For the most of the summer and especially these last few weeks, the economy and Wall Street has been in the forefront of everyone’s minds. This humongous event has been the talk of America from the diners in the Mid-West, to the evening dinner tables of the South East, to the corner offices on Wall Street, and to the halls of Congress.
Everyone is asking what is going to happen to our economy if this crisis continues and what should be done to stop this runaway freight train? These are all good questions for our leaders to sort out as they debate the current $700 billion bail out that is proposed by the Treasury Department. Questions that I not sure will ever be answered to everyone’s liking.
One item that has not landed on the front page of any new papers as it should — the $25 billion bail out of the “big three” auto manufacturers — Ford, GM, and Chrysler.
For the past few weeks the “big three” have been lobbying Congress for assistance through a direct loan program that was created by the 2007 energy law. The original goal of this loan program was to offset the “big three” costs to develop and produce an increase in fuel-efficient cars.
Does anyone believe that this loan will be used to cover cost from switching from SUV manufacturing to hybrids? No way! This loan is really a bail out of another mis-managed industry that failed to adapt to the changing needs of the U.S. consumer while supporting a bloated, overpaid work force.
Where is the outcry in the press and the public about this bail out? Why should the taxpayers be on the hook for the auto industry? These companies are bleeding money by their own design by getting in bed with the union more than the last 40+ years, saturating the market with a product that was not needed, failing to be innovated, using non-productive manufacturing processes, and employing a bloated work force (blue collar and white collar workers).
These failings all add up to a poor business model that is just a stone’s throw away from collapsing. However, why should these companies change their business philosophies, they all know that a “white knight” will be there to save them in their darkest hour. Isn’t that what occurred back in 1979 when Congress bailed out Chrysler? Well, history sure does have a way of repeating….
Like Wall Street, the auto industry will be bailed out by federal government and will return back to the status quo once the crisis has ended. I guess the questions I need to ask is when will these hand outs end and will the airline industry be next?
How much can the taxpayers absorb? When will our government let our capitalist market correct itself through its own form of Darwinism? I just don’t know….I just hope the Democrats and Republicans wake up and see the big picture before it is too late!