Saturday, November 15, 2008

For whom the bailout doth toll

In a letter to the editor, David Shaw of Post Falls informed the Spokesman-Review readers of the fact that General Motors Corporation was expanding its operations in foreign countries and bleeding money on the home front. And, at the same time, General Motors along with Ford and Chrysler were bellying up to the bailout trough. Mr. Shaw can hardly be blamed for thinking that the sort of management now leading the automotive industry has been shoddy in its practices, refusing to get with the times in creating fuel efficient and more affordable cars. If what Mr. Shaw reports, then the taxpayers are indeed being called on to fund companies that want profits and subsidies and don't want to invest in the American workforce.

Of course, CNN doesn't report that. And Michael Barone didn't care to report that either. What Barone did say was that should the big 3 automakers fold into bankruptcy, then the union perks that come with working for such companies, such as: health insurance and good wages, would have to be slashed and severely. Barone also made the argument that the federal gvt wasn't as in good a position to put new and better transportation on the road as the marketplace and of course new start up companies can.

The problem for Barone, and he does write a more thoughtful piece: Is that banking bailouts were supposed to unfreeze the rest of the market to the point that businesses small to large could keep putting inventory on their shelves and pay their employees who could then go out and shop for small to large big ticket items inclusive of homes and cars. That hasn't happened. Just as the big 3 automotive industry got hit hard with gas prices shooting out of sight, crippling their sales and etc. Everything can't be blamed on the union worker and his demands for a middle class wage, pension and health benefits.

So as was heard on "The News Hour with Jim Lehrer" last night, what was the point of putting people back in their homes if they didn't have jobs?

For companies to start up and invest in an American workforce, there must be capital present. The banks aren't likely to lend for new business start ups, investors now bailing out of the stock market on Wall Street aren't likely to invest in new companies. Then it seems to me that Barone still holds to an ideological position that somehow the free market as it now exists will find its way to terra firma. Will it? Well then, I expect it will require a massive monetary incentive from the federal gvt to nudge the market toward some sort of future. Unfortunately, given the massive debt of the last 8 years, we don't have that.

What to do, what to do?

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