Posted on 11/14/2008 5:15:41 AM PST by reaganaut1
Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction — with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.
But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.
This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.
Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?
(Excerpt) Read more at nytimes.com ...
The NYT thinks this is “different” than the Wall Street bailout? Go figure.
Bad point, Brooksie. Circuit City, no. Newspaper industry, damn right they are inferior.
Some of us were against the whole damn thing.
Main Entry:
endangered species
Function:
noun
Date:
1964
: a species threatened with extinction ; broadly : anyone or anything whose continued existence is threatened
Brings to mind the history of British Leyland.
Agreed. Sprinkled with a healthy dose of the right rhetoric, it could have made the difference.
What this article has done is give us a rallying cry. There are long, elegant explinations on why this bailout won’t work (most too long for the average person to read.) But if you tag it a “bailout to nowhere” people immediatly get the message. It won’t solve the problem and is money wasted.
Your probably correct!
Please STFU! You are not a Conservative and your article is just lip service! You relentlessly trounced the only Conservative running in the 2008 presidential election, Sarah Palin! You helped usher in Obama. Now live with it asshat!
National security people! We need heavy industry in bad times. I’m buying Ford stock today and later GM. Buy American!!!
I did not see where he mentions the government forcing GM to retool to make cars nobody wants . Just Blames CEOs
Phone calls to house and senate members were 90 percent opposed, or so I’m told.
I agree. But by supporting the Wall Street bailout, the NYT has ceded the principle.
It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America.
A Chapter 11 bankruptcy would really be a very healthful thing for the industry. Under such a proceeding the debtor remains in possession of its assets while it is financially reorganized and its debt structure redone and it continues doing business. Most important, all of its creditors are forced to participate in the negotiations. That would definitely include the UAW and its retirees.
The UAW retirees benefits are currently immune from anything other than a bankruptcy. To get an idea of what this means, all you need to know is that the average copay for a UAW drug prescription is about $1.00. Try to get that kind of a rich benefit even if you’re a government employee!! The UAW also has very rich early retirement benefits, which are not generally guaranteed by the PBGC. Any bailout will necessarily cover these huge costs, forcing millions of people with far less generous benefits to cover the UAW and reward them for their extortion of the auto companies and the buyers of American cars.
Do you think those so-called representatives actually care what the people think anymore?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.