Tuesday, November 25, 2008

To Bailout or Not Bailout? That is the Question

The current economic situation has every politician and economist pulling out there hair and spending a lot of long late nights trying to figure out what is the best solution. At first all the economist where saying that if we didn't pass this bailout for the financial industry that the whole economy would fold up and collapse. Well they passed it and things really haven't changed much. It didn't give anyone any more confidence in the economy plus it puts us in deeper debt. Republicans who are suppose to be for "Small Government" have just increased the size of government.

Now the idea of a bailout isn't totally a bad idea, I just don't like the way they are going about it. Financial Institutions don't produce any tangible goods. They only sell PAPER. Giving them more money really doesn't help create jobs. And it doesn't necessarily mean that they will start lending money again. The problem with the bailout is easily summed up in this analogy. Pretend you are a recovering drug addict the last thing you need to be around are drugs. So if someone kept giving you drugs you would more than likely abuse them. It is the same way with bail out. George BUSH was right when he said that "Wall Street got DRUNK" but now we are paying the price. We can't continue to give money to companies that are failing just to keep them from failing. They are failing for a reason. They have ran their companies into the ground. If you want talk about capitalism and socialism well this bail out is the biggest example of Socialism that I can think of. I am oppose to the notion that banks don't have enough money to lend money. PLEASE! I think the whole thing was a little bit overstated. They are just taking advantage of the situation.

Now the Auto Industry wants a handout. I don't want to see millions of people lose their jobs. But I don't want the UNIONS to continue to have a strangle hold on Manufacturing in the North East. I know that at one time Unions served a really good purpose. But now their time has passed. They need to have a far less significant role in the Auto Industry. The need to renegotiate there contracts. It is crazy for someone to make 25 dollars an hour sweeping floors, when there are people with 4 Year degrees that don't even make that much. We have to get control of labor cost. Unskilled and uneducated labor shouldn't be able to make more than someone who busted their ASS and got a education just because they are a member of a UNION. I don't want to blame this totally on the unions. FORD, GM, Chrysler all had a role to play in the demise of the auto industry. They should pay a price. They under estimated the strength of there competition. Toyota, Nissan, and many other foreign owned and operated Auto companies are out performing the Big 3. They are using simple economics to do it. They are controlling their cost allowing them to have a slightly higher profit margin. They can sell a car for the same price as FORD, GM, Chrysler but are making more money on the sell be cost of the lower cost of manufacturing. At this rate the Big 3 will go out of business. Do they need help? Yes! Should we give them a blank check? NO! They have to promise to make MAJOR CHANGES IN THE WAY THEY DO BUSINESS OR THEY WILL BE OUT OF BUSINESS. It is in their best interest to do everything in their power to stay afloat.

To make a long story short Yes we should help Ford, GM, Chrysler if we are going to help the Financial Institutions. But we can't give anyone of them a blank check. We need oversight. If we are going to invest in companies that sell PAPER and IOUs, we should invest in companies that manufacture goods and create jobs.