Monday, March 30, 2009

BAILOUTS: IT"S THE ECONOMY STUPID

You know I have really been confused over the whole auto bailout plan I admit. As a union worker and avid supporter I wish the industry well. As an American taxpayer I think they should be held accountable. Inner turmoil to be sure. The more I see about the continuing problem and the involvement I have in it (my wife is still a Ford employee) I continue to be torn on the whole issue.

Let's take this whole bailout mess apart.

The whole concept of bailouts began years ago with Chrysler Head Lee Iacocca asking for money to bailout Chrysler. At the time everyone jumped on board. I mean why wouldn't we right? A major American employer was in trouble that would devastate, at least temporarily, the industry and cost thousands of jobs. This coming at the end of the 70's when inflation was out of control, home loans costing as much as 11% for good credit, and all of America footing the bill for a lousy economy.

Made great sense then.

A funny thing happened then. The 80's brought about major greed and corruption, junk bonds, paper money and so forth. Thanks Michael Millken. Gas was cheap per se, people wanted bigger and better, and status symbols became the norm. With the advent of cheap financing gimmicks, the introduction of affordable SUV's, and the profit margins afforded those sales, the automaker's got lazy and greedy.

As the 90's rolled around with cheap credit available to almost anyone the problem worsened. When the Joneses could buy a new SUV everyone wanted to keep up with them. Why be left behind? Somewhere along the road we forgot about savings, and sacrifice, to realize our dreams. Dreams that would last a lifetime.

Not just until the first missed paycheck.

We became a Country of little or no responsibility for ourselves and our ways. We became dependent on the Government to bail us out instead of becoming creative and bailing ourselves out. We said "it isn't our fault it is theirs" clearly avoiding the responsibility that rests on our shoulders for our decisions and actions.


We became used to easily available credit with interest sucking us dry and rationalizing it with "everyone else does it." Cheap money gotten easily and banks willing to cram it down our throats. Not once did anyone think about the possibility that it could dry up.

We continued this throughout most of the years of George Bush. 911 came and it was a great excuse to turn a blind eye on our problems and say "we are Americans we must unite against the evil terrosists in the world out to destroy us." We allowed the spending on the war to cloud us and give us cover for the evil terrorists coming from within.

We became apathetic and became followers of leaders who did not have our best interests at heart into the gates of hell.


And now we all suffer for it.

Anytime questioning began and the cloud lifted about our current financial mess we were bombarded with the mantra call of "911." It was used at every opportunity to derail us and make us forget to see what was happening right under our noses. The evil terrorists from within quietly seeping it's way into our daily lives and destroying many of us in the process.

And we bought it. Why not? After all, war has always been a great rallying cry for America historically and has helped us tremendously fix our economic problems in the past.

The funny thing is those problems were fixed through a rigorous manufacturing economy that was converted to make planes, ammunition, tanks, etc. All vehicles of war. Ford was one of the first American manufacturers to jump in and help in WWII for the good of the Country. Did we learn about the effects of a robust manufacturing base on our economy?


Nope. We continued to erode the manufacturing base in this Country for a cheap less expensive service economy. Or so we thought. Less expensive? Not really. Look at what it is costing us now with high unemployment and no way to work our way out of this mess. Politicians continuing to load these so called "stimulus" plans with excessive pork spending on things we simply do not need at this time. Is this what we should do in times of supposed budget "crises?" I think not.

Without the manufacturing base our course is tougher. We simply cannot build our way into prosperity. And if I know that so do the politicians yet they do nothing to combat it.

The mindset has been lost through the decades and continues to fail us everyday. How could anyone claim to be American and care about We the People and then sell us all out for personal financial gain and ruin?

That folks is the underlying question we must ask ourselves today. How did this happen and why did WE allow it to. Greed at all levels.


We gave the banks a $750 Billion bailout with little to no stipulations involved. Money that was supposed to be used to make loans and get money circulating again. Free up credit they said. Allow people to buy things again they said. In short, the bailout did not accomplish any of that to date.

Instead the money has went for buyouts of other banks creating a larger bank in most cases eliminating competition. It has been used for lavish spending and corporate graft and greed (read about AIG fiasco's anywhere on the Internet). Throwing money at a problem is a short term solution to a long term problem and will burden us for years. We must change the mindset to fix the problems. We must demand better from our elected leaders.

The auto buyout money has been loaded with stipulations clearly designed to help bust unions. I will catch flack for this statement I am sure but so be it. The facts are the concessions made by auto employees and the UAW have been extraordinary and by agreeing to these concessions the auto workers themselves have proven they are willing to do whatever it takes to make the industry successful. Yet with this in mind all the concessions given by the UAW and the workers amount to a miniscule paltry amount in the millions of dollars when even Ford lost $17 Billion last year. The employees could give up everything and work at minimum wage and that would still not be enough to offset the losses thanks to corporate greed.

Self serving to save their jobs? You bet. A painful way for employees who have built their future on contractual promises to save them, nonetheless, considering they had absolutely nothing to do with the problems today. These people sell their bodies for better wages and benefits, which incidentally are no better or worse than most anyone's today with co-pays, deductibles, etc. I mention this to avoid at least one part of the sure to come arguments about the benefits being part of the problem.

In fact, thanks to the efforts of the auto industry employees, you know the line workers who build the cars they are told to without any consideration of what they think should be done, the bottom line costs associated with employees have been dramatically lowered. With little effecton the bottom lines of the industry.

Have we seen any concessionary things coming from those who receive bank bailout money to this degree? Nope. But we have seen the lavish spending on weekend getaways and bonuses to management at AIG and others.

Buyouts have become just another way to avoid responsibility for your actions and choices. We should have learned the lessons long ago with Chrysler leading the way. Cause and effect would have taken a natural turn and many would have learned from the mistakes of Iacocca and Chrysler. Unfortunately, we did not.

Now we have become a buyout mentality Nation. If it is good for one then why not the other? At least if we are going to use buyouts to "stimulate" the economy make it fair across the board. Put uniform rules in place that apply equally. Do not allow the money buddies of politicians, like AIG, get a free ride compared to others in the same predicament. Personally, I see the need to help the automakers IF they do what they have to do. I do not believe in the billions being given to the banking industry for failures that continue thanks to little oversight.


I do not believe the government should dictate to any private company what they can or cannot do outside of agreed upon stipulations. That is not the job of government. We must be a Nation that believes in giving people a hand up not the one we have become as a Nation of giving handouts.

That used to be a Democratic principle. Somewhere it got lost in the equation.

Hold the leadership accountable. The employees are the ones who really suffer in hard times yet are the least of the problem in regards to waste. Survival of the fittest says it all.

Big fish will always eat smaller fish. They have to in order to survive.

I don't know about you but these days I feel like our Government and their Corporate buddies are the sharks.

I am, unfortunately, their next meal. The guppy.

Your thoughts?

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Ed Springston

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