Grab a bucket; we are bailing out the auto industry
Thursday, December 11th, 2008
It looks like Congress has finally come to terms with the Bush Administration on bailing out the auto industry. I expect within days the deal will be officially announced. Some view this as an essential point to stave off U.S. economic Armageddon. Others view the bailout as robbing the U.S. population of their hard earned paychecks so companies with bad business models can continue to do everything a viable business should never do.
Environmentalists hate the deal because the money is to be taken from funds allocated to developing greener vehicles. Some of the money could also be used for the big three to continue legal battles with states who have adopted strict CAFÉ standards. Some environmentalists say we are essentially giving Detroit’s “big three” money to turn around and sue the hand that gave them the money.
Even the corporate leaders of the “big three” would face restrictions on their compensation, essentially eliminating some of the major perks included with being responsible for managing three of America’s largest businesses. Bye, bye corporate jets and golden parachutes.
It sounds like nobody is really very happy with this deal.
So why are we doing this? Many agree that allowing any one of them to fail would be catastrophic. Is this a sign that capitalism is a miserable failure? A shop owner called me yesterday stating that consumers have spoken with their wallets. He argued that Detroit is not making products consumers want and so asking consumers to then in turn support the companies with tax dollars is like forcing them to buy a vehicle without getting anything to put in the garage.
This is an issue that I am sure all of you have diverse opinion on. So let’s hear them. What do you think?