Bailout fever
Everyone is going to the federal trough for bailout money now. It’s like a game of musical chairs; once the government starts playing the bailout tune, everyone scrambles to get in on it lest they be the company that was foolish enough to attempt to survive through normal means, i.e., trimming operations, greater efficiency and, if necessary, bankruptcy.
The list of industries seeking bailout money has grown to absurd proportions. For example, the following entities are now being considered for bailouts:
3. The City of Detroit (not an industry, but they always have their hands out).
And this is after the government already overstepped and decided to prop up AIG, which mainly deals in automobile insurance.
I understood the need for a bailout of the credit markets because every other aspect of the economy — from GE to a local restaurant — is directly affected by a lack of credit. Using some government money to get the credit markets moving was at least a plausible way of preventing the economic crisis from spiraling out of control. However, when the government starts to prop up individual companies and sectors to prevent layoffs and bankruptcies, then we’re in serious trouble.
A key part of the American economy has always been our general willingness to allow companies to go through hard times, even if that harms workers and investors in the short-term. We haven’t socialized risk. This is why American recessions are usually short, whereas in Europe and Asia, where they lack the gumption to allow the market to work itself out, recessions tend to be much longer and more painful.
If we are weak and try to bail our way out of this, we may be in for a long haul indeed.
While I think Detroit city government is competence-impaired, note that the article says they are following the lead of the biggest suburbs in the metropolitan area: Sterling Heights, Warren, Livonia. It’s a pandemic, and for once, Motown caught the fever a little later than most.
but didn’t the credit card compnaies iniate the bankruptcy “reforms” that make it near impossible for the cardholder to get “bailed out’….and now the taxpayers/cardholders must bail them out? Something is terribly wrong here
We must not as a nation forget the role the high cost of our dependence on foreign fuel played in the demise of our automakers. The exorbitant cost of gas the past year has done serious damage to our economy and society. We need to take lessons from our mistakes.WE also need to get out from under the grip our dependence on fore gin oil has on us. Why not take some of these billions and invest in America becoming energy independent. Driving an electric car would cost the equivalent of 60 cents a gallon. The electricity could be generated by solar or wind power. Green technology would create millions of badly needed new jobs. What America needs is a green revolution. It is time for us to move forward with alternative energy. I just read Jeff Wilson’s new book The Manhattan Project of 2009. I highly recommend this book to anyone who is concerned about the downward spiral of our economy and it’s effect on our society and would like to see our country become energy independent!
Sherry,
There’s alot to dispute there:
Driving an electric car would cost the equivalent of 60 cents a gallon.
Where did you hear this? With the cost of batteries and the power drain from a stereo, air conditioner, etc., I seriously doubt we’re talking about the equivalent of 60 cent a gallon gas. Moreover, there is the inconvenient issue of range…
The bottom line is that if the electric car were economically viable, people would be driving them already.
The electricity could be generated by solar or wind power.
Those are very cost ineffective and neither produces a constant stream of energy. If it’s cloudy or not windy, solar and wind don’t work. Accordingly, you need a regular nuclear or fossil-fuel plant to produce the lion’s share of the power.
Again, if these were effective technologies, their use would be far more widespread. Instead, they are heavily subsidized by governments wanting to look green.
Green technology would create millions of badly needed new jobs.
Sure, but more jobs would be destroyed than created. You can’t simply have the government invest tax dollars in cost-ineffective technologies and create more jobs. It doesn’t work that way. You’d have less jobs at the end of the day; that’s part of the trade-off. Green policies tend to sacrifice economic productivity for the good of the environment.
I understand the frustration with energy politics and the problems associated with our reliance on fossil fuels, but indulging these ridiculous fantasies isn’t helping anything.
Judge Richard Posner thinks the auto industry should be bailed out….
This isn’t a Ponzi scheme, just a bailout every time you play, Bailout! The Game.