Earlier, I voiced my opposition to the proposed $25 billion bailout of the auto industry. I still believe that an outright handing over of $25 billion worth of taxpayer money is not right for the country, nor is it right for the industry. But I will concede that something must occur here. A loan, I think, which is now being proposed, is more in line with what I think could be the best idea.
It is obvious, that for various reasons, America's auto industry is faced with catastrophic losses in volume and has seen revenue all but disappear. Hundreds of thousands of jobs have already been shed, product lines slashed, plants shuttered, and I suspect that even if a loan is extended to the Big Three auto companies, yet more will likely be coming.
This is, without a doubt, due in large part to a terrible failure on the part of these companies top level managements to foresee major shifts in consumer demand, and to have a plan in place to deal with it, such as looking at innovative ways to make plants more capable of producing more than just one type of vehicle. They literally ran their companies into the ground in this case by being too heavily focused on the big trucks and SUVs that have now severely fallen out of favor. The money they are seeking is primarily for the purpose of retooling existing plants to manufacture smaller, more fuel efficient vehicles, as well as increase focus and attention on the research and development of electric and other hybrid technology in cars.
There's a vast majority of people who keep saying to just let the auto companies fail. They've gotten themselves into this mess and they should therefore suffer the consequences.
The truth is, I think, that under normal economic conditions that might be something certainly to consider. It is largely their problem. The logic certainly sits well with my thoughts about free markets. But we are not experiencing normal economic conditions right now. And there's more going on than just simply bad decision making. There's tension and unease and there's still a massive amount of that uncertainty I keep talking about which is holding back any near term hope for even the slightest hint of a recovery. The markets continue to fall, and the credit markets are all but frozen solid. Under these circumstances, allowing the auto companies to outright fail would, in my opinion, have a devastating—and lasting— ripple effect on this economy. And I think, looking at it now, and looking at the sheer millions of jobs that could potentially be lost from not only the automakers, but their suppliers and dealers as well, that the possibility of a deep depression could be more real than I've ever believed it could be before.
We really do need to tread very carefully here. We're coming very close to testing that bottom we had on October 10th with yet another disgusting day in the stock market today. There's a piece of advice someone once gave me that I still find very profound today, and I think applies to this situation rather well. Don't fuck yourself, trying to fuck somebody else.
I think there are a number of people actually enjoying the pain and suffering of the big companies and the top dogs without realizing the real effect it ultimately has on us in the end.
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