Roger L. Simon

Bye Bye Miss American Pie: No Chevys to the levy for GM, but Milton Friedman is watching

If the present mood continues, the Big Three automakers were just too late for the Big Handout given to their friends in the financial industry. Too many people are suspicious that these billions – unlike the other billions or trillions – will be money down the drain. I can see why. Everyone knows those auto companies are hopeless but few, including most of the so-called experts I’ve read, have a clue what all that financial mess means. Better to do something to paper that over (pun intended) or the world will explode. And despite the good old nostalgia for American cars from Don McClean’s song, this particular levy is dry and Them good old boys drinkin’ whiskey and rye singing “This will be the day that I die” probably have it just about right.

But still, I have a suspicion that the day will be saved via Chapter 11 and some restructuring will occur (although I probably can kiss bye-bye to my small pension plan investment in GM, bought in the naive belief that it can’t possibly go any lower.) This will provide an interesting test case for the whole bailout. I am the furthest thing imaginable from an expert in such things, but I noticed a few weeks ago that the market kept going up when it seemed as if the bailout was failing and then down as soon as it was accepted (and has continued to go down, as we all know, for the most part since then). Watch how the market responds. GM is headed for nowheresville. But the larger group of investors may be pleased. Milton Friedman is watching.