Dude, Can You Loan Me Some Cash to Buy Your Car?

Now we see the American automotive industry looking for a bailout along with the financial industry. Let’s take a hard look at what is being proposed here and, more importantly, who is proposing it. I personally oppose bailing out the auto industry. I opposed bailing out the financial industry too under the bill that went through. I am a believer in Economic Darwinism. But read on and see what I am thinking. Then let’s talk about it.

Here is the caveat to what I am seeing. The legislation we are talking about is being written and sponsored by Barney Franks, Democratic Representative and Chairman of the House Financial Services Committee. This is the same Barney Franks that, 2 months before the bailout of Fannie and Freddie became necessary, went to the podium and told America “Fannie and Freddie are fundamentally sound, that they are not in danger of going under. I think they are in good shape going forward. I do think their prospects going forward are very solid. And in fact, we’re going to do some things that are going to improve them.” Two months later…. bailout.

Furthermore, Nancy Pelosi and Harry Reid are both using their influence as leaders of the two sides of Congress to get a quick passage of this bill that would essentially give $25 billion in emergency aid to the auto industry. In exchange, the federal government will have an ownership stake in the big three auto companies. So coming soon to your financial outlook is a scenario where you can borrown money from a bank with the federal government as part owners in order to purchase a car from an automaker where the federal government has the same position.

I don’t like it. I don’t like it one bit. First of all I understand the position we are in with the banks and the auto industry. I understand that people will lose jobs if they fold. But I also understand that when one company falls down, inevitably another steps in to replace it. Honda and Toyota have been eating into the big three’s market share for years, this just speeds up the process. It is the nature of business. One failure is another’s opportunity.

Second, these three companies ran their own fortunes aground. They chose not to stand up to the unions about the ridiculous demands they were making. They chose to make business decisions that didn’t quite work out. And now they want the American taxpayer to bail them out. They want us to fund their shot at screwing up again. No thanks. If it was my call, I will miss you Ford. I will have fond memories of you Chevy. But you perish the same way every other company that doesn’t practice sound business does.

Finally, How did we get to the point where America thinks it is a good idea for government to start having a stake in private companies? Isn’t it insane enough that our future  President thinks that private industries that work hard and succeed should have their wealth taken away and redistributed? Now we want the government to help run that private company? How many steps are we away from all business in America being state run…..

Comments

  1. I am so mad about this I can hardly see straight. This is what all of those political donations buy the big companies. We need a bailout, and remember all of that money we gave to your campaign. The Bush administration owed the big oil companies and that got them in trouble. But both parties owe the financial institutions and the auto industry. I saw that Citi gave a large donation to the Obama campaign. Should they ever be in trouble, you can bet they will call in that marker.

  2. Raul and I have had many discussions about these bailouts. In our own town, the Cincy Zoo was trying to pass a tax to help ‘bail out’ it’s own failing business. If it’s failing, hire someone to fix it or find an alternate and creative solution — not throw more money at the problem. We have the same issue with the schools here as well. Bailouts don’t happen in the real world. If you owned a failing business with a track record of not doing well, you have 2 decisions: continue on a path to sure failure, or bite the bullet and choose to attack the problem head-on, even if that means closing down. The first solution seems less painful but doesn’t fix anything. The second one stings like a mother but corrects the problem.

    For years, American cars have been inferior pieces of junk in my opinion. Honda and Toyota have infiltrated the US on such a mass scale that we should not have an issue. These are better products and they are now made in the USA. What more is there to discuss. GM, Ford, Chevy, you’ve had your chance to compete but you blew it. Game over.

    For the financial bailouts, since when did we get in the bad habit of spending outside of our means? Shame on our Govt. for continuing to advocate this bad habit.

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