Friday, November 14, 2008
Auto Bailout Alternative
I've been leaning towards supporting an auto bailout but with a lot of reluctance. We've lived for decades with major airlines in bankruptcy and the economy can function normally. The bailout drug is very seductive once you start taking hits off of it. Detroit also needs a falling out. Bailout or not will not return the Big Three to their old glory nor will it return the old auto towns to what they were.
On the other hand these are not normal times. Credit is frozen and while the economy is on the edge of collapsing. I'm not sure the people who would normally pick up the pieces are able to at this moment. Additionally, since we are guaranteeing a lot of debt indirectly by asorbing AIG's 'insurance' on various corporate bonds, maybe this might be best way to avoid paying a lot more on the other end of the equation.
On the other, other hand I don't trust the government here. They don't have the incentive to force serious change on the Big Three, especially when that change is going to need to include serious union concessions, plant closings and a lot of other things the political system doesn't do very well.
Perhaps the best idea I've heard then is a concentrated effort to pick up the pieces. Namely the people and communities harmed by a collapse of the automakers. Target unemployed workers with additional unemployment insurance, grants for education and business starting, relocation grants for them to move to growing communities and assist towns devasted by plant closings. In the long run this is probably a more efficient bailout because even if the corporations survive, they are probably going to lay off thousands of workers anyway.
On the other hand these are not normal times. Credit is frozen and while the economy is on the edge of collapsing. I'm not sure the people who would normally pick up the pieces are able to at this moment. Additionally, since we are guaranteeing a lot of debt indirectly by asorbing AIG's 'insurance' on various corporate bonds, maybe this might be best way to avoid paying a lot more on the other end of the equation.
On the other, other hand I don't trust the government here. They don't have the incentive to force serious change on the Big Three, especially when that change is going to need to include serious union concessions, plant closings and a lot of other things the political system doesn't do very well.
Perhaps the best idea I've heard then is a concentrated effort to pick up the pieces. Namely the people and communities harmed by a collapse of the automakers. Target unemployed workers with additional unemployment insurance, grants for education and business starting, relocation grants for them to move to growing communities and assist towns devasted by plant closings. In the long run this is probably a more efficient bailout because even if the corporations survive, they are probably going to lay off thousands of workers anyway.
# posted by Boonton @ 10:07 AM 
Comments:
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It is a difficult problem.
It's one thing to let small companies go out of business, another for a large one. And you are right, these are not normal times.
I would be in favor of the bailout if the government had forced them to make real changes. Unfortunately, they didn't.
Both parties are behaving badly on this one.
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It's one thing to let small companies go out of business, another for a large one. And you are right, these are not normal times.
I would be in favor of the bailout if the government had forced them to make real changes. Unfortunately, they didn't.
Both parties are behaving badly on this one.
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