves to places that still put out the welcome mat.

So people, decide what you want, a high living standard or a low one. Governments can deliver either by getting out of the way or by appointing csars to micromanage everything including your freedom.

Posted by: Rosco at February 9, 2009 11:13 AM

From GM to taxpayers: "HAHAHAHAHAHA SUCKERS!!!!"

Posted by: eljay at February 9, 2009 11:19 AM

Here's a link to the Latin American Tribune with more info.
http://www.laht.com/article.asp?CategoryId=12396&ArticleId=320909

Posted by: Ghost of Ed at February 9, 2009 11:27 AM

Are you suggesting the US adopt an 'Invest in America' policy to complement their 'Buy American' policy?

Posted by: Robert McClelland at February 9, 2009 11:33 AM

*
"While one might expect hordes of auto workers massing outside local recruitment centres,
a scenario that has been reported in the United States, the military says it hasn't seen any
such trends and doesn't expect to."

*

Posted by: neo at February 9, 2009 11:34 AM

Well, that is very bad news for Canada, because that maybe enough to start a trade war.

The real problem is that the auto unions have made it financially disadvantageous to invest in the US.

This is bad! It of course makes economic sense to do this, but it will cause a mess of trouble.

Posted by: Erik Larsen at February 9, 2009 11:38 AM

Are you suggesting the US adopt an 'Invest in America' policy to complement their 'Buy American' policy?

No, Robert, one dumb idea added to another dumb idea is a bad idea...

How do your union buddies feel about the stimulus cash that they're not going to get their hands on?

Posted by: Richard Evans at February 9, 2009 11:39 AM

GM is just following Ford by investing outside North America.

http://www.laht.com/article.asp?CategoryId=12396&ArticleId=320909

This is probably why GM turned down the bailout money from Canada. If they had accepted the money on a Monday and then on Tuesday announced the Brazil investment , the Canadian stipulations would probably have been violated and the money repaid. At the very least it would be a PR catastrophe.

Interesting video about the modern Ford plant in Bahia Brazil. It describes how Ford would love to have a similarly integrated plant in the US , but the UAW would never allow it.

http://info.detnews.com/video/index.cfm?id=1189


Posted by: Brian at February 9, 2009 11:41 AM

Looks like a bunch of Americans are going to have to move to Brazil to get their automaking jobs back, eh...

Posted by: The Canadian Sentinel at February 9, 2009 11:44 AM

Let's see, if I announce I'm laying of hundreds or thousands of workers will that increase my chances of getting a bailout?

Get those pink slips ready.

Posted by: Stan at February 9, 2009 11:44 AM

There's a video out there somewhere of a Ford plant in Brazil that represents the epitomy of manufacturing efficiency. For example, suppliers operate 'inside' the Ford, labour is commited to the operation, and production makes/models can be modified on/off quickly as their various international markets demand.

Maybe GM is hoping to replicate this 'offshore' success.

BTW, has anyone told Lou Dobbs about this? IMO, he should be included in any cap & trade scheme because he blows a lot of hot air! lol

Posted by: PhilM at February 9, 2009 11:45 AM

"Are you suggesting the US adopt an 'Invest in America' policy to complement their 'Buy American' policy?"

No projectionist, we suggest bailouts just don't work, for numerous reasons, this being one prime example.

Posted by: Sounder at February 9, 2009 11:45 AM

Rosco,

Just when did a billion dollars get shuffled into the micro-management column?

Capitalism isn't your butcher putting his thumb on the scale when you buy pork - that's called something else. And maybe it's just me, I like more meat than fat.

Posted by: ural at February 9, 2009 11:46 AM

You can't put the genie back in the bottle. You want free trade and globalization, you live with the consequences.

Posted by: dp at February 9, 2009 11:54 AM

One of those advising BO - a former Clintonite (what a surprise!!) - Robert Reich wrote this column last week and it explains a lot about why these guys just do not get it:

http://www.miamiherald.com/opinion/other-views/v-fullstory/story/892392.html

The comments are priceless as most of them destroy his argument that "unions can strengthen america". as one commenter said "i can only be happy that Professor Reich is an academic and not in a position of power"

another commenter sums it up perfectly:

"Time to get your head out of the sand. In 1965 America peaked. We were just seeing the first competition for a rebuilt Europe and a rebuilt Japan. America to that point had no competition due to the destruction of the global manufacturing resources during WWII.

Unions were able to drive wages out of sight, and impose idiotic work rules because there was no outside competition. As long as every manufacture labored under the same conditions, the only result was excessive pricing.

As soon as we started seeing competition from foreign manufacturers who were not laboring under the grossly non-competitive wage and benefit obligations, America started seeing their business go elsewhere.

To suggest that labor unions, as they exist today, can contribute to America's competiveness is absurd at best. In a competitive market there is zero tolerance for non-value-added cost in any product or service."


h/t RCP

Posted by: Gord Tulk at February 9, 2009 12:12 PM

no, dp, free trade and globalization doesn't mean that companies will move their industries to foreign countries. Free trade and globalization means that foreign countries can produce goods and market them to foreign consumers.

The reason N.American companies move their production to foreign countries is because the unions have created a disastrous economic and manufacturing system in N. America. This increases the costs of manufacturing beyond any viable returns, disables the company from investing in better equipment, and prevents the company from making rapid adjustments in the manufacturing process. The unions have effectively destroyed the ability of these industries to..manufacture and invest.

Robert McClelland - of course America should 'invest in America'. Particularly if they are using American taxpayer money.

But unions prevent such investments for the costs are too high for profitable investment. And of course people should 'Buy American' IF the value and utility of the goods is beneficial to the consumer. If the costs of production are too high, then, consumers must be free to purchase their goods elsewhere. That's the market system.

And for an industry to take US taxpayer money to invest in a non-American location, is unacceptable.

Posted by: ET at February 9, 2009 12:16 PM

It isn't just the unions. The Ford plant makes most sub-assemblies also. No trucks crossing the border would make just-in time more timely. Quality problem? Walk across the floor and iron it out.

Posted by: Speedy at February 9, 2009 12:30 PM

Plus, white collar jobs are being outsourced to foreign lands too. That's why I don't want a single cent of my tax dollars to go to Canada's chartered banks.

Posted by: Mississauga Matt at February 9, 2009 12:36 PM

And for an industry to take US taxpayer money to invest in a non-American location, is unacceptable.


Bwahahahahaha......no,it isn't.I can take ANY money the sucker taxpayer wants to give me,and invest/put it anywhere I want.Don't like that? Tough.You voted for it......GM to dopey taxpayers.

Posted by: Justthinkin at February 9, 2009 12:45 PM

Bye America!

Posted by: set you free at February 9, 2009 1:14 PM

Justhinkin,

You may laugh, but there is no way that congress will allow this.

So there are gonna be some repercussions. Either we are gonna see protectionism, which will spark trade wars and will severely harm Canada nation-wide, or we will see conditions attached to the bailouts which may wreak havoc on markets.

Put your seatbelt on.

Posted by: sf at February 9, 2009 1:28 PM

I wonder how much GM's move out of the US is motivated to escape the UAW high wage fiefdom here. That would be rich in irony since "saving" Detroit was political payback for the unions delivering the votes.

At the end of the day, bad businesses need to fail so capital can be reallocated to more viable businesses. And, GM isn't one of them.

The Big Three lost something like $485 billion over the last decade. There are companies/industries that aren't going to survive and shouldn't in this meltdown. Either we are capitalists or we are socialists. Recovery will come faster when capital can be reallocated to the survivors.

Posted by: penny at February 9, 2009 1:28 PM

Will they at least be using American steel in the "Brazil operations"?

Posted by: Indiana Homez at February 9, 2009 1:37 PM

"I wonder how much GM's move out of the US is motivated to escape the UAW high wage fiefdom here. That would be rich in irony since "saving" Detroit was political payback for the unions delivering the votes."

I would say about 100%,penny.Would you hire me as a 10$/hr lawnmower,or a 50$/hr union lawnmower?

There are only two types who support unions now....union fatcats and socialists. Oh wait.That was redundent.

Posted by: Justthinkin at February 9, 2009 1:38 PM

The reaction of the Obamaniacs is likely to be a call for greater government control of industry. Rather than recognize the bailout strategy for the failure that it is and let GM go broke, they will now be more inclined than ever to nationalize GM outright in order to gain absolute control over its investment decisions.

They seem hellbent on repeating the experience of British Leyland no matter what.

Posted by: Dennis at February 9, 2009 1:52 PM

I was all set to be pissed off, then saw this: http://www.autoblog.com/2008/11/22/gm-not-sending-any-bailout-money-to-brazilian-operation

That's not to say that I think bailing out GM is a good idea - far from it.

Posted by: Tony at February 9, 2009 1:59 PM

Re: Tony at February 9, 2009 1:59 PM

Original link is down as well. Debunked months ago... Ouch.

Posted by: K Stricker at February 9, 2009 3:03 PM

The Examiner link isn't working. This link works though.

Posted by: Robert W. at February 9, 2009 3:09 PM

"Original link is down as well. Debunked months ago... Ouch."

Don't you mean...Har har?

Posted by: Robert McClelland at February 9, 2009 3:18 PM

Nah, Kate isn't deliberately misleading. Unlike the MSM.

Posted by: K Stricker at February 9, 2009 3:39 PM

McClelland - have you ever pulled and apologized for that post of yours accusing Carol Skelton's campaign manager of being a white supremacist?

Posted by: Kate at February 9, 2009 5:26 PM

Oh, Oh, RMc has pissed in the pickle jar again and is about to be handed his head on a platter.

Posted by: Texas Canuck at February 9, 2009 5:56 PM

Kate.What post??? Doncha know that each morning is a new day for leftards,and they have no memory,or reason, to apologize for something that happened in the past??? That's their religion...we are all reborn anew each day so that leftards can try their BS on us again.

Posted by: Justthinkin at February 9, 2009 5:58 PM

Justthinkin - Obama and the Dems are not satisfied with their union margin of safety vote so far and are pushing hard to put all of us into the public union trough via this insanely stupid stimulous package. Their vision one of a French modeled America.

Actually the brain dead management that never prepared for a severe downturn at GM have finally done something less than stupid in morphing the business to overseas and away fron the UAW now. They put that wasteful union in their passenger seat for decades. Bad, bad, management.

Oh, well, our national messiah will be on the airwaves tonight connecting with his sheeple and calming the fear driven.

Posted by: penny at February 9, 2009 6:27 PM

I thought we already agreed, Kate, that truth takes a backseat when we're flinging mud at each other.

Posted by: Robert McClelland at February 9, 2009 6:31 PM

penny....I will not be watching the "0" giving his lickspittle tonight...but if you have the guts to,maybe give a brief outline or link to it?
And one,just one question I would like answered by anybody.....what happens when we all work for unions??

Posted by: Justthinkin at February 9, 2009 6:36 PM

OH....forgot too add what I will be doing instead of watching the 0....sitting in corner,watching my male cat lick his...errrr...nether regions...who strangely...has the nickname of Robert McMac.

Posted by: Justthinkin at February 9, 2009 6:43 PM

I haven't read all the previous comments so it may have already been asked.
Kate, their clammoring out there asking if you're paid by the Conservatives.
I hope you are, you deserve all monies.
Anyway, just thought you might not be aware.

Posted by: Doowleb at February 9, 2009 7:03 PM

"I thought we already agreed, Kate, that truth takes a backseat when we're flinging mud at each other."

You say that as though I've actually, you know, mentioned you in the past 4 years.

Posted by: Kate at February 9, 2009 7:44 PM

"Kate, their clammoring out there asking if you're paid by the Conservatives."

I'm paid to keep my mouth shut.

Posted by: Kate at February 9, 2009 7:47 PM

ural,

When O'bomb-a's czars take control, the only place you'll see meat is in history books. As for fat, you'll be lucky to get greased up when you bend over.

Posted by: Rosco at February 9, 2009 8:02 PM

Yeow, Kate! (re: McLelland)
I like when talk like that!

Posted by: Snagglepuss at February 9, 2009 9:45 PM

ET- One thing is obvious, your interpretation of globalization is different from GM's.

GM and Ford have had overseas plants since before the war. The number one (auto) brand name in China is Buick. That one surprised me. Foreign sales have been keeping GM afloat for some time, basically subsidizing domestic operations.

I'm just not so sure there's any way to even ask GM not to invest in foreign operations. It would really open a huge can of worms.

Posted by: dp at February 9, 2009 10:45 PM
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