12 November 2008

Hey Congress: This Is America

I feel like Congress is missing the big picture. Why is there any discussion about a Big 3 Bailout? It seems clear to me: Detroit needs help. General Motors can't stay afloat financially for the rest of the year -- and there are less than two months left. If cars aren't put together, car parts won't be manufactured. Millions of people will be dumped into an already overflowing pool of job seekers. America has the problem. American lawmakers have at least a temporary solution. Seems easy enough, yet it's getting to the point where lawmakers need a letter to encourage them to do what's best for the country.
Why are there doubts now? Why for the blue collar workers? It was all the rage not to long ago to take $700 billion for banks and lending institutions, despite their having profited from predatory lending. There was bipartisan support. President Bush sent messages to lawmakers through news conferences. It was an overwhelming thrust to spend money the country didn't have. I was against the $700 Billion Bailout, and I still think it's a bad idea. But the deal is done. It's too late to go home, so we may as well go big. There are still $350 billion in Congress' control. Detroit is dying. And lawmakers are dragging their feet.
But AIG got another $40 billion. And there was a $363,000 conference to commemorate it. Way to go.

1 comment:

  1. Hi Danie :-)

    Originally, I agreed with you. I will try to be concise on why I don't now. After extensive research/reading, I found a few things. First, it seems logical that, America being built how it is, people will still need cars. It also seems logical that there will always be a market for American-made cars - be it from pride or whatever. What is NOT logical is the way these companies have been run, which is why they are in the shitter (so to speak). Instead of listening to the will of the consumer and innovating with smaller, fuel efficient cars (like foreign companies have done), they focused solely on the small group of consumers who wanted big gas guzzlers - and had no alternative for if there was a 1970's-style oil/gas price run up. Additionally, they HEAVILY lobbied to stave off gas mileage increases. It is their own fault they are in this mess.

    Now, I agree re: the plight of the blue-collar worker. Let's be honest: even with a "bailout," jobs are going to be lost and there will be restructuring (and, if not, God help us because we'll be bailing them out forevermore). So, instead of handing billions to people with a history of mis-management, why not make that money available (perhaps in terms of healthcare or unemployment or job-retraining benefits) to displaced workers and let the companies go through the massive restructuring they need in order to remain competitive?

    I also see your argument with the financial industry. However, there is a decided difference between the two. The financial industry is just that - the backbone of our entire economy. Without capital, there is no ability to loan. Without loans, nothing gets done. When nothing gets done, there is no output, and therefore no paychecks, and no capital, and around we go. Yes: it was HUGELY irresponsible of the financial industry to go crazy with credit-default swaps and mortgage-backed securities that were essentially BBB rates loans cut up and repackaged and somehow re-rated as AAA debts (still beyond my comprehension). The people who perpetrated that should be "punished" in one way or another. However, no matter what, we need the financial industry. And, despite the "bailout" - none of which has bought toxic securities yet and has mostly just been capital infusion to jump-start the economy again - there HAS been massive restructuring out of necessity for survival. "Well, wouldn't that happen with the auto industry then?" History tells us "no." There are far to many factors at the Big Three - lack of innovation, gross mismanagement, and the involvement of the unions (good and bad) - to hand them billions and trust they will do the right thing.

    The Big Three should go into bankruptcy, if they need to (much like the airline industry), restructure, and start making quality products again. Would we bail out Microsoft or Apple if they made crappy products and mishandled their companies? What about an oil company that made consistently bad choices on where to drill and was failing?

    I invite you to continue the conversation :-)