American Automakers and their bailout
Posted in Rant, Reflection | November 18th, 2008 | No Comments »
The new hot potato topic in the financial industry is now the bailout of the automakers, the big three — Ford, GM, Crystler, and congress invited top execs from these companies to testify under the banking committee and explain why the need this bailout. These companies were making bank on the SUVs during their run at the top… while these gas guzzlers consumed resources and helped destroy earth, the execs were making top dollar bonuses along with their Exxon partners. Now they want our money to help them survive.
To be clear, I side with the republicans on this issue. These automakers simply failed to compete in a changing environment that favors smaller, more efficient vehicles. Foreign motor companies like Toyota and Honda overshadowed American automakers with their hybrids and small cars like the civic and accord. This competition is the core of the economic system we call capitalism; the strongest companies survive and make money while those that don’t fail and go out of business.
The argument is that their failure will cripple the economy even further due to job losses both directly and even moreso indirectly. Its scary to think about what would happen if the reported 2.4 million jobs that are tied to the auto industry were to simply disappear. Everyone from suppliers to dealers to advertisers are at risk. But what makes this industry different than any other? What makes these companies different? Retailers are hurting right now, what about them? I mean, CircuitCity filed for ch. 11 just like many other companies have and will continue to as the economic turmoil gets worse. When do the bailouts stop and America gets back to capitalism that allowed these companies to get this big in the first place?
Maybe that’s the problem though. These companies grow far too large and get interwoven into the survivability of the economy as a whole. AIG too big to fail? GM too big to fail? If unfettered capitalism allows companies to get too large to fail, then unfettered capitalism isn’t the right way to do business. I believe in capitalism as a foundation for small businesses and economic growth of a country, but there must be regulations to prevent the AIG’s and the GM’s from becoming so large that their failure leads to economic collapse.
During the hearing today the executive douche bags from the Big Three were given an opportunity to explain why they need my money and yours in order ot continue operations. I believe they have failed horribly to explain their plan to fix themselves and to become competitive with the stiff foreign competition who, by the way, is not asking for a bailout. How about that? The backbone of American manufacturing is being broken by foreign companies that outsmarted, out adapted, and outperformed us. If it were up to me I would go with the republicans on this issue and allow the Big Three to go into chapter 11, and allow the Next Four or five or six to spring up and start competing to put America back on track in the auto industry.
