Bailing out losers

If we are going to be spending billions of taxpayer dollars, it can’t only be on office-decorating bankers, over-leveraged home speculators and auto executives who year after year spent more energy resisting changes and lobbying Washington than leading change and beating Toyota.

6 responses
i disagree with this article. it seems very short sighted and just looking to get a rise out of people.

I'm not an economist, but here's my take on the situation:

1. You know I hate American cars, bankers, and the home speculators who got us into this mess. I would love nothing more than to have the people who caused this problem take the fall.


2. The collapse of the American car companies and the number of jobs that will be lost *so quickly* would be devastating to the country. Imagine if 10s (100s?) of thousands of jobs disappear this year as the car companies go under. Scary.

3. So while I would love nothing more than the car companies to go down and those resources to flow to other ventures, that's a long term, slow process. It won't happen overnight.

i think for the short term sake of the country, we need to bail out these companies and keep the economy running. Then hopefully, gradually over time the markets shut down the car companies and those resources move elsewhere.

It would be great if the US stopped making bad cars and started exporting something again, but that can't happen overnight.

Well, focus on the problem- education. It just simply sucks. If they had improved that in the recent years, then, there would be no bailouts. Right now, its just a bunch of lawyers (politicians) who don't understand the problem. China has engineers and scientists as their leaders. That explains why they don't get in this mess. What if 1000's of jobs disappear. The government and the companies can't guarantee jobs. It's the employees responsibility to succeed. So first-don't vote for another lawyer as a politician. It is all because of those lawyers.
Sure, education definitely is key. We should have people in place who ensure this doesn't happen. That's always the best route. But the problem is that now we are in this mess, and we have no choice but to clean it up.
I'm also not an economist, but I wonder if the damage is done?
Average sales price for a home in Detroit: $10,000.
Like most human endeavors, what something is "worth" is purely psychological. I think what you want to avoid at this point is herd-driven panic, where asset values like home prices or these toxic assets plummets in a chaotic free-fall. Sure, these things aren't worth nearly what we thought they were in the heady days of the bubble, but neither do we want them to overcorrect in completely chaotic way. Controlled deflation is the name of the game. Hence, the bailout.

As for China, they're honestly not doing any better than the states --- in fact, much of the current problems can be caused by the strangely symbiotic relationship that the US and Chinese economies have developed. China loans money to the US so that our consumers can keep young Chinese employed, young Chinese who would otherwise be the source of "social unrest" that the Chinese leadership is deathly afraid of.

Yes, China's graduating thousands of new engineers every year. But what about the millions of rural Chinese who are just scraping by in third world conditions? History tells us that these people are the source of social unrest. Think that's far-fetched? Just look at the Cultural Revolution (1968), the Communist Revolution (1949), and pretty much every single ouster of a sitting Chinese emperor!

China needs to generate millions of new jobs a year just to keep up with population. Now *that's* scary.

Think of this- a population of a billions entering the global market. Effect= earthquake. Earthquake = trouble for existing economies. The thing to realize here is no job is guaranteed- even if you are an American. No one can guarantee you a job even if it is one of the wealthiest giants of the world.

Another problem- the people and banks borrowing and lending loans with huge amounts of money to an average person. Result is the same as the great depression. And still we do not understand the patterns. The reason why the great depression occurred is people borrowing tons of money and a workforce of millions coming to the market (people moving from farms to cities). Now, the workforce is in China and they are impacting us through their strong education, skills and population.

Simply, result= disaster or in other words, we put ourselves in a situation of doom.

Way to get out of this horrible time- good education.

(All from reading the book- The World is Flat)
@VC You are right- China has rural population but someone needs to make food for China too! Not all of them can be manufacturing or jobs in services.