November 11, 2008
Clawing back up the slope

The Motley Fool carries this op-ed that is both fun and depressing--a plea to bail out neither U.S. automakers nor the satellite radio companies that beam a deadbeat product to the dashboard.

Satellite Radio: Too Big to Fail By Tim Hanson November 10, 2008

Congress is stupid. Really.

Amid all of the debate in Washington over what to do and whom to help to solve this financial crisis, our legislators are ignoring one critical and imperiled industry. It's piling up losses, overburdened by debt, and unable to attract consumers who have cut back on spending. And even a Hail Mary merger between its principal players will not save it.

Stock in its flagship company has dropped more than 90% this year, and something needs to be done.

So listen up Obama, Reid, Pelosi, and all the rest: Forget about the auto industry. Now is the time to save Sirius XM Radio (Nasdaq: SIRI).

Yes, I'm kidding
In reality, there's no good reason for the government to step in and save satellite radio. It's a terrible business that's done nothing but pile up losses and disappoint shareholders. It can't compete with the Internet, podcasts, or MP3s. The business destroys value. If the government were to loan it money, it would never see that money again.

Bailing out satellite radio is a ridiculous notion. No one -- not even the politicians in Washington (let's hope) -- is considering it. Yet Washington is considering a hefty bailout for U.S. automakers -- an industry with much more in common with satellite radio than anyone would like to believe.

So basically what we're saying here is: No, no. Don't throw good money after bad. This isn't like the financial bailouts--which really, really were important and which we really, really were reluctant to support. No, this is different. And not just because we're staked in financials. Bailouts for cars? Who's next? Here's where we draw the line. No more bailouts, please!

Meanwhile, today's WSJ reports on AMEX gaining access to financial bailout funds:

"Everybody wants to be a bank because everybody wants access to government funding," said Craig Maurer, an analyst at Calyon Securities, a unit of Credit Agricole Group.
Posted by Edward J. Lopez at 07:11 AM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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