Bailout Bashing

Posted: December 10, 2008 by April Watkins in Automaker Bailout, Bailout, Current Issues, Economy
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I don’t know if there is one thing that upsets me more than the others about the “Bailout Plan.”  I can understand the necessity to Bailout the mortgage lending banks so that refinancing can begin and people can stay in their homes.  However, I have very little empathy for those people who bought houses that they simply could not afford.  That’s like going to buy a $100 pair of shoes with a $10 bill in your pocket.  You know it just is not going to work out in your favor at the checkout counter.  Moreover, I’m troubled that we apparently have some citizens who are so naïve or trusting or, frankly – just plain stupid that they have to be told that they can’t afford the $500,000 house on a $30,000 salary. This is beyond not reading the fine print; this is what I moronic.

I’m appalled that the problem became so enormous before any of the media caught on.  I’ve spent enough years in D.C. to know that nothing is a secret.  Someone in somebody’s office knew things were going downhill and said nothing – where did the buck stop? I’m also ticked-off at the fickle liberal media for not naming names and forcing the perpetrators to account for their part in this mess, especially when everyone on Capitol Hill to Wall Street knows who is to blame.   houses-for-sale

However, I am not surprised that our stalwart politicians (Democratic pols this time) kept turning their heads, so as to see the shining city rather than the growing subdivisions of empty homes from foreclosures.  [It’s amazing that their heads didn’t just pop off.  Now that…I would like to have seen; at least it would have had an amusement aspect].

As I have pointed out in previous articles, I am no economist; nor am I an expert on how much U.S. debt is held by other countries, nor do I know what a massive default would do to the global economy – but I can take a stab…we are damned if we do, damned if we don’t.  Granted, the auto industry has been the backbone of manufacturing in the U.S. for more than a century. But…push has come to shove for the automakers.  We’ve been telling them for years that their vehicles are not holding up as long as the Japanese or German cars; nor are they as fuel efficient as our technology can produce.  Even their design and styling is simply atrocious on many models.  Did they think this party would never end?  

money-handoutHowever, facing energy crises, environmental issues, newer technology and a younger market, you would think that the American automakers would be reinventing themselves in order to survive this economic catastrophe. Sadly, no.  Instead, they have come, again, hat-in-hand to Congress for additional Bailout money.  MORE!  Possibly $35 Billion more than the initial $25 Billion! Had the airlines done this there would be outrage and demands for mergers, acquisitions, inventory reduction, etc.  Did the furniture market beg for taxpayer Bailout help when it saw its manufacturing sail away to China?  Did the clothing manufacturers beg for taxpayer support as its factories moved to third-world countries for cheap labor?  What about the music industry, whose products of records, tapes, and CDs are now obsolete due to new technologies?  What about newspapers who are struggling to survive in the age of Internet and 24/7 Cable news? 

The rest of American entrepreneurship took its hits and got up and retooled or adapted.  No sensible person wants to see job losses, but to save one industry over another is a difficult thing to justify.  Airlines, specifically, have been bailed-out several times, but not without a detailed plan to streamline costs, merge or sell off inventory, any action showing a gain to their bottom line – a defined plan of action was required. 

This same standard was apparently, NOT true for the auto-lords.  This week Congress told the big three that no additional money would be released without a solid business plan.  WHAT?  Our Congress released $25 Billion already WITHOUT a definitive plan from each to show that they could become solvent again? 

To say I am incensed with Treasury Secretary Paulson would be an understatement.  I know he has a hard job… but, paulsontough!  He signed up for it; if he couldn’t take the heat he should have stepped down.  McCain was correct, in my opinion, that Bush should have demanded his resignation.  Sec. Paulson was entrusted with the Treasury of the people of this nation and he failed to secure solvency plans or repayment options for the first round of Bailout money.  He may very well be one of the most brilliant financial minds in the kingdom of money, but this gaff has discredited his reputation and has lost the confidence of the American people.  It is past time for him to step aside. 
                                                                                                                                                                                                                                               –private-jetHowever, the one thing that really angers me about the Auto Bailout is their arrogance in it all –  from top to bottom. When CEOs and Auto Executives are accustomed to such extreme wealth, that using three private jets from (the same town) Detroit to head to (the same town) Washington, D.C. to beg for Billions additional taxpayers’ dollars, didn’t even strike them as a “bad image,” Congress should have kicked them all down the marble stairs. Furthermore, when Union leaders can legally hold a company hostage with tactics such as nonsensical negotiation, including demanding per hour wages and benefits that would shock Silicone Valley, something is amiss.  Union demands have caused countless companies to take their manufacturing to other countries where the company can meet the payroll, pay the corporate taxes and still make a profit.  America’s corporate laws and Union demands on large manufacturing, as well as the trickle-down effect to smaller suppliers, make profits and investor returns almost impossible in some sectors.  I would venture a guess that most Americans are not unionized, as most jobs are generated from small independent companies.  So when the average American Joe and Jane discover that their hard earned taxes are going to pay, primarily, Union debt and exorbitant wages, rather than be put into retooling, innovations and new technology – heads will roll.  Frankly, seeing their heads pop off would be more entertaining, but I digress. 

There was a time and place for Unions: to help poor working people be treated fairly; to end child labor; to improve child-labor-1920working conditions; and to stand together for “fair” pay.  But now, Union officials have inserted themselves into company management in such a way that they often override the manufacturing and marketing flexibility of the company to properly produce and price a product for the competitive market.  In addition, most of our Unions, specifically the U.A.W., have become behemoth entities of their own, using intimidation and threats as incentives for workers to join.  This seems to be a very non-productive arrangement and certainly not one that benefits the American worker or people.

How do you feel about your taxes going to this Automakers Bailout, Part II, which is supposed to save our manufacturing and restore jobs to laid-off, unskilled labor autoworkers that dictate a Union wage of, say $75 per hour and benefits?

Kicks you right in the stomach, doesn’t it?  Call your Congressmen, your Senators and make YOUR voice heard.  After all it’s your money…and that is…Why It Matters.

 *Note: At the time of this writing the Bailout issue was and is still before Congress.  Changes in Bailout funding and requirements for such taxpayer funding to be released from the U.S.Treasury remain unstable.   

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