Bail out? – No dice…

The federal government has already spent $350B plus the bottomless money well for AIG on this so called “bail-out.” No-one, not even the people who have received these large sums, can tell us where the money went, what it was used for and there has been no apparent effect on our economy. This goes to prove that a quick fix will never work; nor does trickle down economics.

A simpler, more effective long term, bottom up approach makes more sense. Bailing out the auto industry will not work either. Here is a better idea:

Have the federal government mandate all mortgage lenders (especially Freddie and Fannie) offer a 3.5% 30yr mortgage to all US home owners. This would put hundreds of dollars per month into households for saving, spending or reducing debt. And, in the case of those facing foreclosure, it could help people keep their homes. It would help fix the economy from the ground up and give us a stable foundation for the road to recovery.

Otherwise, we need to objectivly abandon the auto industry, let them fail or consildate, let those workers go unemployed, let their homes enter the foreclosure bucket and THEN the market will bottom out. From that point reform can insue.

The last stimulus package and the recent bailouts are obvious failures. Congress and the next administration are talking of another large cash infusion stimulus package. Einstein described insanity as “doing the same thing over and over again and expecting different results.” Apparently we are insane.

Embedded video from CNN Video

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3 thoughts on “Bail out? – No dice…

  1. There really is no good answer to the auto company bailout question. On the one hand, hundreds of thousands of people will be out of work, and that could have a devastating effect on our economy. On the other hand, if we bail them out, who’s to say that it will fix anything?

    In this little debate, I tend to come down on the bankruptcy for the auto companies side of the argument. Despite how much it may hurt the economy in the short run, I think it would be far healthier for our country to force them to go through some painful restructuring.

    It seems pretty damn obvious at this point that the U.S. is no longer a manufacturing based economy. Sure, manufacturing takes place, but we are moving ever more quickly to an entirely service based economy. It makes no sense to pay all of the unnecessary extra charges to employ an American worker to do the same job more poorly than a Japanese or Indian worker is willing to work for.

    If we throw all of this extra money at the auto industry, what will be the outcome. None of the American auto companies have offered a coherent plan for the future and they have continually cranked out shoddy product. I know that when I was looking for a car, I made sure to avoid American made cars because I knew that they were sub-par at best. Even someone not familiar with cars can tell by looking at a Ford or GM car that it has serious shortcoming when compared to anything made by most foreign companies for a comparable price.

    Really, we just need to let the recession do its job. A recession, as painful as it is, should not be a surprise. It is a normal part of a functional economic system. It is the best way to weed out those companies, like Ford and GM, who no longer have any competitive reason to be in the market. It’s not that I’m heartless or that I don’t care about American jobs, but people need to be more realistic. It is time to cut those losses that we have already experienced and focus on doing what is needed to get our economy running efficiently again.

  2. Eh, again I think we should be very stark and blunt in the approach. We are pussy footin’ around with evading the inevitable.

    My last suggestion would be this:

    Big 3, close ALL of your overseas plants and reopen the US job and THEN I will give you my 25b in tax money. Deal?

  3. First, I don’t support the proposed bailout, but further pose the question of degree of certainty that an intervention by the Government at this point would turn the situation of the automakers around. Would it, could it, do any more than prolong the inevitable bankruptcy, at a pretty hefty cost mind you, that is looming on the horizon for the likes of GM?

    If GM were to file bankruptcy, it may not be the detriment to the organization that many profess it to be. Could it not provide a fresh perspective on a more competitive cost restructuring that could support those workers who remain. Shareholders have already lost much of the equity that would, in fact, disappear in a bankruptcy. True shares rose 16 cents this week, but have fallen over 90% this past year. That’s huge, and I don’t think the potential for recouping via bailout is what is needed. A different approach by the automakers is critical to success forward.

    Automakers, not just GM, need to learn to operate a leaner, more efficient company. Perhaps looking at dispersing of needless toys — such as the CEO corporate private jets. There’s a thought that perhaps should have been more closely studied before they got to this point. I realize that this alone didn’t get them where they are, but it sure does smack in the face of humble request for support when each of the Big 3 CEO’s roll up to the meeting in private jets, and show no remorse, no thought to need to rethink….As well, your proposition of dispersing of overseas plants could very well be included in a ‘pre-packaged bankruptcy’ that carries with it a solid, leaner more cost effective plan forward. Take care of the workers who remain, turn to strategies for supporting communities that have supported them…carry this thought forward and we just may get somewhere.

    I realize there is potential for loss of consumer support and growing concern of residual value of the cars purchased, but if approached openly by the automakers it could work. Regardless of strategy, you can’t continue to do what you’ve always done and expect different results!!

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous :)

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