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“Big Three” bailout review
As expected, the House has signed off on a bailout plan for the big three automakers. Actually, let me rephrase. The House has decided to give the big three money, without any real plan in place. As a result, while the bill passed last night with a vote of 237-170, a struggle in the Senate remains. Let us review.
GM, Chrysler, and Ford, under the bill, will receive an approximate 14 billion dollars in low interest loans. However, Ford after further review of their financial status has requested that they take no money at the current time; instead they asked to receive a line of credit should they need the money further down the road.
The Government will appoint a car czar, whose responsibilities will be to create and negotiate a restructuring plan for both the companies and the creditors. If by March 31 the czar’s review reports that no workable plan has been instated, the czar can and will recall the loans and force bankruptcy upon the automakers.
Joel Kaplan, White House Deputy Chief of Staff for Policy, said that by the March 31 review they must “either have a long term plan that’s viable or we get our money back”. He went on to predict that “if we call our money back which is required under this bill then these firms are not going to be able to survive”.
To understate it, the reviews from the Republican side tended to be thumbs down. The plan, or lack there of, was condemned by Republicans across the board, calling it, “ass backwards” (Republican Senator David Vitter) among other names.
With a near look of disgust on his face, Senator Jim DeMint (R) declared “Americans are not stupid they know that this bailout is only a temporary solution”.
But can you really blame them for being weary of this approach?
As our current President Mr. George W. once said, “Fool me once, shame on you. Fool me twice…uh…uh…” Ok, I won’t go there. But seriously, I think of it like this:
When I see a homeless man on the side of the road, my first inclination is to give him money, however, most of the time I stop myself. Why? Because I am afraid that he will waste my money on the same things that got him homeless in the first place (booze, drugs, etc.). So, instead, I buy him a loaf of bread and block of cheese with the couple bucks I was going to give him.
By Congress just passing the big three a check, why will they all of a sudden magically know how to save the business that they just ran into the ground? What’s worse, if and when that happens and the March 31 review comes around, now we won’t only have the entire state of Michigan in shambles, but Congress will be out a cool $14 billion.
It is said that at least 10 republicans’ approval is needed, likely more, for the bill to pass. I am pretty confident that it will, I only hope that in review they provide a more structured approach when it does pass.
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I find the trend of confronting this country’s economic downturn with federal bailouts on large corporations particularly disturbing for two reasons:
One- This country is founded on a capitalistic free market economic system in which the laws of supply and demand rule. These companies have managed to dig themselves into a hole so large they expect the federal government to help them. It was their own failures that allowed foreign companies to make a better, cheaper product that attracted American customers. Furthermore, these same companies that claim a bailout will save thousands of American jobs, also just spent the last 25 years outsourcing labor to foreign countries to make bigger profits. (I believe a polite FU is not out of line…)
Two- To agree with the article, how is 14 billion going to help these companies survive longer than the immediate future. This is obviously a long term failure on the management of these huge companies. Furthermore, who is to say that a federally appointed car czar is going to be able to magically fix or approve of a plan to fix these companies? Who is this car czar? How has he/she been gifted with the key to success in this fluctuating modern global economy?
PS- Is anyone else noticing that the federal governments solution to all problems is to expand. I fear this increasing trend towards a fascist state…
Michael Wrote
It seems that not only do they bailout companies, and banks against the wishes of the american people but they always take more than they say they are going to. 700 billion turned into 6 trillion dollars?!?!? Ironically congress would probably be better if we had a national lottery for seats instead of elections.
JumpingjackFlash Wrote
or you can just ask IL governor Blagojevich to select seats for every state…he seems to know how to handle such issues.