Bailout Blues

One of the things I noticed while back in the States was that there is a palpable feeling of fear about the economy. Those of us over here are pretty much insulated from that. Yeah, we read the news, but we're so busy getting Iraq back on its feet that most of us don't focus on America. But at home, everybody is immersed in the American economy, and when it's sick, everybody is sick.

The auto industry bailout took center stage in the media starting a couple of weeks ago. GM and Chrysler are next to bankrupt, while Ford can hold on a while longer. I saw polls that indicated people are pretty tired of bailouts and didn't support another one for carmakers, but at the same time, there's a lot of fear that if GM and Chrysler go under, with their hundreds of thousands of jobs, then the rest of the economy won't be far behind. Yesterday, the Senate Republicans killed the auto bailout bill. Today, the White House says it may tap into the Wall Street bailout fund to support the automakers. I gotta rant about this.

There's a ton of blame to go around, of course. GM and Chrysler have been management disasters on wheels for a couple of decades now. They focused on providing flashy trucks and SUV's that had mediocre quality (or worse) but were profitable, while pretty much ceding the car market to the imports. Ford, at least, has been working on its quality for a couple of decades, so although their designs may not be world-class, their quality is, which goes a long way toward explaining why they're not in as bad shape as GM and Chrysler.

The recession hits carmakers pretty hard, as it always does. People in fear of losing their jobs aren't going to go out and spend $25-50K for a new set of wheels. Even Honda and Toyota are hurting. But they (and Ford) seemed to understand years ago that someday the gravy train would end and they positioned themselves for it. GM and Chrysler didn't. Bad on their (high-paid) management.

But I don't think we can let them go under right now, either, which is what the Senate Republicans advocate. The loss of hundreds of thousands, or even millions, of jobs would very probably push us from a recession into a depression. That was the logic that the Administration and Congress used to support the Wall Street $700B bailout, which was rushed through without much debate. The problem is that the $700B was a purely arbitrary figure. It wasn't supported by any research or anything, it was just a great big number used to put fear into the general population. And it worked. Now, however, we've got a figure of $34B that the auto industry needs and it's supported by facts. And with the Senate Republicans refusing any more bailouts, I think it's reasonable to take the money from the Wall Street funds.

And if the banks object, well, screw them. They're the bastards that got us into this in the first place. We've already pumped $335B of taxpayer money into their coffers with the specific intent of keeping the credit markets open and functioning. And what's the big problem with our automakers? Credit. The banks won't give it to them. Or anybody, for that matter - witness the debacle in Illinois recently, where Bank of America essentially shut down a window manufacturer by refusing to extend their credit. So if we're giving the banks money to pump into the credit market, and they're not doing it, where the hell is it going? Besides bank executives' bonuses, I mean.

So I say, take the money for the automakers from the Wall Street bailout funds. Use it to save jobs. The automakers need to stop putting out crap like Hummers and start making better cars that people want to buy. And they need to streamline/slim down their bloated bureaucracies, too. While we're at it, the UAW needs to bend a bit. The UAW refused to negotiate to help the American automakers become more competitive, which tells me that they're perfectly willing to kill the goose that lays the golden egg. So screw them. If I'm sending my tax dollars to help them keep their jobs, they've gotta do their part, too.

You know, if it wasn't for the auto execs, the UAW, and Congress, we might have a viable automobile industry.