The ongoing, expanding bailout is a freaking disaster
The current orgy of folks lining up to latch onto the federal teat is both predictable and disgusting. (You can apply for some by filling out a five page form!) What did we think was going to happen when Congress authorized the executive branch to spend $700 billion on God knows what? Hell, it’s only been two weeks and the Treasury has already changed its plan. Henry Paulson says that instead of purchasing toxic assets we’ll just continue nationalizing financial institutions.
It was as plain as the nose on my face that the following was going to happen after the government started handing out money it doesn’t have as though it were candy on Halloween:
- Many companies would suddenly portray themselves as being in dire financial shape – on the verge of collapse
- Said companies would also tell us how their failure would mean calamity for the broader economy (i.e. too big to fail)
The big three auto makers surged near the front of the line. AIG’s original bailout package has grown to at least $150 billion. American Express wants $3.5 billion to “help bolster reserves to protect against future losses.” Bolster reserves? Protect against future losses? Insanity. Absolute insanity. Don’t worry, though, the bonuses will still flow on Wall Street. Where does the federal giveaway stop?
I say right here, right now.
If Ford, Chrysler, or GM fails let it happen. If they can’t survive on their own they don’t need to be propped up on our nickel, temporarily staving off the eventual fall. The world will not end. The outcome won’t even be as bleak as their backers will have you believe – they’ll likely restructure under Chapter 11 and come out stronger.
This country has become scared of failure. That is a shame. Failure is how you learn, how you grow. Just ask Thomas Edison. Well, pretend you could ask him. You know what his response would be. Failure is a sign of opportunity. It is a hallmark of an economic system that enables upward mobility by allowing people to take risks and work hard to see the risks pay off. Sometimes they don’t. When that happens you dust yourself off and try again. But you learn from your failures because the consequences are unpleasant. You do things different, better the next time. Our government is on a grand mission to eliminate failure – to hide all of the unpleasant consequences from taking on too much debt, too much risk, and providing an inferior product. To do so will only encourage greater risk taking in the future. It will set the stage for a more spectacular collapse.
I’m picking on the Big Three because they are the best known companies to most folks. But lets face it, their products have sucked for years now compared to Hondas, Toyotas, etc. Their market share has been eroding for a reason. The reasons why their products do not match consumer tastes are many and are irrelevant. The point is they have had an inferior product and have been unable or unwilling to make the necessary changes to be competitive. What is the point in placing taxpayers at risk to keep such a company afloat? So that we can have a vested interest in sucky cars? They need to learn a hard lesson. I bet that if one fails the other two will not. They may snatch up valued portions of the failed company at discount prices. They will learn from witnessing the pain their former rival endures. They will become stronger and better able to compete with currently superior foreign cars. Who knows, maybe their cars won’t suck anymore.
BTW, someone has kidnapped Richard Shelby and replaced him with a taxpayer advocate and believer in private enterprise. Notify authorities. The impostor is again railing against a federal bailout (he also stood up against the $700 billion):
“The financial situation facing the Big Three is not a national problem, but their problem,” Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said in a statement. “I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers in such a way that allows them to continue and compound their ongoing mistakes.”
Ditto.
Unfortunately, bankruptcy for the Big Three will inconvenience several core Democratic factions. So, we can expect it to proceed one way or another. However, buying used instead of new, American assembled Hondas, Hyundai’s etc is a good protest move and easy on the pocket.
Speaking of American made cars, my last two Fords, one was made in Korea (a Festiva) and the other in Mexico (ZX 2), both good cars that saw about 200K miles each. Still see the Festiva on the road too. Currentily drive a 8 year Buick with 250K (or so) which still runs with the big boys. The big three can make good cars, they just choose not to and need to have the consequences.
I agree with you on the Shelby issue. Something doesn’t sit right with me when he stood up to this, especially when he normally goes along with things like this.
I’m thinking about filling out that 5 page document and seeing if I can get a slice of the pie too, hell why not, I’m going to have to pay for it.
Oh, I forgot to mention. I own a 1994 Ford F150, I’ve had it since it was made at the Missouri plant in 1993. Great truck, and has over 160,000 miles. It’s had a lot of trouble since hitting 125,000 but hopefully I will be able to keep it until it hits 200,000 :)
I should clarify the part about sucky cars. I’ve owned three GM vehicles in my life: ‘89 Buick Regal (nicknamed the Beagle), a ‘95 (I think) Sonoma, and an ‘02 Impala. All ran pretty well overall, although the Impala tended to need quite a bit of surprise maintenance. But the fit and finish was way behind, say, a Honda. Interior parts looked cheap and often showed their age far sooner than what I noticed in comparable foreign cars. I currently own two Honda’s (’01 and ‘07) and I can’t think of a single non-scheduled repair. The full extent of my problems is a temperamental knob that controls the rear air on the ‘01.
Unfortunately while the Big Three may make decent cars in absolute terms they remain inferior to their competitors in terms of refinement and hence “suck” relatively speaking. Consumers have agreed with that assessment en masse. I say all this know full well that I am itching to buy a late 90’s to early 00’s full size, extended cab Chevy. (Hey, I still personally like their trucks from that era.)
Their problems are far worse than substandard product quality, though. Unions and retiree benefits are like an anchor around their necks (this one is huge). Poor bets on product offerings, such as going all in on the Hummer and its smaller offshoots right before oil hit $150 a barrel. Too many product lines causing them to spread resources thin. I could go on.
On this topic, Jim Manzi is excellent.
Abolishing the secret ballot for union elections will drag the rest of the vehicle manufacturing plants down into the abyss of union thuggery and they will also fail.
—- BTW, someone has kidnapped Richard Shelby and replaced him with a taxpayer advocate and believer in private enterprise. Notify authorities. —–
Ok. Now I’ve spewed Diet Pepsi all over my keyboard, that made me laugh so hard.
I can’t figure Shelby out either. He seems to have multiple personalities. As a Senator at least.
Process question…. is there a way to blockquote so it’s clear someone is responding to a particular section of the post or someone else’s comment?
Use good ole’ html to blockquote. [blockquote]Insert quote here.[/blockquote] Just replace the brackets with greater than and less than symbols. Maybe I should look into a WYSIWYG comment editor…
More on the multiple personalities of Shelby later…
Just testing…
HTML I can deal with… just wish this had a “preview” feature…
Success! I’ll try to look around for a better comment interface plugin when I get some free time.
Alright, by popular demand (of at least one reader) I have installed a WYSIWYG comment editor with preview functionality. Enjoy and please alert me to any bugs.
Well, and I know this detracts from the central point, but I live on a farm and I wouldn’t have anything but a Chevy or Ford pickup. There just isn’t anything better. Now to the bailout of Detroit; I don’t see why they shouldn’t qualify if everyone else is. If we are going to bailout AIG, then why not GM? If other companies are sucking the government tit, why should Detroit get the left-hind one?
I agree – AIG, etc. shouldn’t have been bailed out either. Two wrongs, as they say, don’t make a right. Bailing out GM & co. because the wrong decision was made to bail out AIG makes no sense.
How do you tell the workers at GM that AIG warranted a bailout, but they don’t?
I, as a citizen, say, “Sorry, I didn’t want them to bailout AIG and I don’t want them to bail you out.” I, as a government guy, say, “Sorry, we thought bailing out private companies was a good idea, but realized it was a mistake.”
Otherwise, next week you’ll be arguing, “How do you tell the workers at Victoria’s Secret that GM and AIG warranted a bailout, but they don’t.” You have to draw the line and I say the line has to be drawn now.