Saturday, August 23, 2008

Aesop's Foibles

Perhaps you remember the fable of the ant and the grasshopper. (If not, you may remember the movie "A Bug's Life," loosely based thereon.)

The fable concerns a grasshopper who has spent the warm months singing away while the ant (or ants in some editions) worked to store up food for winter. After the winter has come, the grasshopper finds itself dying of hunger, and upon asking the ant for food is only rebuked for its idleness. The story is used to teach the virtues of hard work and saving, and the perils of improvidence. Some versions of the fable state a moral at the end, along the lines of:

Idleness brings want
To work today is to eat tomorrow
It is best to prepare for the days of necessity
In a rational world, this story would be inscribed in parchment and hand-delivered to the CEOs of GM, Ford and Chrysler in response to this:

Aug. 22 (Bloomberg) -- General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles.

The U.S. automakers and the suppliers want Congress to appropriate $3.75 billion needed to back $25 billion in U.S. loans approved in last year's energy bill and add $25 billion in new loans over subsequent years, according to people familiar with the strategy. The industry is also seeking fewer restrictions on how the funding is used, the people said today.

GM and Ford lost $24.1 billion in the second quarter as consumers, battered by record gasoline prices, abandoned the trucks that provide most of U.S. companies' profit and embraced cars that benefit overseas competitors such as Honda Motor Co. U.S. auto sales may drop to a 15-year low this year and fall even more in 2009, analysts have said.

I will feel tremendous sympathy for the line workers who get shafted when these titans of industry finally sink beneath the waves in the (near) future. But I have zero sympathy for the folks making decisions at the grasshopper factory.

It takes some serious chutzpah to ask for government help now. It is long past time to let them die the death they have worked so hard to bring about, and let the ants inherit the earth.


I could go on. But there is obviously nothing here that would convince a rational investor to put a damned cent into these companies, let alone tens of billions. The money these grasshoppers would fritter away yet again could do infinitely more good in the hands of a few enterprising ants.


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