The bailout boondoggle, GM, and me me me
The Great Bailout of 2008, ill-conceived and hastily enacted in early October, is continuing to implode. $700 billion, more money than most of us can imagine, is half gone, Treasury Secretary Hank Paulson has unilaterally changed the rules for its distribution, and the oversight committee has yet to be named. This, you’ll recall, is the bailout that we absolutely, positively had to have “this week” or the U.S. economy would go poof.
Originally the bailout was intended to help America’s financial institutions survive their own poor business decisions — all those subprime mortgages to home buyers who clearly could not afford them — and help those same buyers keep those homes. It became apparent in short order that the banks were not spending the money as intended. Not surprising, since there weren’t any rules in the bill. Oops. What they were doing instead was paying huge bonuses to their execs, dividends to their stockholders, and, in the case of AIG, footing the bill for execs and their underlings to continue going to lavish “business meetings” at fancy resorts.
Reports of foreclosures continue; reports of homeowners being bailed out have been non-existent. Yet now the discussion is swirling around a bailout for General Motors. GM, we’re told, employs one of every ten workers in the U.S.; GM must be saved.
Baloney. GM has been a bloated, failing corporation for decades. While Americans turned to high quality, fuel efficient, stylish foreign cars — and usually paid a premium for them — GM continued to produce giant, gas-guzzling road hogs of questionable quality. They were slow to react to public demand, slow to improve their quality, slow to produce more fuel-efficient cars. Sure, maybe their quality is better now, maybe up-to-date high-mileage cars are going to be rolling off the assembly lines next year. But it’s too little, too late. Businesses that don’t respond adequately to consumer demand and market conditions either fail outright or go into bankruptcy. It happened to the airlines, and the ones that scrambled fast enough are still in business. GM needs to do the same, or die trying. Like the dinosaur it is.
And no sooner had GM stuck out its corporate hand (“we’re a financial institution too; we finance cars”) than the cities of Philadelphia, Phoenix, and Atlanta followed suit. How a city qualifies as a financial institution in need of a bailout isn’t clear, but hey, free money is free money, right? Let’s all get in line for a bailout. We can all use some financial assistance, right? My mortgage still needs paying off and a fat annual government stipend would help ensure I don’t go bankrupt in the coming years. Grandmothers are vital to America’s future, after all. Where would you be without a grandmother? Everybody has one. Two, in fact. You wouldn’t exist at all without grandmothers. That makes grandmothers far more essential than GM.