Who decides who deserves a bailout?
Is the current debate over whether or not to provide financial aid to the automakers a white-collar/blue-collar argument, because it’s sure looking that way when the government gives billions to help a single company like AIG and yet it won’t help companies like Chrysler, General Motors and Ford with a nearly insignificant $25 billion. Readers already know that I am against these bailouts on principle with the belief that they are prolonging the problem by smoothing the road and not fixing the problem, which ultimately means a much longer and more painful recession. My mantra remains, let companies fail, even the big ones – it will hurt more, but generally it’s for a shorter period of time The net impact on the economy will most certainly be less.
The problem that I have with the proposed auto-bailout is that it’s starting to look like the prejudices are coming out. Most vocal are the same people that supported the recent $700 billion bailout. These rich folks in office want to protect the companies and individuals that have backed them the most and aren’t worrying as much about the average American. Most government officials have forgotten who votes in this country, and unfortunately when it comes time to vote again most will have long forgotten about the decisions made today. Think about it – until recently most of the country has never heard of a company named AIG. Yet, the government had us all convinced that if they went under hundreds of thousands would be impacted. To this point already, AIG has been “loaned” over $150 billion and it’s still questionable if they’ll survive. That billion with a “b” and taxpayer money.
On the other hand, I think you would be hard pressed to find a person in the United States over the age of six who hasn’t heard of General Motors. Most over 10 probably know how successful they used to be and their impact on America. Right now their industry needs a lousy $25 billion and they’re getting denial every step of the way. Senator Christoper Dodd, (D) from connecticut, who also happens to be the Chairman of the Senate Banking, Housing, and Urban Affairs Committee is quoted as saying:
“Their board rooms in my view have been devoid of vision. They have promoted and often driven the demand of inefficient, gas guzzling vehicles, and dismissed the threat of global warming.”
Anyone want to bet on whether the boardrooms of AIG and the banks benefiting from the bailout were any more visionary in their foresight on the mortgage crisis impacting the world today? Sure seems like that would have been easier for everyone to see that coming then it would be to imagine those same companies bringing the economy to its knees leaving consumers unabe to afford to buy cars from GM, Ford and Chrysler. Befitting his title, Senator Dodd goes onto justify the reason that banks need help by saying:
“I appreciate the Treasury Department’s willingness to adjust to the current situation in our financial markets. I am also gratified that they listened to Congress when we insisted on including alternative strategies, such as liquidity injections, in the financial rescue legislation. It is alarming to imagine how limited the Treasury’s options would be if Congress had not made substantial changes to their three page proposal.”
…, it is becoming increasingly apparent that a robust and aggressive program to stem the tide of foreclosures sweeping across the nation is critical to any policy to put our economy back on track. I am concerned that we may have to wait until the next Administration before we have the real change in economic policy that our nation needs, but it is my sincere hope that Secretary Paulson collaborates with Chairman Bair to get this program up and running as soon as possible. There is no legitimate reason why they would be unable to do so. Secretary Paulson should be as quick to realize that the foreclosure issue is critical to solving our problems as he was in realizing that equity purchases were necessary.”
Any questions about where Dodd’s allegiances are? I guess there’s not a ton of car money in Connecticut. Unfortunately, at this point for the government it is probably all or nothing. The government either needs to look at these companies and say they cannot be replaced or continue heading down the path of rescuing those that are most in need. Obviously this isn’t trickle-down to even the smallest companies, but I think that GM, Ford and Chrysler would have to qualify and it’s amazing to me that the same government that rubber-stamped $700 billion can’t see it.
Ranter
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[...] talked yesterday about my feelings surrounding the auto-bailout for Chrysler, Ford and General Motors, and the more I read about what Congress is doing and the debates that are flying around the more [...]