Wall Street Bail-Out Versus Auto Makers Bail-Out
By anniepa
@anniepa (27955)
United States
November 19, 2008 5:32pm CST
There are some of us, both civilians and members of Congress and others in our government, who have been fairly consistent regarding the "bail-outs" or "rescues" that have been given and are being discussed. Some were for the Wall Street bail-out and are also for rescuing the Big 3 Automakers while some are and were against it both both. However, there are some who have very much double standards.
Somehow, according to some people, it was acceptable and even absolutely necessary to give $700 Billion+ of our tax dollars to Wall Street and the banking industry. There were all kinds of reasons given and I'm sure some were valid. I'm not an economist and I don't have access to or the time or energy to do the research to find all the facts and figures so I'm not going to get into a lengthy discussion on the pros and cons. Now the auto industry is in very serious trouble and if GM or Ford should "go under" it could mean the loss of several million jobs and would finish off our economy for sure. I don't think it's necessary to be an economist to figure that out! It's not only the workers on the assembly line in Detroit but the parts suppliers, the dealerships, other businesses in areas that depend on workers from the auto industry, the list goes on and on. Some have said GM and Ford should file Chapter 11 and reorganize and streamline. Fine, but how many cars do you think they'd sell while in bankruptcy? Would you buy a car you may not be able to get parts for in a year or two? What about your warranty, wouldn't you want to be sure it would be honored if something went wrong before it was even paid off? In my not so expert opinion Chapter 11 would be the beginning of the end for these companies.
Some people have talked about the "over-paid" union workers in the auto industry but the fact is the union has already made many concessions and by 2010 the majority of the workers will be receiving wages and benefits in line with those from the Japanese auto manufacturers. I think that's something few people are aware of and I think it's a step in the right direction. I think it's management of these companies who have to make some concessions now. I agreed with the Congressman who spoke today about their corporate jets they traveled to Washington in. I think their seven and eight figure salaries and bonuses would be cut.
My main feeling is that some people in Washington seem to have more empathy for the white collar Wall Street "fat-cats" than they have for blue-collar workers on the assembly lines and that's just plain wrong. I don't know how it can be justified to give over $700 billion to Wall Street but refuse to give a "paltry" $25 billion that would actually benefit people who do the real work.
Any thoughts on this?
Annie
3 people like this
6 responses
@LovesTravel (303)
• United States
20 Nov 08
Hmmmm, to my mind, "bailout" is not really an appropriate term. Thanks to our incumbent president, the economy is in shambles. It may not be the Great Depression redux, but it is a serious crisis. Cronyism and irresponsibility are clearly walking hand-in-hand down this particular street.
I am one of those who does not regard this as another Great Depression. I don't, however, discount the possibility that it could get that bad. Preventing this will have to include serious government activity on several fronts, including:
- Stimulation of the economy through the direct infusion of cash
- Special programs to rescue threatened industries and/or business sectors
- Review and revision of regulatory schemes to keep folks honest
- Enforcement of regulations to punish those who aren't honest
- A thorough review of our tax system, loopholes and all
- Goodwill across political divides to act in the best interests of the country (including the middle class) as opposed to the best interests of the party, of individual politicians, or to the benefit of a small group of wealthy contributors who support a narrow agenda designed to make them wealthier
- International cooperation, including regulatory watchdogs who have the authority to work across borders
That's the short list, I figure. From the above, it's probably clear that I support government involvement in preventing an economic collapse. Leaving the outcome to market forces is exactly what brought us the Great Depression, and it had a good deal to do with getting us in our current fix. Still and all, as citizens, it's our job to keep a sharp eye on the process. Time to get government back to "by the people" and "for the people"--not just "of (or over) the people."
2 people like this
@xfahctor (14118)
• Lancaster, New Hampshire
20 Nov 08
Do you really believe this is all the fault of the "incumbant president"?
this is a problem that goes so much deeper. As long as this country has it's head up the tail of the whole Dem/Rep mentality nothing is going to be solved. And the solutions you present are not solutions, but probably results, either intentional or incidental.
As to the regulatory watch dogs with the ability to work across borders, this is absolutely constitutionaly illegal and to hand such authority over U.S. finance, to a world authority, ammounts to a treasonous betrayal of our national soveirgnty
@LovesTravel (303)
• United States
20 Nov 08
P.S. Yes, help the auto industry. No, don't just throw the cash as walk away from the problem. A real solution is needed. I'm just not personally smart enough to create that solution.
I will also note that one of the great expenses thrown out in every discussion of the role of the auto unions involves healthcare. In every other major industrialized country, this is not a separate cost the auto industry (or any other sector of the economy) has to bear. In those countries, healtcare is a right rather than a privilege. Every citizen has access to reasonable healthcare that is cheaper and, on a practical basis, better than ours. (Better because eveyone has routine access to preventive care.) It's time our country realized that a national healthcare program would save businesses billions of dollars. In the long run, it's an investment that would save lives as well as money.
1 person likes this
@LovesTravel (303)
• United States
20 Nov 08
xfactor: Our current president waged a needless war that will cost, yes, as much as $5 trillion dollars before it's all over and added up. Right now, we're knocking on the door of $1.5 trillion. Just imagine what all could have been done with that money: all manner of alternative power initiatives, healthcare, education, improved national security, disaster response preparation--just name it. That doesn't even get to the cost of the war in Afghanistan, which has been neglected to the point of shame. Just where is Osama bin Laden anyway? Still out there in the hinterland taunting us with his recorded messages.
Add to that the fact that deregulation and ignoring existing regulations amounted to virtually a cause celebre for our incumbent administration. They could go after Martha Stewart, but the fat cats on Wall Street and in the oil industry enjoyed carte blanche--not to mention government subsidies. Heck, you might have thought there were oil men in the White House!
All this happened on this particular presidential watch, and like it or not, he gets the "credit."
As for our national sovereignty, what about the long-standing tradition that one person's rights end where another's begin? We've done a great job of spreading capitalism. Now it's time to do what is necessary to make sure that capitalism is practiced responsbility--at home and abroad, for our protection and that others around the world. Even the administration grants grudgingly that some of this will be necessary. Why do you think he called an international conference on the matter? And by the way, we already have a number of international accords that affect economic activity. Adding a few more doesn't need to impinge our "sovereignty"--unless we expect to behave like bullies. Of course, the accusation itself makes a wonderful scare tactic, doesn't it.
1 person likes this
@spalladino (17891)
• United States
20 Nov 08
I don't know all that much about the specifics with Wall Street and the banks but I supported bailing them out because I *thought* there was going to be some oversight and that the result would be more stable banks who would loosen the pursestrings on credit. I also saw a total collapse of our economy if those institutions fell. Imagine my recent surprise at learning that no one was paying attention once the funds were handed over and that the credit crunch is still just as bad.
As far as the automakers go, I do realize that many, many people will lose their jobs if they fail...those who work for the auto manufacturers as well as those who work for parts and other suppliers, along with folks in the transportation industry. What bothers me about them is that each of the Big 3 have had the capability of building vehicles that got much greater gas mileage for years and they have fought it. Instead they pushed the big SUVs, making the sale of these large monsters a priority over the development of more economic vehicles, fuel cell technology, battery power and alternative fuels. These cars and trucks would have sold faster than they could have produced them, especially during this past year as gas prices rose steadily. So, who were they looking out for? Not the consumers...not the tax payers. I may be wrong but maybe they should be looking to Big Oil for a bail out.
@anniepa (27955)
• United States
20 Nov 08
I thought the same thing, Spall. All that money hasn't really helped anyone I don't think. I also can't argue with anything you said about the car companies but I blame the management, not the regular workers who would be the ones to suffer the most. Heck, the CEO's will walk away with tens or hundreds of millions in bonuses even if they do go under. I'd love to see Big Oil be made to bail them out!
Those guys flying to D.C. in their corporate jets was absolutely ridiculous. By doing that they proved how incompetent and stupid they actually are!
Annie
@spalladino (17891)
• United States
20 Nov 08
I had to laugh when a member of the House Financial Services Committee brought up the subject of those private planes and asked for a show of hands indicating who would be willing to put their jet up for sale and fly home "coach". They all sat there....very, very still. 
1 person likes this
@lilaclady (28207)
• Australia
19 Nov 08
I don't really understand all this bail out stuff, maybe I can be enlightened here, do these businesses have to pay this money back, as it is an awful lot of money to be just handed and not have to do something for it. I look at the amount money involved here and I can't really comprehend...Why aren't the struggling people get help and if these businesses get this huge handout with tax payers money does the tax payers in the future get cheaper products from these companies...isn't it the tax payers money that is being given away...
@CinderInMySoul (4717)
• United States
20 Nov 08
"some people in Washington seem to have more empathy for the white collar Wall Street "fat-cats" than they have for the blue-collar workers on the assembly lines and that's just plain wrong."
couldnt agree with you more!
i dont like the idea of having to bail anybody out, but i think that the Auto industries deserves it far more than the friggin swindling fat cats on wall street do! those a$$holes KNEW what they were doing...the auto industry is in its current predicament BECAUSE of what those wall street a$$holes have done!
we the consumer are taking hits left and right and of course we cant afford to buy a brand new car! its not like the auto industry has been screwing with ppls money and FUTURE!
like you said if they go down, things will be horribly worse!
however..i CAN see a warning sign in this, 10 months down the line, when the economy is STILL in the sh*thole...and ppl STILL cant afford to start buying new cars...the auto industry is going to be right back where it is now. i think giving them the money would just be a band-aid. nothing is going to provide them any lasting longevity UNTIL the "wall-street bailout" does what they SAY its supposed to do. course i dont honestly see that happening as it is.
shoot i dont know anymore, take the hit now or try and stave off the bleeding for a bit longer?
the country is going to Hell in a HandBasket faster and faster! its like friggin dominoes!
1 person likes this
@anniepa (27955)
• United States
24 Nov 08
I sure can't argue about the auto makers bringing their troubles onto themselves but it's always sad when the people who do the actual work are the ones who suffer the most. Let's face it, for the CEO's and other top executives and these companies unemployment, inflation, foreclosures, the credit crunch...NONE of these problems are going to really hurt them because they have their millions!
Annie
@spalladino (17891)
• United States
20 Nov 08
Personally, I think the auto industry did it to themselves. I started buying new cars back in 1973...a Chevy Vega was my first. They turned out to be dogs but, by the time their engines started warping, I had traded that 73 in for another new car in 1974. Just about every year or two, for many years, I traded in my car for a new one...the theory being that I was building my credit and that the price was reasonable. I don't remember when the price jumped enough for me to say "What the F*@!" but a combination of that and interest rates caused me to start hanging on to my vehicles longer and to buy pre-owned instead of new. The Big 3 have not directly profited from my money for many years and I'm not the only one who changed the way they buy automobiles.
1 person likes this
@xfahctor (14118)
• Lancaster, New Hampshire
19 Nov 08
The "bail out" aspect of all this is such a small part of the bigger picture. The bigger picture goes much deeper than blame to republican congress, democratic congress, republican president, democratic president. It goes deeper than even a U.S. government blame. It is a U.S. and world monetary system problem. The system that developed slowly, a debt based system, was one that was one that lit a slow but sure burning fuse a long time ago. It involves players with out borders or parties or loyalties to anything but money and power. It doesn't matter who gets "bailed out". It is a drop in the bucket and a tiny band aid on the larger problem. It ammounts to bailing out a sinking row boat while water is rushing in from the bottom through a whole the size of the entire ocean while the boat is tied to a whole fleet of other boats.
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