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Sparkle (0)
I'm no economist. I don't play one on tv either. But I've watched the government try ways to shore up this economy and so far, none of it has affected me personally.
I did get that stimulus check, which we used to pay off bills (like we were going to go SHOPPING????) however the recent Wall Street bailout hasn't made it to my pocketbook. By the looks of how things are going, won't be inching near my checking account either.
Yesterday came word President-Elect Obama discussed an auto industry bailout in his meeting with President Bush. Today House Speaker Nancy Pelosi called on leaders to work with the Bush Administration to "craft legislation to provide emergency and limited financial assistance to the automobile industry under the Emergency Economic Stabilization Act."
My ears perked up and my heart started to race. This is one economic issue I do know a bit about. Not because I understand how it all works, but because I was born and raised in the 'burbs of Detroit.
Again, I'm not econ wonk by any stretch. But I know what I see.
My hometown needs jobs. People I know and love need plants to stay open, parts to keep on the shelves, and suppliers to stay in business. When a plant goes down an entire town goes down. Detroit isn't one of your 'least favorite cities to visit' for no reason.
Yes, there have been serious flaws with the Big Three for many, many years from management to unions to everything in between. However the Big Three has kept my mid-west going for generations and they need help.
Again.
Many of you don't think they deserve help. Certainly not your tax dollars. Let them fall into bankruptcy with their crappy cars and their poor management like any business should when it stinks, right?
Megan McArdle at the Atlantic seems to think so. She writes,
"People don't want to buy their cars. People have not wanted to buy their cars for years. The only category in which they excel is the one in which foreign automakers barely compete because of gas taxes: light trucks. Without light trucks, they die. Even if people did want to buy their cars, they couldn't survive their legacy costs, which are vastly higher than what their competitors pay *in the United States*. The Big Three union model is simply not sustainable. That "massive" renegotiation didn't fix their problems; it merely staved off the date of the projected bankruptcy. That's why the stock has been heading south pretty steadily for nearly a decade, as has GM's credit rating, which hit junk long before the credit crisis. Perhaps you have seen something that all the investors, analysts, and creditors missed. But the company seems to me to have been in trouble for a long long time, and its turnaround strategy based on waiting for the price of oil to drop so it wouldn't lose so much money on light trucks."
As an OWNER of a Chrysler (yes, some of us DO buy American, Megan)I would contend that JD Powers shows American cars totally competitive with their foreign counterparts. The past several years have seen more than an effort to transform the American auto industry quality and the proof is in the ratings.
However Megan is joined by many others, like Betsy who writes,
"We should not be rewarding the Big Three's shoddy management. If we continue down this road, where will we stop? Are we going to be bailing out every large company that makes bad decisions and then goes under? Is Circuit City next? Will the only companies that we don't bail out be the small mom and pop businesses that are small enough to fail?"
And even if you are angry about the hole Detroit has dug itself into, consider what Laurie David writes,
"These companies invited their impending destiny, and some have argued they ought to face the consequences of the market without federal intervention. But the fact is that America can't afford to lose the millions of jobs Detroit provides and the opportunity to lead on a manufacturing product that will see explosive foreign sales in the near future, especially in China and India."
So where does that leave us? Agreement that GM, Chrysler, and Ford have done a crappy job and everyone is to blame. Fine. How do we fix it?
Sending these companies packing is not an option in my book. The American Industrial complex is one steeped in innovation
