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There is a lot of discussion of failure and bailout or otherwise of the US Auto industry.  Here is a video as well with Peter Schiff discussing this thing.  I agree with a lot of what he says.

It can’t be denied that lot of people will be affected if GM and other two die tomorrow.  However, they need not.  It is important to isolate what is critical and what is important and what is Nice to Have!  And I have always believed that Sherlock Holmes advise is still relevant:

“When you have eliminated the impossible, whatever remains, however improbable, has to be the truth.”  The need here is to eliminate the “impossible”!

Here is my prescription:

– Let these Top 3 companies go bankrupt
– Give any company in the world which wants to set up factory or take over the existing ones, a 10 year tax holiday – just as India gave to the Indian software industry and other companies.  And then let companies like Toyota, Hyundai, Tatas, Mahindras of the world make cars more efficiently.

This way the names and brands would change but the cars would still be made in Detroit and the people will also be employed.  So, instead of spending $25 billion on giving to the companies…. earmark it for shortage in taxes!!  Have a combination of State and Federal tax cuts to motivate the foreign companies to set up shop here.

Extraordinary times require extraordinary actions.  This is one of those.

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