Automakers Get Bailout

By | Dec 19, 2008

This morning the White House announced $13.4 billion in loans to the Big Three automakers in Detroit, with an additional $4 billion handout waiting in the wings for February. In return the automakers will let the government inspect their books and promise not to fly their executives around in fancy jets.

There is a satirical cartoon being circulated across the intertubes featuring what appears to be an automotive advertisement straight out of Car Magazine. The caption reads to the tune of “We don’t need to compete. You don’t buy our products but we get your money anyway.” Ouch.

The popular perception is the government is in a tight spot – either it pays to bail out Big Business or the livelihoods of everyone in the country go down the drain. Executives bandy on about the bailouts not being enough; they are upset not to get their multi-million dollar bonuses this year – but its the sheet metal worker in the factory that loses his job and has to worry about where he is going to find food to put on his family’s table.

We’ve seen this before; markets correct themselves and corporations die. Workers lose jobs in hard times. Executives lie to save their skins and end up going to jail. I like the septic system analogy – all of the crap rises to the top and has to be cleared out periodically; when that happens a lot of the important bacteria are removed from the system as well. Just like the septic system, the economy recovers in time. Mismanagement and greed plus the misplaced faith in the power of capitalism (I’m not saying another system would be better) to maintain logic and order have put us on the brink of a major correction that will make the 1930s look like a small recession.

A lot of us stand to lose our jobs and go hungry. Throwing nearly $1 trillion at trying to steady lumbering juggernauts is not only irresponsibility, but may be looked upon by history as downright criminal. By pushing the country even further into debt our ability to help our own people as times get worse is being traded for the fantasy that throwing money at dying relics of the industrial age will somehow protect our workers. For shame.

3 Comments so far
  1. Canadians Follow Suit : Ignorant Mouth December 21, 2008 11:37 am

    […] It seems that the Canadians are following the Americans and are also giving a bail-out package to the auto industry, a key industry in southern Ontario with a four billion dollar (canadian) series of loans.  This is very similar to what the United States announced a few days ago. […]

  2. Culture of Mediocrity : Ignorant Mouth January 2, 2009 8:09 pm

    […] to create a business that produces products which fail to excite its customers. I’m still not convinced the bailouts will even work in the long-term. Unless the Big Three improve their products they will continue to be disappointed […]

  3. […] a report by Reuters we learn that GM, unlike other recipients of government bailout money, has invested in GMAC bank restructuring with the intent on fueling more credit business. Wait a […]

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