Will Bailouts Help a Global Economy?

I spent over two decades in the automobile business at virtually every level in the distribution chain from the manufacturers down to retail.

I have watched Detroit loose market share over a period twice as long, 40 years. They refuse to learn their lesson and continue to design and market products that can not compete with imports, first those from Europe and eventually from Asia.

The company Ross Perot created and developed was purchased from him by GM. In the bargain they got him on their Board of Directors. When he saw how poorly things were being done he criticized the management and reported them to the shareholders.

They bought him out to shut him up but failed to alter their behavior. Google Ross Perot and GM and eventually you will see the extent of the problems Perot spoke of a long time ago.

Now they are weeping for a handout and want Washington to save their butt with tax payer money.

In the meantime, Toyota, Honda and other companies with factories here in the US and who create jobs for Americans, build better cars and do so without the benefit of corporate welfare.

It's unfortunate that American workers jobs depend on inept companies. Nobody bailed out Enron or the employees or shareholders who lost their shirts!

Why should the car companies get special treatment?

L.j.

bailouts only help the big banks, and tax the people. been that way since 1913, and the creation of the fed. see Ed Griffin's "The Creature From Jekyll Island", or "Zeitgeist: Addendum"

L. Jaguar, depending on where you are at in the US, there are more than two choices on the ballot! You do not need to vote for the "lesser of two weasels".

Go to http://www.campaignforliberty.com/blog.php?view=547 to see Ron Paul's recommendation for this election. Review the platforms for Ralph Nader, the Greens, the Libertarians, and the Constitution parties, and make your choice.

If you keep voting for the Dems and Reps, you only encourage their bad behavior. If enough people begin voting for something different, maybe they will notice and change. Or enough people will vote and maybe we can get something different.

Just because you didn't vote for the winner does not mean that your vote doesn't count.

If the government has so much excess money that they can consider bailing out GM, they should give it back to the taxpayers.

Ken I am fascinated by the avatar accompanying your posts. Looks like a streamlined trike.

Might you slip a larger image of it here please and tell us a bit about it?

Thanks

L. J.

Go to http://gaiatransport.com for info.

A government bailout of the US automotive industry is the same as the government forcing each and every citizen to purchase an automobile that is not wanted, and that the purchaser can not use. The US automotive industry is in trouble because of management ennui. Other automotive companies are surviving quite nicely...The market should go to those who can handle it.

I do not remember when, but several years ago, Forbes magazine published a study about the longevity of major corporations. Most of the major corporations of a century ago no longer exist. Most of the major corporations of today, did not exist a century ago. Chrysler has been bailed out once, but never fully recovered. If these corporations are not being run properly, why should tax payers foot the bill?

We should bail out the auto industry for the same reason we bailed out the bankers, because . . . . . Sorry, they did not have a good reason for that bail out either!

I suppose the downside of GM crashing is more places like Flint Michigan. The ripples are pretty large, with (especially) the rank and file losing jobs while the C level guys go onto the next company to wreck. The heroes of the stock market lay off workers to drive the stock price up, rather than fostering a climate where innovative products keep people working and drive up profits, and stock prices. The second approach requires a bit more patience, and a lot more real thought.

Right now, the (once) big three have excess capacity. Unemployment is likely to go higher, and fewer people will buy new cars, driving unemployment yet higher. People have been driving much newer, much larger, and more luxurious cars than they need, so in hard times the auto industry could shrink to about 1/4 of it peak size. I guess the reasoning behind a bailout is that if we can avoid unemployment going way up in the auto industry, we can avoid a depression. They used to say "As GM goes, so goes the nation." Horrible thought.

Bailouts will only prolong the agony of a disfunctional banking/financial system.

Let the chips fall where they may. Why maintain a system that promotes too much debt?

"Why maintain a system that promotes too much debt?"

Because their purpose is to do exactly that.. Debt is like an electronic fence for a farm.. keeps all the livestock where they are supposed to be, and running on their little hamster wheels, generating value for the farmer. period.

chris

Reid and Ken are correct. I must admit that people like myself, who voted for "the lesser of the two evils" these many years, are partly to blame. So are those who were so disgusted or complacent as to not vote at all.

I voted for Bush in both elections because he appeared to be the less offensive of the alternatives.

What I find so embarrassing is to have to admit that I was a student of Alan Greenspan back in the 60's when he was yet a partner at Townsend and Greenspan, the Wall street consulting firm that he eventually closed when the Feds came calling.

He was a strict Lazier Faire capitalist and a staunch believer in small government with little interventive authority. It was the intervention of the Fed under his direction, that continuously postponed the needed corrections for an economy that was being fueled by credit cards and debt. And with each preventive action by the Feds, the consequences were put off and fiscal infection allowed to grow even further, far beyond the original cause.

When he saw that a recession was apparent, he pulled down the interest rates and while he succeeded in preventing a personally embarrassing recession under his watch, those low rates were what fueled the continued expansion of individual debt and artificially stimulated growth of housing prices and the banking mess.

Then the smart alec's like Barney Frank and Chris Dodd ignored the complaints of other legislators. Both those men insisted things were not amiss in lending and that Freddy Mac and Fannie Mae were not operating irresponsibly. Worse yet, they demanded that banks stop Red Lining economically poor neighborhoods and intimidated them into loaning practices inconsistent with common sense credit criteria.

With Greenspan's money on the table, the lax criteria of Freddy and Fannie and the politically motivated myopia of those in Congress, the rest of the story was predictable by any 2nd year high school student with average intelligence. That assumes of course that the Sophomore was not being given money by lobbyists from Fannie and Freddie. Don't hold your breath waiting for congressional commities to investigate who got money from lobbyists on that one!

Some people like to think the President is the end all and be all of power and authority, He is not. All he can do is ask and either veto or approve what is submitted. The Constitution makes that clear!

However, those who really do the most damage are those in control of Congress. Bush may deserve shouldering the blame for some things but it's the pot who is calling the tea-kettle black that is really to blame for this mess.

There is a lot of blame to be spread around. Unfortunately, much of it rests with us.

We elected those guys and continue to send them back to D.C. in spite of the fact that Congress' approval rating is a third lower than Bush!!

Figure that one out!

The fire hasn't even been put out yet and already some are blaming Capitalism as the cause. Both presidential candidates are endorsing what is nothing less than socialized medicine, The feds are now partners in banks all over country and now they are being cajoled into taking part in the automotive industry!

As evidence of how absurd this whole idea is, please take note of a historically funny event of about a decade back where a legal brothel in the Midwest was seized by the IRA for back taxes. The law requires that such a business be operated until liquidation or new ownership is found. So the IRS did so, much to the laughter of many and substantial embarrassment I am sure to the IRS.

Guess what?!

Under IRS management, the business failed!

The Federal Government couldn't make money selling alcohol or prostitution but they want to run banks, the auto industry and other far more difficult ventures!

Are we nuts or what?

L. J.

"less offensive of the alternatives"

I heard Ralph Nader speak when he came to Ottawa, and I was extremely Impressed.. What a absolutely fantastic man!! Also running in that election was a man named Harry Browne, one of the great geniuses of the 20th century, and then you also have Al Gore..

I am so shocked that George Bush, a complete and utter Redneck brain dead Idiot, got into power...that I had virtually written off the United States of America as a civilization at the complete end of its existence... I can't express just how sad it is..

I'm glad I'm Canadian, but politics here isn't much better...

The only person who may make a difference here is Obama. McCain makes me want to throw up.. I can't even listen to him.

Presidency of the Fed is clearly just a puppet position. He's hardly the true author of fiscal policy. He's just doing what he's told.

Bailouts are a novel idea, give money to the squirrels and expect them to stop eating nuts

When I think of all the money involved in this spectacle I'm angry. We hear of redistribution of wealth and some are irritated by the thought of it. But the middle class is the main source of revenue so the bailout money was a redistribution of wealth from the lesser to those who don't deserve nor need it.

The math says if the money used for bailouts had been split among every US wage earner between the age of 18-65 each would receive $400,000.00; this I believe would have turned the economy around with authority.