Big-Three Bailout

[3fingeredsalute]

Okay -- this is an obvious political post, but I am almost ashamed to say that it may be me switching teams. I am FOR this political bailout due to what it will do to the American economy (which has many causes for ruination, especially the GOP government and tax supported loopholes for free SUVs for any family who decided to declare themselves a

Comments

[sestree]

I keep waffling back and forth on this issue.

It's difficult because on one hand our economy is at stake. On the other hand, the big 3 obviously didn't learn from the last time did they? They're still making cars that are not competitive and using non competitive business practises.

The one thing I do remember reading (in regards to the credit situation but it applies here) is we're in territory we've never been in before. That means only history will be able to decide if the decisions made were the correct ones.

[3fingeredsalute]

The economy should not be at stake over three companies. My point was that NO company should be too big to fail. The first miserable realization was that the banks declared they were in over their heads, and now the auto industry. We did NOT intervene with blank checks when the airline industry nearly "crashed" (thank you, thank you) or when the telecom/datacom industries "couldn't imagine Y2K would impact their sales" (oh, don't get me started on that rectal-cranial insertion....)

But yet, here we are. What I want to see is smaller companies who, if they fail to this degree, their presence will be missed, but not take the entire country into a death-spiral of economic doom.

Now that all that is said -- I truly believe the biggest contribution to our current downturned economy is the auto fuel industry. But... going into that would be the beginnings of an entirely different journal entry.

[sestree]

No the economy should not be at stake over 3 large companies - however - consumer confidence is and that drives our economy.

when the bunnies are frightened they squirrel away their money in mattresses and it's out of circulation. When the bunnies feel more confident, they spend and help drive our economy.

Strange analogy but my rather lovely econ instructor used it to explain a lot and she'd lived through the great depression.

We can't compare this to AT&T or the airlines because this has the added impact of the credit crisis and bank bailouts. Is it just one too many dominoes in a string? possibly. I hate the idea of giving them money though - truly I do. It could set an ugly precedent and we have to wonder 'who is next?'.

That's why I waffle back and forth. Often a crisis is not one single thing but a cascade of events.

Great topic and discussion btw :)

[3fingeredsalute]

I do not in any way tie consumer confidence to this auto-industry bailout. Consumer confidence is down more due to the credit companies and Freddie Mac/Fannie Mae (who names these damn companies?) than any commodity producing company. I daresay that few people would be impacted if Saks Fifth Avenue went bye-bye. No one flinched much when Bennigans got the axe, but yet they did. Consumer confidence is down because gas prices became unaffordable, which cut meager household budget margins to the point where credit card and mortgage payments got too difficult to pay

[sestree]

Sacks 5th Avenue doesn't employ that many people nor have that large an effect on other industries. The auto industry impacts a great deal of other industries.

When people are scared they don't buy and that impacts the retailers and other businesses. Also people who strongly impact the attitude of the economy are shockingly the blue collar workers whose livelihood is in question. That's not really trickle down economics. When jobs are impacted at this level is causes problems. That much is a given. This alone? probably not that big of an issue. Combined with the credit crisis and housing? it could very well turn out to be a big problem.

Again, I'm just not certain throwing money at the situation is a good idea. I just don't know. If I did I'd definitely be making more money and annoying people for a living instead of just for fun ;) Oh and I definitely agree it's a flawed system - if I knew how to fix it? well see above ......

[3fingeredsalute]

Sacks 5th Avenue doesn't employ that many people nor have that large an effect on other industries. The auto industry impacts a great deal of other industries.

I believe that was precisely what I was trying to say.

I don't believe that general Americans are scared of the impact of the auto-industry's blue collar workers. OF COURSE the impacted workers are scared! But as a statement of economic collapse, I believe that fear and those layoffs are two entirely different things. Other than that, we appear to agree on that paragraph completely.

The trickle-down economics was a separate point about how the whole economy is flawed, and was in reference to your bunnies squirreling away their money in their mattresses. I don't believe it's the bunnies with their nuts in a bunch -- it's the bears. The bunnies already had to plow through their mattress-stash's nuts until there is no more nuts left for the economy, except for those in the bears' mattress.

[sestree]

I don't believe it's the bunnies with their nuts in a bunch -- it's the bears

That's quite possible and the little people are the ones that suffer for that in the end.

I read a commentary (that sadly I didn't bookmark) about the possible pros of the goverment taking over the auto industry. I don't think it's feasible but I certainly don't buy the whole "if we go into bankruptcy nobody will buy our cars" either. I do wonder if other companies who aren't having quite these issues would purchase the factories and churn out a better product without the unneccessary overhead. Then mostly it would be the execs out of a job.

hmmmm another point to ponder.

[3fingeredsalute]

Great topic and discussion btw :)

Gawrsh, thanks!

I tend to stay away from these types of discussions, mostly because it has the tendency to piss people off. As long as no one takes this too personal, makes immature threats and "your mom" jokes, I'll stay interested enough to try some other ideas. Truly, this has been enlightening for me already -- even if I don't always agree, I am always learning.