Posted on 12/14/2008 11:24:20 AM PST by Star Traveler
If government were run on the business principles of profit and loss, the decision on a bailout for the Big Three automakers would be obvious: Absolutely not. Companies that make poor investments and unpopular products end up in bankruptcy court —- without salvation from the taxpayers.
But the decisions of government are not simple balance-sheet calculations. Political leaders must take into account additional considerations, including this one: What’s in the best interest of the country? Aiding Detroit, as Congress is now considering with $15 billion in bridge loans, is the right move because failure to do so poses even graver economic risks.
If this scenario were occurring a few years ago, with a healthy economy and low unemployment, the failure of General Motors, Chrysler and even Ford would still jolt the nation’s economy. But the free market would do its work to limit the damage. And business executives who made bad decisions would squarely face the consequences.
But we are not in such a time. The American economy has been in freefall for months. Confidence in American business —- as measured by investment in corporate stocks —- has plummeted, with the Dow down 33.6 percent this year, on track to be the worst yearly loss since 1937. The economy shed 533,000 jobs in November, the biggest one-month drop since 1974, and unemployment is projected to go far higher as the recession deepens.
Now is simply not the time for Congress to watch two, maybe three, companies go under when they directly employ 227,500 workers and indirectly employ thousands more. In the midst of the present turmoil, the U.S. economy needs steadying, not more body blows to the system.
(Excerpt) Read more at ajc.com ...
And so..., no matter what one thinks about bailing out these auto giants, they've got so "down-the-line" connections and business deals and suppliers and so on, that it *definitely* would be even more devastating for the U.S. economy.
I know I've seen posted here, many saying to let them go bankrupt and out of business -- but -- be sure..., if that is allowed and they don't keep going as a "on-going business" -- it will wreak havoc on the U.S. and many, otherwise, good people who depend on the spillover effects from the business done by these giants.
This is even more evidence (a "cascade" and "avalanche" of evidence) that we are slumping, every more surely, into the Great Depression. It will take hold in 2009 and be probably as big and even worse than the last big one we had. Only this time, there is a safety net underneath some of the poorest in this country -- which -- will be paid for by those who "continue" working... (such irony..., indeed, for those who are left still working...)...
This was posted in the wrong area before (what the Admin Moderator said), so it’s posted in a different area. It’s not supposed to be “News/Activism”...
The last post was at — http://www.freerepublic.com/focus/f-news/2148634/posts
Okay, it’s here to comment on now, again... :-)
What if they do not turn a profit? They should not be supported forever.
What led me to this article was the following one —
GM, Chrysler Bankruptcies Would Cause Turmoil for U.S. Economy
http://preview.tinyurl.com/5majcb
The best thing about the auto industry crisis and the coming recession (or maybe depression) is that it will give us the opportunity to destroy the UAW and all American unions. Once the unions are gone, America can become competitive again.
I’m notifying you that the post is back again, after correcting it per the Admin Moderator. Sorry your comments got deleted...
Of course there would be great turmoil if these companies collapsed. But the main reason congress is going to try to save these companies (notice I said “try”) is that they don’t want a couple million Americans, most of whom own guns, wandering around and reading about the billions given away to save financial companies who in turn pay their incompetent managers million dollar bonuses.
Be that as it may IMHO unless the union gives serious concessions all the loan money in the world will be entirely wasted.
Add to this mix the attempt by an Obama Administration to shift the USA to a totalitarian socialist system and the chances for serious repercussions approach 1.
You said — “The problem is that to give the US Automakers the money also gives it to the unions.”
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You might as well start buying strictly foreign vehicles, then... Also, don’t forget to keep buying that imported oil, so we can get the terrorists to “finish us off” with our own money... LOL..
You said — “The best thing about the auto industry crisis and the coming recession (or maybe depression) is that it will give us the opportunity to destroy the UAW and all American unions. Once the unions are gone, America can become competitive again.”
—
I seriously doubt that this sort of thing is going to destroy unions, actually. More than likely, a severe economic downturn will breed much more union activism than every before. It’s the “unintended consequences” that you’re going to get...
Now.., the big problem is that the companies could disappear, after a liquidation of everything (with certain assets being cherry-picked over by other companies to use for themselves). The many down-line companies and/or resources could disappear, especially with the economy going into the Great Depression. Many of the associated businesses and money spent from them will simply dry up.
It’s the down-the-line ripples which will wreak havoc on the economy, which is already headed down into the Great Depression. Might as well shoot the economy in the head and just put 25% of the workforce out of work, like the last Great Depression...
But, the difference with this particular Great Depression is that it will put more of those 25% who will be out of work, on the government rolls for personal subsidies, which, ironically, will be paid for by those who are complaining the loudest about sinking these other companies.
At least if this particular workforce keeps working, they won’t be on food stamps and government housing... LOL...
Otherwise, what you thought you were putting back in your pocket, you ended up having taken it out of the other pocket to feed and house millions more people not employed any longer... :-)
Sorry I buy what is the best bang for my buck... If I buy a Nissan or a Kia so be it..
I'm no fan of the American car companies, but my husband's business is indirectly dependent on them, as are many others.
Kind of a 'damned if you do, damned if you don't' situation.
You said — “What if they do not turn a profit? They should not be supported forever.”
That’s correct, not forever... They should be supported no more than we’ve been supporting the Iraqis and the Afghanis in fighting this war (which is supposed to help “us”, too...).
If we can spend that kind of money for some extended benefit to the U.S. and it’s foreign policy and to promote *freedom* around the world (as Bush makes clear that is the case here with Iraq and Afghanistan) — then I would say that we should spend *no less* that we’ve spent on Iraq and Afghanistan...
Does anyone have the figures on how much we’ve spent on the war in Iraq and Afghanistan. I would use *that figure* as a benchmark to not go beyond.
I say that — on the *principal* that you spend just as much on one’s own internal country affairs as we’ve been willing to spend on foreign policy affairs and fighting wars (and I’m not saying that Bush should not have spent the money fighting for the cause of freedom, worldwide..., mind you...).
The UAW however, needs to go completely out of business.
You said — “Kind of a ‘damned if you do, damned if you don’t’ situation.”
Yeah..., and a lot of good FReepers are going to be affected in a lot of “unintended ways” if they push for things that are the equivalent of “shooting oneself in the foot”... unfortunately...
You said — “Sorry I buy what is the best bang for my buck... If I buy a Nissan or a Kia so be it..”
—
Well, I just hate to see money going to foreign enterprises (of course, after they pay whatever minimal amount here in the U.S., then take the rest “home” with them).
I hate seeing the money of the U.S. going to the Communist Chinese as they continually send in garbage stuff to us and rake in the money that they put back in the military to fight us in the future (as they’ve made clear, by their generals, that they intend to do).
And I hate seeing the money sent out of the U.S. by all the oil that we buy and see it end up in the terrorists hands who then go to “blow us up” and train even more terrorists here in these United States.
We just keep *sending money outside* the U.S.
It’s about time we sent money *inside* the U.S. .... LOL...
Sorry comrade, it is none of your business in where the money goes.
What a line of BS. 1. Bankruptcy won’t cause them to cease operations, it will allow them to get out from under debt and absurd union contracts.
2. What good does it do to prop up GM and Chrysler, if their cars just continue to pile up as unsold inventory. Unless the government wants to start buying GM cars, then throwing money at GM without first making them competitive will accomplish nothing except taking more money out of the pocket of the Americans that actually produce something.
3. If GM, Chrysler & Ford do stop making cars, the American people will still need the same number of cars next year, they will simply get them from Toyota, Honda, Hundyi, VW, BMW etc. All the transplants have excess capacity and can hire more workers and produce more cars. Those companies supplying GM can compete for the business of the profitable car companies.
4. Sell your Socialism somewhere else, we’re already well stocked up, and remember. Socialism always generates the exact opposite of its stated intent. If the government throws a hundred billion at Detroit, in five years we will be in the exact same place with 100 billion of additional debt we can’t pay.
I agree.
To me, it makes more sense to bail out manufacturing enterprises than the fiinancial companies, although I'm not a fan of bailouts, and I don't know that our country can afford to (or not to) bail out anyone...
I'm just very afraid that if the auto industries go down, many other peripheral industries will as well.
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