I was a little amused reading the WSJ last night. Republican lawmakers are apparently ready to draw a fault line and not bail out the American Auto Industry. Now I have heard cogent arguments yea and nay on this and I don't actually have an opinion one way or the other. Yes, Detroit has buried it's head in the sand for the last thirty years, we have worsened the fuel efficiency and mpg of our cars, they build ugly, crappy product that doesn't seem to have the care and craftsmanship of their competitors. (I drive a Chrysler Town and Country by the way and it's just fine.)
Some democratic lawmakers want to save the U.S. auto industry because of the horrific effect on labor in MIchigan and elsewhere if it was to tank. I wonder if providing jobs for an industry that has shot itself in the foot so many times is smart or even "american". A part of me says die already, we don't dole out jobs and subsidies to keep people busy. Sink or swim. But a failure of the big three would be as least as catastrophic to our economy as a failure at AIG.
The thing that I think is funny about the whole thing, that as I stated previously, even amuses me, is that the conservatives can be so pious about not extending the bailouts. Hey memo guys, you're not virgins anymore, you can't stuff that genie back in the bottle. You gave a largely unsupervised gift to the banking industry but god forbid you should do anything for the american worker. Now that's socialism, isn't it?
2 comments:
I have been going back and forth myself on this. There are good arguments on both sides. At this point, I am leaning toward allowing the companies to file bankruptcy. This will allow them to reorganize, new boards of directors, new executives and renegotiate labor contracts. At that point, maybe the government should look at a "bailout".
Also, as I understand it, the supposed bailout currently being discussed is a loan, not a hand out. Presumably, the loan would be paid back, that is, if they can make some money in the future.
WASHINGTON (AP) -- Treasury Secretary Henry Paulson told Congress on Tuesday that the administration remains firmly opposed to dipping into the government's $700 billion financial bailout fund for a $25 billion rescue package for Detroit's Big Three automakers, no matter how badly they need the help.
''There are other ways'' to help battered automakers, Paulson told the House Financial Services Committee as the auto bailout legislation clung to life support on Capitol Hill.
Committee members grilled Paulson on the administration's stance that the $25 billion come from separate legislation passed by Congress, which was designed specifically to help auto manufacturers retool their factories so they can make more fuel-efficient vehicles.
The $700 billion plan enacted by Congress in October and signed into law by President George W. Bush did not envision that the program would be used to help rescue nonfinancial companies, Paulson said.
''I believe the auto companies fall outside of that purpose,'' he said.
At the same time, Paulson testified, ''I think it would be not a good thing, it would be something to be avoided, having one of the auto companies fail, particularly during this period of time.''
Paulson said that solving the financial problems of the automakers should be done in a way ''that leads to long-term sustainable viability'' for the industry.
Okay now - the banks screwed up and we helped them out but the Big Three will have to work it out some other way. Am I missing a rationale here?
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