Bailouts and the Auto Industry

Decisions made for short-term profits, but which have great risk for the long-term future of the company. When that risk hits later on, its the taxpayers that are told that we have to bear the costs.

Sound familiar? It should, because its pretty much the shape of American 'free-market' capitalism these days.

And just like everything else we've seen, such bailouts can only work in the short term and are destined for long-term failure.

Lets take a brief look back at the American auto industry. In recent years, they've made their profits, such as they were, from selling big gas-guzzling SUV's. Lots of people tried to point out the flaws in this. They had awful fuel economy. This meant we imported more oil, which meant the balance of payments deficits for our country got worse. Also, by burning such huge amounts of fuel, they were awful for the environment and contributed to global warming.

But the big three American auto companies didn't care. They were looking at the short term profits quarter by quarter, and this is where they were making their money. So, they kept churning out more and more SUVs.

The people who were talking about Peak Oil were pointing out the problems with this. They'd always predicted that as we started to reach the peak zone, and its a long gentle curve, not like the peak of a triangle, that what you would see would be strong oscillations in the price of oil. It would go up sharply as people started to panic of oil running out and speculators moved into the market. It could just as easily drop quickly when people adjusted to the high prices and economies went into recession and demand drops.

So, the first time this happens, when the price of gas spikes up to $4 a gallon in the US and the economy starts to tank, the big three auto companies take a big hit. Even thought they should have seen this day coming, they weren't ready for it. At least not in the terms that you'd expect in a free market business. Toyota is selling their Hybrid Prius' as fast as they can make them, and none of the big three American companies have a product that can compete.

In a competitive free market, this is how these companies would be expected to compete. To be looking ahead and making sure that they have products that would be attractive to potential customers. Businesses that fail to do that would go out of business.

So, now we all about how a collapse in the auto industry would be a disaster. We are told that we can't let them fail. Sound familiar? We were told the same about the wall street giants a couple of months ago. But now, lets ask this question. Did the big three auto-companies count on this all along? Perhaps they did think that they were ready for the future. Its just that in early 21st century America, the smart way to be ready for the future is not to pay engineers to develop attractive products, but instead to make large political contributions. That way, when times get rough, the politicians bought with those contributions will act to bail out your company.

Here's the really ironic part of this. Just exactly who is going to bail out the big three is left vague in our corporate media. Its not even directly referred to as the government very often. And there's this bizarre discussion in parts of the news as to whether the money should come from TARP funds or from last year's energy bill.

But the key thing to know is that the person who will be bailing out the auto industry is you. Its your money as taxpayers that they want. Or, perhaps its more accurate to look at your children and grand children and know that they are the ones expected to bail out these companies. Because we don't have the money today to do this, so its more money we have to borrow. Its more debt we have to incur. Your children and grand children will be paying it off for a long time to come.

There's one group of people to whom this must sound quite strange. Funny how you don't see them on the corporate TV channels. I'm referring to the American workers who've been laid off by these same big-three auto companies. The big-three auto companies were perfectly willing to tell these tax payers to go get stuff when they thought that moving their jobs overseas would make a few more dollars of profit on the corporate bottom line. And now they have to come back to these same tax payers and ask them for the money to save the stock price of their companies.

Nope, you don't see too many interviews with laid-off auto workers asking how they feel about their tax dollars about to be given to the same auto companies that told them they were no longer neccessary.

The problem is that America is deep in debt. At all levels ... personal debt, corporate debt, government debt. At some levels, we've reached the point where we can't borrow any more. The values of our homes have fallen, so we can't borrow against that any more. Credit cards are maxed out. Our jobs are either disappearing or in danger. Corporations can't borrow anymore either. So, the one credit card that hasn't been maxed out yet is government debt. Right now everyone is trying to pay their monthly bills off that credit card.

In terms of personal finance, we'd all understand what that means. If our finances are in such a bad shape that we have to be paying our monthly bills off of the one last credit card that isn't maxed out, any sensible person would know that a crash is at hand. But, that little bit of wisdom never makes it onto the corporate TV news. There we just hear about how we just have to give another $25 billion away to one more group of business people who made bad decisions that let to short term profits but a long term crash.

Common Debate

With the thoughts in the post below in mind, I created a new site called Common Debate. It can be found at commondebate.blogspot.com

CommonDreams Refugees

The comments on the post below have told me a couple of things.

1) There are actually people who read this site. At least occaisionally. Wow!
2) Anyone who is critical of Obama and the Democrats is being booted off of the CommonDreams website.

The latter makes me thing that people need a place to gather and discuss. Its better if we gather together and stay in touch. While the forums at CommonDreams used to be a place to do this, it seems apparent that the new Democratic censorship is going to make this hard to do there.

I don't know if this site is the place to do that. But, I'm willing to help where I can. CD refugees are welcome to comment here. I'd also be willing to open up the posting privlidges here to allow others to write here if they are interested.

And one thing that could certainly be done is if CommonDreams refugees want to post links or email to stay in touch, this thread could be a place to do that.

But, I'm also thinking maybe its time for a new site. I might try to get something started. Maybe have links to articles on other sites, but with the ability to comment freely on that site. So, for instance it could have a link to an interesting article on CommonDreams, but then it could also allow a free and uncensored discussion of that article.

If anyone is interested, leave a comment below. Not only about my ideas, but with your own.

A new era of Democratic censorship

Its amazing how if you scratch a Democrat, under the fake out outer covering, they act just like a Republican. I dared to post some comments on the CommonDreams site that tried to point out that everything might not be as rosy as the Obamabots are saying it is in the glow of their victory. They tended to point out that Obama still supported the wars, was pushing the wall street bailout, and generally hadn't really promised anything 'progressive' during the campaign. And that he won the campaign with record amounts of corporate money in his accounts, topping the amounts Bush had run on.

Do that on a Democratic site like Common Dreams, and that gets you blocked and banned these days. The Democrats are as intolerant of dissent as the Republicans. That's going to be one of the interesting things to watch in the coming months, as all the 'progressives' start to wake up to that fact. Especially since the Democrats and Obama won't be enacting a progressive agenda and won't be following a 'progressive' foreign policy. When the true progressives start to raise their voices. When they try to do exactly what the Democrats said during the campaign that they should do and try to 'hold the Democrats feet to the fire.', when that colides with the little fact that the Democrats are as intolerent of dissent as the Republicans, then it will start to get interesting.

No issues

Watching CNN, at least for what I can take before the mute button gets pressed again. And I noticed something about their coverage. They are going into great depth about voters where they live and what their demographics are and who is voting for Obama and who is voting for McCain.

If you want to know that in S.Carolina, black voters went 96% to Obama and white voters went 72% to McCain, CNN will tell you all about that. If you want county by county breakdowns in Indiana of how many voted for Bush last time and how many are voting for McCain this time, CNN will tell you all about that.

But, I've been watching for probably an hour and half now, and I haven't heard any discussion of issues. The words 'war' or 'antiwar' are not mentioned. The word 'bailout' hasn't come up once. Wouldn't it be interesting to know how voters who oppose the war are splitting? Or how the minority who supports the war is voting? Wouldn't it be interesting to know how many voters are telling the exit pollsters they opposed the wall street bailout and how the voters who are upset over that are voting?

Of course, there's no difference in reality between Obama and McCain on these issues. So, mainly you'd be seeing the effects of the campaign propaganda. Even though McCain and Obama would follow the same basic course in our middle eastern wars, the two campaigns have tried to use different propaganda to create the illusion of a difference here. The same with the wall street bailout. So, it would be interesting to see the numbers on issues like this.

I'd imagine CNN will show that eventually. At least they usually do. But they are spending a lot of time on what I'd call 'identity politics'. That's telling, because it tells you a lot about an American election. Its not about choosing the course of the nation. Because both candidates will steer close to the same course. So, the election has to be about something else. There has to something to hype or to talk about. The people have to feel that they are deciding something. So, instead we see that blacks are supposed to vote for Obama and rural whites are supposed to vote for McCain. And, I'd suspect if you asked members of either group in person the question of why, the answer that would come back would be more about their identity instead of their policies.