12th December 2008
Sinking, Floating, or Just Getting By

The car industry “bail out” issue is one that has been pressing on my mind of late and there’s many facets of it that I’m trying to consider and draw up conclusions in my mind.   None are very clear and I’m never completely certain I always know what’s best for the situation, but like most people, I’m forming opinion anyway.    The difference with myself, however, is that I readily admit that I may be taking the stance of a raving idiot.

Here’s some things I do know:

- Without extremely strict guidance as to where funds are used in the corporations, they will be misused.     Period.    Clearly the folks couldn’t properly use their own money; what makes us think they’ll use loaned money any better?     To paraphrase Olbermann, piles of cash sitting around are a bad idea.

This Sinking Ship

- There’s loans to hold your current business open and keep it running, and there’s loans to restructure it into something better.    Everyone says it’d be bad to let them go into bankruptcy, but for restructuring?   I think that’s exactly what they need.    Telling someone to stop being bad or hold a gun to their head and see which method gets more response.

- I really, really hate unions.   Always have — I think they’re fundamentally unnecessary in today’s modern market.    And now we are going to (probably) see a prime example of why they’re a bad idea when everyone has to go along with the negotiated terms.    UAW Suckers.

- Letting these companies die scares a lot of folks, and don’t get me wrong — it’s a big deal.   But to be honest, I’m leaning more and more towards letting them die.    Yes, it’ll be extremely painful, but in the long term I think we’ll end up with something better than we will if we limp things along.   It’s like a broken bone — if you snap a bone straight through, when it heals it’ll be very strong, stronger than it was before.   But a “green” fracture that only bends or frays the bone takes longer to heal and is never the same again.    I think that can be applied here, and as painful and traumatic as it is, a clean break may be our best bet.

I worry — a lot.   We’re struggling big-time to make it right now, but if I had my choice, I’d rather dive into a horrific couple of years to emerge victorious and more productive than ever before vs. limping a broken economy along for the next 10 years.

Your thoughts and discourse on these reflections and any others are appreciated.


There are currently 4 responses to “Sinking, Floating, or Just Getting By”

  1. 1 BrandonNo Gravatar UNITED STATES (1 comments) said:

    I agree with you. As much as it may hurt I think they need to collapse in on themselves. I also have more faith in the private sector and free market than I have faith in our Government. And like I said in my blog about this, the more we are dependent on our central government in situations like this, the more eminent it makes a governmental collapse of some sort. Which is worse? The automotive industry collapsing or our government collapsing?

  2. 2 CourtneyNo Gravatar (58 comments) said:

    I agree that in the long-term, they need to fail. My concern is this: if people can’t afford cars now, what makes anybody think that in March they’ll be able to buy them up then? The car companies are just going to be coming back for more money. My heart just hurts for the people who will lose their jobs if and when these companies go under.

  3. 3 nicheplayerNo Gravatar UNITED STATES (130 comments) said:

    The trouble with the free market, as we’ve seen, is that it’s populated by unscrupulous people. On the other side of the fence, you have stockholders, fickle, bratty folks who’re ready to drive a company’s shares into the ground at the first sign of weakness. This entire scenario is very much analogous to an earthquake. Had “we” seriously addressed the issue of poor quality and fuel efficiency long ago — maybe at the expense of a couple years of bad earnings for the auto industry and a little shareholder pain — we wouldn’t have had this huge, devastating shift to manage now. Seriously, if you know someone who’s driving around in a Hummer, cast them a dirty look for me, wouldja?

  4. 4 kingofnewyorkhacksNo Gravatar (1 comments) said:

    Its not just stockholders. Its the bondholders who dictate the price of the equity and bondholders get paid before stockholders do. The government is limiting “freemarkets” by banning shorting stocks on the financials. Will they ban buying stock if it is sure to rise in price. Way too much interference by the fed and the Gov’t….ok now I’m ready to rant but will not. I will say that Jim Cramer should go to prison for advising people to buy Bear Stearns at $180 just like he told everyone in 1999 to buy yahoo at $350 or Sunmicro at $125. ok , i’m done for now.

    kingofnewyorkhackss last blog post..The King turned the big 40 !! Salvation Army Greetings and the Wall Street Tree lit to singing carolers !!

Leave a Reply:

CommentLuv Enabled
Possibly Related Posts (auto-generated):
107 queries. 0.521 seconds.