Do We Need Three Domestic Automakers?

Should taxpayers save the Big Three automakers? If so, why?

What does saving (or not saving) GM, Ford, and Chrysler mean for the economy and stock investors?

These are difficult questions and the answer (no matter what it is) will probably have unintended consequences.

Should you hold, sell or buy any of these stocks?

Here’s my guess: In fewer than two years, we will have only two domestic automakers. Which two will survive is a big question.

The automakers may get a bandage from the lame-duck Congress, but President-elect Obama has indicated long-term fixes from taxpayers may be tied to significant changes in the industry.

This is another way of saying it doesn’t make good sense to keep dinosaurs on life support if they are not willing to institute significant changes.

U.S. Automakers can be competitive, but they are going to have to acknowledge the world they once thrived in has changed.

Gas prices may be down thanks to very low oil prices, however anyone who believes that prices will stay around $2 a gallon are in serious denial.

As soon as the global oil cartel decides it can raise prices without creating a financial panic, it will do so.

Even if we adopt an energy independence program, it will take years to become fully realized.

In the meantime, it is unlikely gas-guzzling products from Detroit will survive.

The best course of action may be to combine three automakers into two and give the survivors an incentive to innovate.

This assumes that our enemies don’t destroy or hijack a significant percentage of foreign oil production before we can get started on a viable program of energy independence.