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Reported at the Daily Reckoning
by Adrian Day:
?I?ve been called a cynic?and worse?but, as Winston Churchill told us, if you don?t know the future, look to the past. So if we want an idea how long the government might be subsidizing GM and Chrysler, let?s look to the experience with railroads. In 1970, Penn Central, America?s largest rail company, filed for bankruptcy, and Congress created Amtrak. The government passenger rail monopoly was confidently expected to be paying its own way by 1974. Well, 38 years and $33 billion later, it has still to turn a profit. So this year, congress has voted another $14 billion for the next five years.?
From our perspective ? because we hate taxes and we like trains ? it would have been better if the railroads had gone broke?and been bought up by whomever could make a go of them.
And from our perspective ? because we hate taxes and we like cars ? it would be better if GM had been allowed a death with dignity. Then, other automakers could have salvaged the wreck for spare parts.
Of course, this formula applies to all the crippled banks, bankrupt households, reckless insurance companies, greedy Wall Street?and all the rest of the flotsam and jetsam of the Bubble Epoque.
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