Why is it that political pundits and everyday Americans are eagerly following the various news stories about the potential auto industry bailout? Those directly and indirectly related to the auto industry are waiting with baited breath for a congressional rescue, and the rest of us shake our disapproving heads at the notion, hoping it doesn’t go through.
Newsflash: IT IS GOING TO PASS. These congressional hearings are nothing more than a dog & pony show designed to insert some semblance of accountability into the financial dealings between our elected officials and corporate America. The reality is, there are just too many vested interests in the auto industry for political leaders to actually vote down a bailout. If all of controversy and opposition raised to the financial industry bailout failed to stop a $700 billion blank check, it is hardly likely that American’s tired of Detroit’s outdated business model are going to stand in the way of what now looks like a paltry sum- together the big three, Chrysler, General Motors, and Ford are only asking for $34 billion.
What’s even more interesting about this whole dynamic is the language being used to describe the situation. The term “bailout” is the new buzzword on the street. Since when is a loan a bailout? When we walk into the bank for a business, home, college or auto loan, we rarely list “bailout” as the reason. However, when corporate America want’s a loan, its all of a sudden a bailout. Maybe some of this criticism is warranted- but only in instances when it is truly an undeserved financial package- as in the case of the financial sector. The original premise of the financial sector “rescue package” was that “we”, the American people were going to buy toxic assets, and one day hope to get our money back. That is hardly the case now with the auto industry. They are simply asking for a loan, that will undoubtedly be paid back unless all three vanish from America overnight. American’s decry all sorts of corporations for shipping jobs oversees and outsourcing, but they then are unwilling to assist an industry, that to some extent keeps well paying jobs in America.
Is it fair to attach stipulations to the auto makers if they are to receive economic assistance? Most assuredly. Have they acted any more ignobly than the financial giants by flying corporate jets to the D.C. hearings? Hardly. The very same week of AIG’s bailout, they held luxury retreats costing hundreds of thousands of taxpayer dollars.
So what’s the bottom line? We now live in an economy so interconnected and interdependent that the government will not stand by and let any major industry fail. Period. Sure they will drag their feet and vote down the first version of the legislation and call for stricter guidelines, then appear on t.v. interviews and bemoan how their hands were tied, but that’s politics. Please allow me to save you the time and hassle over agonizing over the merit of saving an outdated business model:
Act 1- The economy is in duress
Act 2- An industry falters
Act 3- The government steps in
Like it or not, a new age of public/private financing has been born. My advice? Go buy a Chevy Volt and drive it to the home loan office.