Should Detroit receive a bailout?

[iNow]

I am not against the principle of a bailout. I think most will concede it is sometimes necessary. However, I am against bailing out failures. Again, I think most will agree with that.

 

Let's focus our energies into creating new jobs. Any reasonably intelligent person can see that it's wasteful and foolish to spend money saving jobs at a company which has over-stayed its welcome.

[npts2020]

Well I am against the idea of bailouts. Unfortunately, that is not the path our leaders have chosen. Given that we are already doing bailouts to the tune of trillions of dollars to entities that IMO are less likely to pay it back than the automakers, it just seems stupid to me to not loan money to the three companies who have putatively produced more wealth than any other three anyone could name in the past century. At least it would be giving money to someone who actually produces something and has tangible assets unlike your average financial institution......

[iNow]

So we give them the money. Then, in 3 months they fail. What then? Not only will they fail, but we'll have spent 15 trillion dollars just to watch it happen.

 

Of note, the problems seem specific to GM. Ford only needs for some credit to be opened to them, not a bailout. However, if one fails, they all will since it will have such an impact on the suppliers.

 

Either way, whether we give them $15B or $50B, it will only help until roughly the end of February, at which time they'll either fail then or need more.

 

 

Let's make the tough decision and let them fail now, instead of paying $15B to watch them fail later.

[npts2020]

So we give them the money. Then, in 3 months they fail. What then? Not only will they fail, but we'll have spent 15 trillion dollars just to watch it happen.

 

Of note, the problems seem specific to GM. Ford only needs for some credit to be opened to them, not a bailout. However, if one fails, they all will since it will have such an impact on the suppliers.

 

Either way, whether we give them $15B or $50B, it will only help until roughly the end of February, at which time they'll either fail then or need more.

 

 

Let's make the tough decision and let them fail now, instead of paying $15B to watch them fail later.

 

And I am all for it. My question to you is why are we not treating ALL of the corporations we are giving money in exactly the same way? You cannot convince me that AIG, Fannie Mae, Freddy Mac, Citibank or a host of other corporations getting "loans" from the government have run their businesses any less ineptly than the Detroit automakers. What is the criteria being used for who does or does not get bailed out?

[Mr Skeptic]

What is the criteria being used for who does or does not get bailed out?

 

I think this one was a case of "first come, first served".

[iNow]

And I am all for it. My question to you is why are we not treating ALL of the corporations we are giving money in exactly the same way? You cannot convince me that AIG, Fannie Mae, Freddy Mac, Citibank or a host of other corporations getting "loans" from the government have run their businesses any less ineptly than the Detroit automakers. What is the criteria being used for who does or does not get bailed out?

 

That's a fair question, and one being investigated now by this group:

http://cop.senate.gov/

[Pangloss]

And the COP probably isn't qualified to form a judgment. But nobody really is, and oversight is necessary, so you have to have someone do it.

[npts2020]

I think this one was a case of "first come, first served".

 

Not if there is still any money in the TARP fund. It has far more to do with who has been in your corporate management and on your board of directors and how much money you donated to whom in congress. I don't doubt that the majority of congress really has little clue of the effect bailouts have and are just doing it because someone they think knows better than they says it is a good idea. There are some there who know perfectly well what a high stakes gamble flooding the market with currency backed by nothing is but figure they will not be around to have to clean up any mess, so why care? When there is some accounting for the money and a transparent and consistent system of making loans to corporations by the government, then maybe I will believe that the whole purpose of the bailouts to date has been for any reason other than to allow Wall Street to loot the American treasury.

 

iNow; One can only hope they can get to the bottom of the money trail to start figuring things out.

 

Pangloss; You live in a Democracy (sort of), that makes you the overseer. Now how much time you got to devote to your job of overseeing?

This is how we got here, there is nobody with the ability and power to do any meaningful oversight. We will be lucky to ever get the particulars of exactly what has happened much less hold anyone accountable.

[CaptainPanic]

And I am all for it. My question to you is why are we not treating ALL of the corporations we are giving money in exactly the same way? You cannot convince me that AIG, Fannie Mae, Freddy Mac, Citibank or a host of other corporations getting "loans" from the government have run their businesses any less ineptly than the Detroit automakers. What is the criteria being used for who does or does not get bailed out?

 

I think that many governments, including the US government, underestimated the crisis and thought therefore that this first bail-out would be the only bail-out.

 

By now we realize that 2008-2009 is the period that all the dirt of the financial system will become known (the 50 billion fraud at Wall Street is the newest one adding to the misery) and logically governments realize they cannot bail-out their entire country... so after a few months of bailing out everything, this has now come to an almost complete stop.

 

The car companies are just too late.

[npts2020]

CaptainPanic; You might well be correct but there is absolutely nothing in "The Economic Stabilization Act of 2008" to prevent the Secretary of the Treasury from giving the TARP money to whomever he wants. It would be fairly surprising to me if there is any of that money left by Inauguration Day. While I am all for big auto discontinuing their line of "horse buggy whips", to allow it to happen precipitously with no plan for replacement will not do a struggling economy any good. Of course, if the goal is just to keep labor cheap, it should succeed spectacularly.

[iNow]

So we give them the money. Then, in 3 months they fail. What then? Not only will they fail, but we'll have spent 15 trillion dollars just to watch it happen.

 

<...>

 

Either way, whether we give them $15B or $50B, it will only help until roughly the end of February, at which time they'll either fail then or need more.

 

 

Let's make the tough decision and let them fail now, instead of paying $15B to watch them fail later.

 

Sometimes I hate being right so often.

 

 

http://www.cnbc.com//id/29243063

GM, Chrysler Seek Nearly $22 Billion More US Aid

 

General Motors and Chrysler LLC requested nearly $22 billion in combined additional U.S. government aid and have reached a tentative deal with the United Auto Workers union to reduce labor costs.

 

The two automakers, which have so far received $17.4 billion from the U.S. Treasury, also announced sweeping restructuring that included capacity reduction and job cuts.

 

GM is seeking a total of up to $30 billion in U.S. government aid, more than double its original request -- and said it would run out of cash as soon as March without new federal funding.

 

"I think this is a perilous road," said Alan Lancz, president at Alan B Lancz & Associates Inc. "This is a situation where we really have to decide whether we are throwing good money after bad."