Or so
that’s the thought of The Detroit News’ Daniel Howe. Stating that “GM and its Detroit-based rivals probably rank among the greatest destroyers of capital the modern
industrial world has ever seen” (ouch!), Howe argues that the current system isn’t sustainable, as capital
markets will not sit back and watch billions of dollars flushed down the toilet.
This, of course, is the bedrock assumption of a market-based economy– that markets will
accurately respond to a company’s (or industry’s) successes and failures. Granted, this does nothing to explain
why Ford and GM were trading at over four times their current values just a half-decade ago. Indeed, slipping
share prices and failing bond ratings should serve notice that America’s capital markets have finally woken-up and are
just now perhaps beginning to understand the magnitude of the problem.
Howe states (and we agree completely) that now is not he time for rehashing the past, but
rather moving forward to fixing the problems in Detroit. Whether that can happen before investors decide to pull the
plug has yet to be seen, but certainly the lumbering manner in which the domestic auto industry responds to
the changing world will no longer suffice.
[Source: Detroit News]