General Motors, Chrysler and to some end, Ford, are asking for $34 billion in subsidy loans to support their survival for the next few months. By all acounts, it won’t be anywhere near enough, but that’s beside the point. What’s funny about this is the sheer volume of justification that they’re having to go through to get these loans. AIG, it would seems, got $150 billion just because, and very few questioned the need or the justification for it.
I’m starting to think that congress should have approved the $25 billion in loans that the Big Three was asking for a few weeks back, because it seems as though they’ve all huddled back in Detroit and all of a sudden the “emergency aid” requirement is up to about $34 billion. Today’s news even has it that GM will go under without an immediate $4 billion infusion.
In normal times, this might not be such a big deal. Chrysler went into bankruptcy a few decades ago and emerged as a better, stronger company. But, times have changed, and the underlying problem is the same no matter what industry we’re talking about – lenders are remiss to help companies before they get into trouble and even less likely to help those in bankruptcy. Congress seems to be missing these facts as they continue to grill the Big Three, and while I’m not in support of a bailout, it is time to consider a loan or rescue package that will allow these companies to survive.
When did it become okay to go to the government bailout line the minute business got bad? In the past, make a bad business decision, pay the price, which might even mean closing doors. With modern day economics, some would lead us to believe that there are companies out there too big to fail.
Some of you still remember the internet bubble and subsequent popping of that bubble almost a decade ago. My own company closed its doors after some of our “new economy” customers lost their funding, resulting in non-payment on millions of dollars already spent on web development. We paid our employees and vendors the old fashioned way – we sold assets, clients, and took second jobs to make sure that we paid every dime owed. Ultimately, we closed our doors, but not one vendor was left without payment or a guarantee of payment. That’s how business used to be done. It never once occurred to us to ask the government to bail us out of our problems, and I don’t remember any other company getting a bailout either.