More Opinion by The Springboard

THE UPRISING OF THE AMERICAN PARTY "Clearly the voters are engaged right now, at least for sure on the republican side, and what they have concluded is that the republican party has not done their job. Thus, Donald Trump gets their vote."

Saturday, September 13, 2008

GM AND FORD MAY GET $50 BILLION TO HELP SHORE THEM UP

If Congress allows an additional $25 billion in low-interest federal loans to ailing General Motors Corp. and Ford Motor Company on top of the already authorized, but not yet funded, $25 billion, which was part of last year's energy bill, it is not, as some would like to believe, a federal bailout. These companies will have to pay these monies back, and the funds would provide a great deal of help to an industry caught up in some very tough times of late.

General Motors Corp. stock is down a staggering 47% this year so far. Ford's stock is down 27%.

Part of what these funds would allow the two companies to do would be to retool existing plants, which have primarily been used to build larger SUVs and sport-utility trucks which have fallen out of favor, in order to better compete with new demand for more fuel efficient cars. Right now, Japanese automakers Toyota Motor Corp. and Honda Motor Co. dominate this market.

Of course, all kinds of arguments can be made that US automakers made some poor decisions which led, ultimately, to myriad financial problems, and governments should not be involved in helping to buoy companies that get it wrong. For the most part that's true, and certainly the airline industry, notorious for receiving federal help, is a glaring example of abuse of the system. But the US auto industry, perhaps one of the last of the strong wage jobs in America, is important to the economy. And in a time when many thousands of American workers continue to lose jobs as the economy yet wheezes more, someone has to step up and do something to curb the damage.

Right now, both presidential candidates support this. They see the very real potential for major bankruptcies if the top two US automakers cannot fix their problems, and soon. Americans should be on board with this plan as well. It's good for jobs. It's good for the economy. It's good for the markets.

1 comment:

podjah said...

I couldn't agree more. For either company to go under would be simply devastating at so many levels. AND because it's a loan and not a takeover, it should allow for a rebound in their stock value instead of sending it into the penny stock class...

Tim