“There’s always free cheese in a mousetrap.” -- Congressman H. R. Gross
The good news is in: Free enterprise can generate a turnaround without assistance from Uncle Sam. All government needs to do is get out of the way.
Ford Motor Co., the only major US auto maker not begging for a government bailout last year, shocked Wall Street and Washington on Monday in reporting its first cash-flow positive quarter in more than two years.
Ford made its first billion by successfully increasing domestic sales for the first time in nearly five years, and boosting market share against its chief rivals, Government Motors (GM) and Crying Chrysler.
Meanwhile, GM and Chrysler and their financial arms continue to struggle. And without another bailout, GMAC is expected to go bankrupt. GMAC has already enjoyed $12.5 billion in TARP money. Where has all the money gone?
Meanwhile, the #2 auto maker predicted turning solidly profitable by 2011 as a result of its cost cutting and renegotiations with the unions.
Ford stock has tripled in price in the past six months.
This isn’t the first time Ford has broken away from the government trough. In the early 1980s, Ford executives opposed the call for import quotes on the Japanese cars and took on their competitors in raising quality standards.
I’ve been a long-time buyer of Ford cars, including two Mustangs, an Explorer truck, and a Lincoln Town Car, and have enjoyed relatively maintenance free service for years. Maybe my experience is exceptional, but most car rating services, including Consumer Reports, ranks Ford ahead of its domestic competitors.
Don’t get me wrong. Ford isn’t lily white when it comes to government welfare. Although Ford has not taken TARP money, it has used the government’s Term Asset-backed Lending Facility (TALF), and it has borrowed $900 million from the U.S. Department of Energy for developing more fuel efficient vehicles. Like all the other banks and lenders, it has benefited from the Fed’s ZIRP (zero interest rate policy) and Cars for Clunkers program.
And Ford isn’t out of the woods yet. It still carries an incredible (gulp) $103 billion in debt (it blundered by borrowing billions to buy back its stock at much higher prices) and has been forced to restructure its debt again. Unions are refusing to cut back its generous medical and pension benefits.
CEO Alan R. Mulally, a turnaround executive from Boeing, deserves high marks for Ford’s latest success. If anyone can make an elephant dance, he can.
The good news is in: Free enterprise can generate a turnaround without assistance from Uncle Sam. All government needs to do is get out of the way.
Ford Motor Co., the only major US auto maker not begging for a government bailout last year, shocked Wall Street and Washington on Monday in reporting its first cash-flow positive quarter in more than two years.
Ford made its first billion by successfully increasing domestic sales for the first time in nearly five years, and boosting market share against its chief rivals, Government Motors (GM) and Crying Chrysler.
Meanwhile, GM and Chrysler and their financial arms continue to struggle. And without another bailout, GMAC is expected to go bankrupt. GMAC has already enjoyed $12.5 billion in TARP money. Where has all the money gone?
Meanwhile, the #2 auto maker predicted turning solidly profitable by 2011 as a result of its cost cutting and renegotiations with the unions.
Ford stock has tripled in price in the past six months.
This isn’t the first time Ford has broken away from the government trough. In the early 1980s, Ford executives opposed the call for import quotes on the Japanese cars and took on their competitors in raising quality standards.
I’ve been a long-time buyer of Ford cars, including two Mustangs, an Explorer truck, and a Lincoln Town Car, and have enjoyed relatively maintenance free service for years. Maybe my experience is exceptional, but most car rating services, including Consumer Reports, ranks Ford ahead of its domestic competitors.
Don’t get me wrong. Ford isn’t lily white when it comes to government welfare. Although Ford has not taken TARP money, it has used the government’s Term Asset-backed Lending Facility (TALF), and it has borrowed $900 million from the U.S. Department of Energy for developing more fuel efficient vehicles. Like all the other banks and lenders, it has benefited from the Fed’s ZIRP (zero interest rate policy) and Cars for Clunkers program.
And Ford isn’t out of the woods yet. It still carries an incredible (gulp) $103 billion in debt (it blundered by borrowing billions to buy back its stock at much higher prices) and has been forced to restructure its debt again. Unions are refusing to cut back its generous medical and pension benefits.
CEO Alan R. Mulally, a turnaround executive from Boeing, deserves high marks for Ford’s latest success. If anyone can make an elephant dance, he can.
Mr. Skousen is a renowned financial economist, author and university professor. He has been the editor of the financial advice newsletter, Forecasts & Strategies, for 28 years. Two of his books highlight Milton Friedman's career: "The Making of Modern Economics" and "Vienna and Chicago, Friends or Foes?." Check out his latest book "The Big Three in Economics: Adam Smith, Karl Marx, And John Maynard Keynes" or "Investing in One Lesson" and "EconoPower: How a New Generation of Economists is Transforming the World." He is the producer of FreedomFest, the world's largest gathering of free minds, in Las Vegas every July (www.freedomfest.com).
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