Quick Hit for Friday

THE AUTO BAILOUT HYSTERIA

  Michigan Governor Jennifer Granholm had this to say after the bailout didn't pass Congress yesterday:  "It is unacceptable for this un-American, frankly, behavior of these U.S. senators to cause this country to go from a recession into a depression."  

  First: how is voting against giving taxpayer money to corporations 'un-American'?  What about our Constitution would imply that a facet of our system of government is giving bailout money to failing companies?

  Second: who knows if the bankruptcy of these three companies will cause a depression.  Besides, even if it does, whose fault is that?  The people who voted against a measure to give them money?  Or the people in charge of the failing company?  How about the people who passed government mandates that made it more expensive to make/sell automobiles in this country?  Do they have any blame?  Or is it the fault of the people who refused to clean up the mess afterwards?

  Third: is it definitive that a $15 Billion loan at this point will solve all the auto industry's problems?  GM sales went down 41% in November compared to last November.  How will the government loaning them $15 Billion help them become more competitive?  Might it just delay the inevitable?  Will we be stuck loaning them more money in three months?

  This is the type of hyperbolic lunacy that leads to nothing being solved.  The thinking goes like this:

1.   Blame someone else for the problem, preferably members of the other party.

2.  Create some outrageous statement that will frighten people into acquiescing to your demands.

3.  Repeat.

  Personally, I'd like more from our elected officials.  Bankruptcy will not cause these companies to disappear.  Sure, it could be damaging in the short run, but if bankruptcy was good enough for the airline industry, is it now not good enough for the car industry? 

  I have almost as big an interest in the continued success of these companies as the next guy.  My industry (real estate) relies heavily on the success of others.  If no one is making money, no one is buying houses.  But if the New Deal and other FDR policies was cause for lengthening the Depression by 7 years (see my post about that), then why are we repeating those policies?  Why not diagnose the problem, fix it, and start over as fast as possible?  Propping up failed industries might do nothing but lengthen the recovery period.