The proposed government bailouts have too many zeros for me to keep up with. We now hear that Freddie Mac just posted a $25.3 billion loss in the third quarter and needs $13.8 before the end of November to cover obligations. As has been reported the federal government has pledged to provide $200 billion in aide to Fannie Mae and Freddie Mac.
It will be interesting to watch and hear the Capitol Hill exchanges between the CEO’s of Freddie Mac and Fannie Mae and members of the House Oversight and Government Reform Committee when they meet next week. The AP reports that “both companies have been asked to turn over a long list of documents and e-mail messages concerning the risks the companies took in their mortgage investments, accounting, and compensation for the companies’ former CEOs.”
A few relevant Questions.
What’s your opinion of this government bailout?
What happens if we don’t bail them out?
How do you feel about other possible bailouts such as GM and Chrysler?
Another major bailout was for that insurance giant AIG. We initially offered $85 billion only to learn that they want an additional $37.9 billion dollars.
Should there be a litmus test where some qualify for the handout and others do not?
If so how and where do we set the bar?
We’re not really bailing out the auto industry. Unfortunately, we’re actually bailing out the pension recipients, and as bad as the ‘negotiations’ went for the automakers the last time this came up, they need to give the pensionees something. From what I understand, it’s so bad that labor is actually re-negotiating because they understand that something is better than nothing.
Banks deal with money exclusively and took total advantage of loosened lending restrictions. The auto industry was weak but the banks shot themselves in the foot on purpose. I think we shoud give GM the 25 billion to buy Chrysler so that they can liquidate it (it’s always been the weakest link anyway). The banks are getting 700 billion for being TOO aggressive. I say let them fold. We the people have to declare bankruptcy but these thieves get rewarded for ripping people off? Come ON! Let’s bail out families instead.
SMS
There comes a time when we simply have to let companies file Chapter 11.
In the case of the auto industry all contracts would be terminated. This would enable them to renegotiate with the powerful unions to address the high burden caused by previously negotiated agreements that simply drive the “big three” out of competition. Here’s some info that needs to be shared:
“So what ails the US automotive industry? Some of its problems are self-inflicted: a reputation for iffy reliability and aging product lines that rely too heavily on behemoth SUVs even in the face of rising gasoline prices have helped to allow foreign competitors to grab ever more market share. But there are deeper structural issues that threaten the profitability and competitiveness of the industry, and the blame for these problems lies squarely with public policy makers in Washington.
First, rising health care and pension costs are draining funds from Detroit’s coffers and choking off R&D funding. Last year GM spent over $5.2 billion on medical benefits for over 1.1 million workers and retirees. That works out to over $1,400 per vehicle! There is more health care than steel in the cost of each GM vehicle sold. On top of that, GM made over $6.5 billion in pension contributions last year, and the firm supports three retirees for every current worker it employs.
The other American automakers are in the same boat. In 2002, Ford spent $2.5 billion on health care benefits, and DaimlerChrysler spent $1.4 billion. In Japan and Europe, national health care plans mean that corporations pay little or nothing to maintain a healthy work force. Health care costs are thus the source of a significant competitive disadvantage for the American auto industry and manufacturers generally.
In short, rising health care costs threaten economic growth and job creation in the US. The profit margins and international competitiveness of US corporations are increasingly under pressure from health care costs, which are becoming the most contentious issue in collective bargaining agreements. Over the years, the UAW has secured very generous medical plans for its members, and is now coming under increasing pressure to renegotiate its benefits to help the automakers and their suppliers return to profitability.”
Larry, Thank you for making the point that our system of healthcare is bad for buisness! Now perhaps we can get away from this ‘socialist’ label and start spending our healthcare dollars in the most efficient way possible. We can no longer allow these old systems to continue when its proven that they are hurting us economically. What we have now is welfare for the insurance companies, I wonder when they will line up for their bailout? Record profits, salaries, and bonuses don’t seem to be preventing banks from lining up at the government trough.
Buffy, “We the people have to declare bankruptcy but these thieves get rewardedfor ripping people off?” have you looked into individual bankruptcy lately? I think the Reeps closed that door earlier this decade.
anonymous.
Larry Gilbert is NOT promoting a new system for public funded health care. He was pointing out that the auto industry signed UAW contracts that are a major drain on their revenue as spelled out in the text which I posted, but did not author.
Union leaders need to take a hard look in the mirror and ask a simple question. Is a half loaf better than not having a job to provide for your union membership families? Is the objective to create and retain jobs or drive the toughest contract with the manufacturing sector which results in higher costs passed on to buyers, if in fact there are any out there today.
And no. I do not support any bailout for the “big three.” They created the mess they find themselves in just as they did during the Carter administration when Japan introduced smaller, higher mileage, vehicles to deal with the high cost of fuel. Keep cranking out those Hummer’s for our governor.
anonyms –
Good point! lol
Oh, and Larry. You do realize that referring to yourself in the third person is a warning sign of mental illness, right? 😉
SMS
Sarah. Perhaps I should have added “I approve this message.”
“Mental illness.” Now you might be on to something. Anyone who devotes as much time to politics as I have since moving to CA has something missing upstairs. Or as Edmund Burk stated: “All that is necessary for the triumph of evil is for good men to do nothing.”
SMS. Now the question for you. Can you define “good men?”