By Staff
Scot Beard
With the decline of the economy many individuals and businesses are feeling the pinch such circumstances bring about.
Many people in the United States have either lost their home or know someone who has lost a home because the adjustable rate mortgage they agreed to adjusted itself out of affordability.
Eventually, this led to lending drying up and the economy going down hill.
The government responded by passing an unpopular plan to loan $700 billion to companies to keep the economy afloat.
The economy is still struggling and consumers are not buying big-ticket items such as cars and trucks.
As business decreases, automakers are struggling and the government is now debating another bailout plan for three biggest automakers in Detroit – Chrysler, Ford and General Motors.
They say the money from the proposed bailout would help the industry transition from producing big vehicles to more sensible options for consumers.
Some lawmakers have proposed diverting $25 billion from the original bailout package to aid with the transition, but the automakers said there would be too many strings attached for this to be useful.
What?
If a business is on the verge of bankruptcy – like General Motors is rumored to be – any money should be welcomed.
Many of the problems faced by these automakers are of their own doing.
Instead of being responsible and transitioning to fuel-efficient cars earlier – a smart move considering there is a limited supply of oil in the world – these companies decided to build and promote large, gas-guzzling vehicles that only made the cost of fuel skyrocket as demand increased.
Stupid business practices – like Ford purchasing the naming rights to the Detroit Lions' stadium – also contributed to the current situation.
The automaker is spending $40 million over the next 20 years to have its name on the stadium of one of the NFL's worst franchises.
These automakers want money to save the companies from the bad decisions made by executives, but they do not want any supervision as they begin to spend it.
What will stop them from reverting to their old ways and seek another bailout?
Foreign companies that are building vehicles in the United States, such as Mercedes and Toyota, have avoided these problems by looking to the future and by making smart business decisions.
Maybe the best course of action would be to let one of these Detroit-based manufacturers fail – it would teach other businesses that ultimately they are responsible for their own success and failure.
It would be difficult, especially for companies that supply the automakers with steel or parts, which would probably keep the economy repressed longer.
Yes times would be difficult, but is that a good reason to use tax dollars to reward companies for consistently making bad decisions?