Word: auto
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Nearly 80 years ago, around the time a Kansas-born carmaker was putting his name on the newest, tallest, shiniest building in the world, a young auto mechanic named Morris Weinberg opened a repair shop on busy Brooklyn Avenue in Kansas City, Mo. As he modestly prospered, fixing and selling used cars, Weinberg dreamed that his son would enter the auto business. Not used cars, though - new cars. Sleek and powerful cars, like the ones built by Walter Chrysler's company. And that's how Steve Weinberg, with his father's savings to stake him, came to open a Dodge...
General Motors' (GM) creditors have rejected a program that would have swapped most of the auto company's debt for equity, effectively driving the firm into Chapter 11. The century that began with the mass production of the Model T in 1909 and ended with the worst collapse of domestic vehicle demand in history is over. It was a 100-year period when Detroit was considered the seat of global manufacturing prowess, a period when the Big Three were among the largest, and often the most profitable, companies in the world...
...Fueled by abundant and cheap gas and the availability of rubber-tire production, the U.S. vehicle market grew to a 16 million-unit-per-year business. This year that number will be under 10 million, which will cause nearly every auto company doing business in the U.S. to show red ink. (See the 50 worst cars of all time...
Obama's defenders will point to the concessions the Administration forced Detroit's autoworkers to make in the arranged-bankruptcy negotiations with Chrysler. It is true that the United Auto Workers (UAW) got less than it asked for. But without Obama's billions in auto subsidies, it would have gotten far less from insolvency. The children of nonunionized American autoworkers in Kentucky and Alabama who build cars that succeed in the marketplace made the largest concessions. They will endure a larger national debt so that billions of federal dollars can be used to prop up the UAW jobs...
Instead of meddling in the management of domestic auto companies, Obama should use his immense political capital to make a policy decision that no recent President has shown the guts to make but that would be greatly in the national interest. A stiff new gas tax, phased in as the economy strengthens, would push new-car demand toward more fuel-efficient vehicles just as the U.S. market for cars improves and auto production ramps back up. That would both stimulate the market for new cars and help curb our self-defeating addiction to buying oceans of oil from countries that...