{"id":5597,"date":"2008-11-24T01:40:10","date_gmt":"2008-11-24T08:59:58","guid":{"rendered":"http:\/\/www.amptoons.com\/blog\/?p=5597"},"modified":"2008-11-24T01:40:10","modified_gmt":"2008-11-24T08:59:58","slug":"you-know-what-i-need-or-maybe-you-don%e2%80%99t","status":"publish","type":"post","link":"https:\/\/amptoons.com\/blog\/?p=5597","title":{"rendered":"You Know What I Need, or Maybe You Don\u2019t"},"content":{"rendered":"

Last week, hands were wrung and tsk<\/em>s were tsk<\/em>ed over the potential $25 billion dollar bailout of GM, Chrysler, and Ford. Sure, directly and indirectly the U.S. auto industry employs about 4.5 million people. But the companies, we were told, might not be worth saving. They hadn’t built the green cars that Americans wouldn’t buy until suddenly gasoline got expensive. They dared to pay their employees decent salaries with good benefits — which is ridiculous; good salaries and good benefits aren’t for blue color workers! And they’d made some bad decisions, like counting on the financial system not to collapse. How could we possibly give them $25 billion dollars?<\/p>\n

Now, don’t get me wrong; one could argue that a $25 billion bailout for the auto industry was wrong in normal times. One could argue that we don’t give billions of dollars to private entities just because they’re really big and their failure would be painful. Of course, one’s argument would pretty much be blown up by this news<\/a>:<\/p>\n

Federal regulators approved a radical plan to stabilize Citigroup<\/span><\/a> in an arrangement in which the government could soak up billions of dollars in losses at the struggling bank, the government announced late Sunday night.<\/p>\n

The complex plan calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in the company. The plan, emerging after a harrowing week in the financial markets, is the government\u2019s third effort in three months to contain the deepening economic crisis and may set the precedent for other multibillion-dollar financial rescues.<\/p><\/blockquote>\n

Yes, that’s right: you and I just spent $20 billion for a stake in Citigroup, and we’re on the hook for over a quarter of a trillion dollars more. Citigroup employs 300,000 people.<\/p>\n

Now, don’t get me wrong — the failure of Citigroup would be a very bad thing, and it may be worth the money to keep it afloat. But how can we seriously argue that Ford, GM, and Chrysler are terrible companies that need to go under while we’re shoveling a trillion dollars into the financial services sector? How can we argue $25 billion for three companies that keep at least one major metropolitan area from collapse is foolish, but $20 billion for one bank is not?<\/p>\n

The auto industry has made plenty of stupid mistakes. So has the finance industry. But the latter has received its money, no questions asked, while the former is still being raked over the coals, and probably won’t get anything until the Democrats take power in January. Why is that? Could it be that the auto industry employs blue collar workers, while the banking industry employs Muffy and Biff’s nephew Chet, who went to all the right schools? I don’t doubt it. For all the talk of employees making $30 an hour at the Ford plant, we still haven’t heard a true accounting of the employees of the financial industry who made millions moving paper around, until it turned out the actual paper was the most valuable part of the transaction. And for all our worry about what will happen to our financial services sector, perhaps some worry about our industrial sector is in order.<\/p>\n

If nothing else, it’s time for everyone to admit that we are not operating in a normal economy. Interest rates are essentially at zero, and the credit markets are still locked. The only source of liquidity right now is the federal government’s ability to print money. Is that a great long-term strategy? Folks, right now it’s all that’s keeping us from going into a depression. So while it’s important to get strings attached to these deals (heck, yeah, Detroit should use part of their money for greening the industry), it’s also important to get deals done. Or we can simply let the market sort it out — but that means letting it sort it out for the white collar kids who went to Harvard and Columbia as well as the blue collar kids from Flint. If we’re unwilling to let the former group fail, we shouldn’t be willing to let the latter group, either.<\/p>\n","protected":false},"excerpt":{"rendered":"

Last week, hands were wrung and tsks were tsked over the potential $25 billion dollar bailout of GM, Chrysler, and Ford. Sure, directly and indirectly the U.S. auto industry employs about 4.5 million people. But the companies, we were told, … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":["post-5597","post","type-post","status-publish","format-standard","hentry","category-economics-and-the-like"],"_links":{"self":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/5597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5597"}],"version-history":[{"count":0,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/5597\/revisions"}],"wp:attachment":[{"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/amptoons.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}