Aid for automakers
Bailout money would be wasted
There have been numerous articles in the press about the possibility of a government bailout of the automobile industry. This would be a foolhardy waste of the taxpayers' money because it won't work.
The reason it won't work is that the real problems of the car companies are not money per se. Any funds that the government provides will not solve them. In short, the car companies have too much plant, too many models, too many people and too many dealers. The notion that by giving them government money, these problems will be solved is just flat wrong. Further, the notion that the jobs related either directly or indirectly to the car business will be saved by this government money is equally wrong.
Probably the best single solution to the real problems of the car business, unfortunately, is to let one of them go bankrupt. Specifically, the labor contracts that they have entered into with the UAW are geared to volumes of business that are not available now. Since the UAW will not undo the contracts because they fought for the provisions, the only way they can be undone is through bankruptcy.
From a political perspective, the Bush administration will probably not have to tolerate the bankruptcy on its watch. It would probably occur early in the new administration. There is already building a major effort on the part of Democratic politicians in Michigan to get bailout funds for the car companies. This may be a "feel good" policy, but it is a futile effort.
John Christman, Parrish
Detroit must be saved
We need to help Detroit now! Although I was not in favor of the bailout of Wall Street, the fact is the money is now out there. If we can bail out the greed on Wall Street and the banking industry, we can help the auto manufacturers. Without the work coming out of Detroit, you are looking at a real economic meltdown, not only nationally but globally. For every job lost in the auto industry you are looking at losing nine other jobs related to this industry — not to mention all the businesses that will fail with ties to this great industry.
The auto industry has been the backbone of this country. Henry Ford understood that when the workers made money, he made money. If Detroit is making money, all other markets benefit. Making credit readily available is only the start of the process for Detroit. If the people who want the loans are not working, who is there to borrow the money in the first place? If Detroit goes back to work, everyone goes back to work.
Matthew Mahoney, Seminole
Nation's problems are rooted in paychecks
Treasury Secretary Henry Paulson seems to think that the economic crisis is caused by financial institutions having too many bad assets on the books and that the way out is to provide funds to make up for the losses they are incurring from consumers not making payments. While there is some truth to that position, it is not the whole story.
The root of the crisis is that consumers do not make enough to make payments. For years consumers financed short-term living expenses by refinancing their homes. Now that the housing market has devalued, they are upside down on their homes. That means they cannot borrow to pay bills. This crisis is not solely because bad loans were made. Its root is in policies that shrank the growth of wages and shrank the growth of higher-paying jobs.
Accordingly, the way out must address this root as well as restoring confidence in our financial institutions. The causes and solutions are not mutually exclusive. When consumers start making payments, they will fund the financial institutions in the way the market was intended to work. An immediate tax credit targeted to the consumers who are most affected, followed up with a permanent tax cut is one part of the solution. The second part is to restructure the consumer debt so that consumers can afford it. Both of these also help financial institutions because instead of nothing, they will start getting something from consumers. The third part is for the government to purchase shares of preferred stock in those institutions willing to make these changes. Those funds offset the lower monthly payments that occur from restructuring the debt with the consumers.
When the crisis has abated and the companies have recovered their value, the preferred stock can be sold at a profit, which pays for the program. So far Paulson seems content with only the last part of the total solution. This certainly bails out those on Wall Street, but it does not address the root cause of the economic crisis.
Mark T. Stephens, Land O'Lakes
Aid for automakers
Stick with capitalism
I don't think we should be bailing anyone out, but I do sort of understand the logic behind bailing out banks because they give and hold loans, which may help some people. However, if we bail out the automakers and people still can't afford to buy cars, how does that help anyone? A few people may keep their job for a little longer, but without continued bailouts, how do the companies keep going? Eventually they will have to start firing people either way.
With a bailout, the CEOs of these companies will continue to get richer on taxpayer dollars. That does not make sense to me. I think you do what you can to keep your company going, including not collecting your own huge paycheck. And if that does not work, your business goes under. It's called capitalism, and America was founded on it.
Kelly Eikenberry, Brooksville
Consumer needs aid
Gee, I need a new car. Nobody is coming to help me. If auto companies fail and go bankrupt, maybe when the dust settles, I could afford to buy a car. There has to be a stopping point to these bailouts.
While I recognize the importance of successful businesses to our economy, there have not been enough restraints on private enterprise to keep the executives from raiding their companies and leaving their employees to suffer the consequences.
Shirley M. Day, St. Petersburg
Why help the crooks?
When will these bailouts end? How much more do they have to borrow from our children and grandchildren's futures?
We are retirees and nobody is going to replace the money we have lost in our retirement funds. We had planned to have this retirement money last until we die and maybe even leave some for our family. I am sure you can imagine how we feel about all these crooks on Wall Street. Lock them up and throw away the key.
Ronald Bowman, Dunedin
Free markets, laissez-faire and capitalism are sound concepts in theory. But theory does account for the effects of extreme wealth and power on human behavior. Because capitalism inherently yields individuals with excessive wealth — which usually leads to extreme power — regulation of markets becomes a necessity. And a progressive tax code is imperative to keep concentration of wealth in check. The regressive tax structure we currently have encourages levels of wealth and power detrimental to our democracy and economy.
Chi Womas, Tampa