Wednesday, December 17, 2008

Bailout bozos

I realize that a great many people were opposed to the banking bailout under any conditions, so they have no cognitive dissonance when they diss the automotive bailout. I wonder at others who think the $700-billion banking boondoggle was "essential," yet they'd let the US auto industry wither and die before they'd LOAN them 5% of that amount.

I think both industries are important to our economy and that of the rest of the world, but NEITHER industry is so important that we should just give them sacks of public money without restrictions and oversight. At the risk of sounding like a Republican bitching about "media elites" I've read articles such as this one by Joe Lauria advocating "ditch(ing) the automobile altogether." The man thinks everything will be okay if we just let people who have the temerity to live somewhere that's not served by a subway walk, or drive a Toyota or a Volvo, even though they are "slightly more expensive." Surely Toyota would sell at exactly the same price without competition from US manufacturers, no? And the fact that Volvo is currently owned by a US auto manufacturer escaped Mr. Lauria altogether. That lends him great credibility in commenting about US auto manufacturers!

A well-structured package of loans or equity positions that the car companies could buy back on terms favorable to the people would be a better use of our money than the disgusting waste that is the hundreds of billions thrown at the financial industry with few restrictions and less oversight. The fact that the gifts to the financial industry were done stupidly doesn't mean that the government couldn't offer useful assistance to the manufacturing sector that could benefit both the public and corporate situation.

If we allow the US manufacturers who sell MILLIONS of vehicles to disappear, Toyota et al will have fewer competitors and will probably become more than "slightly more expensive." Ford, if you've been paying attention, feels that they can actually operate for quite a while without government assistance, and GM has in the last 5 years begun to significantly turn their product line around, and they currently offer some competitive and desirable products. Chrysler may be beyond help... they have little in the way of competitive products, but they are in a different position as a privately-held company, Cerberus could sell them at firesale prices to PSA or perhaps a chinese auto maker that wants a foothold in the US.

Mr. Lauria thinks that if we offer the US manufacturers any assistance, it should be for the government to take them over and force them to make electric cars (because I suppose he approves of electric cars.) It's possible that in 10 years all-electric cars may be viable for extraurban transportation, but the best bet for a truly usable electric car comes from a company he's already written off, GM (the Chevrolet Volt.) All-electrics aren't up to snuff yet.

MANY public transportation projects could significantly improve the state of transportation in certain areas of the country, but the wholesale squandering of vast sums of public money to build a network that would be largely unused in huge parts of the country would be a bigger boondoggle than making well-structured loans to or buying equity stakes in the viable parts of the auto industry.

Mr. Lauria claims he doesn't want to outlaw the car, but still leaves the impression that he thinks the automobile is useless. Considering the scale of the 2 bailouts, I think we'd save more of the people's money by applying some constraints to the financial industry than by ignoring the US auto industry, leaving millions unemployed and further damaging the economies of dozens of American cities. The numbers being bandied about are about 5% of what was tossed to the financial wizards who torpedoed the world's economy in the first place. We need to cut off the free gifts of billions to the financial sector unless and until they promise to use it wisely and responsibly. The billions Mr. Lauria would dump into mass transit would be useful in the densest metro areas and an utter waste in the majority of cities.

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