By Yael T. Abouhalkah, Kansas City Star Editorial Page columnist
Most Americans are all for raking the Big Three automakers over the coals for their past sins, while they demand a $34 billion bailout.
But Americans ought to be equally outraged by the hundreds of billions being quickly poured into U.S. financial institutions, with much less public scrutiny.
These handouts of taxpayer funds to American International Group, Citigroup, many banks and other financial institutions have not come with the same strings that are being attached to any bailout of U.S. automakers.
The car makers are agreeing to cut jobs, shed brand names, slash CEO pay, reduce some benefits for workers, make more hybrids and sell corporate jets, all in a desperate and very public attempt to get taxpayer funds to survive.
Yet U.S. treasury officials have been handing out billions to financial institutions with nothing close to the same kind of public discussion and scrutiny.
For instance, why aren't the CEOs of all the bailed out financial companies going to agree to work for $1 a year, as the chastened GM, Ford and Chrysler CEOs have agreed?
Why aren't workers for the financial institutions having to take pay and benefit cuts, as the United Auto Workers are agreeing to do in return for taxpayer help?
Treasury Secretary Henry Paulson and other financial wizards in Washington offer the patronizing explanation that most people simply don't understand what it will take to keep the wheels of the financial industry rolling.
In other words, the financial institutions are so badly messed up that anything less than throwing money at them would put the entire economy at risk.
Contrast that to the car industry, which everyone seems to have an opinion about.
The problems have been caused by greedy CEOs, greedy workers, companies that produced too many SUVs, not enough fuel-efficient vehicles, etc.
It's unclear whether the automakers will follow the financial institutions in getting bailed out by taxpayers. But the Big Three certainly are having to do a lot more work for the handout.
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Beautiful article! It's just
Beautiful article! It's just what i needed to understand. Happy Day's Sohbet Sohbet Odaları sohbet Chat sohpet Aşk şiirleri Güzel Sözler özlü sözler Anlamlı Sözler şiirler kurtlar vadisi pusu son bölüm izle kurtlar vadisi pusu son bölüm kurtlar vadisi pusu Dizi izle Program indir Gelinlikler dantel Lida Lida Elektronik Sigara Kilo Aldırıcı iştah açıcı good site
zeewoman - are you
zeewoman - are you single?
lol - sorry, it's nice to see a new voice of reason chiming in with the others I respect here.
Informatively, Ron Gettelfinger (the UAW president) completely dodged a question directly posed to him by a Republican Senator who asked him if he would agree to accept a significant equity stake in GM in lieu of cash for a portion of the pension obligations dragging GM down - I loved listening to Ron's pathetic homily about one worker's struggle as if this wasn't happening to hundreds of thousands of others who have lost their jobs in recent months.
I was totally against the original $700 billion bailout for many reasons, not the least of which is the 'slippery slope' argument which I warned would happen - and it has. You can see today the Big 3 sliding down the slope, arguing that if you could bail out the banks, then why can't you bail out the blue collar worker who 'makes things with their hands'? And if/when these people get their pound of taxpayer flesh, there will be no end to the supplications from the acolytes of the Almighty Church of the Bailout - we're already seeing it from homebuilders backing the Treasury Department's ill-conceived plan to offer 4.5% mortgages (I don't have the strength to even begin to tell you how bad an idea this is) to advantage home buyers at the expense of everyone else who isn't buying a home.
Winners and losers, and the government gets to choose, not the market. I can guarantee you now that the government is going to cause this worst of all recessions/probable depression to last far longer than it should, due to their fumbling at dulling the pain by artificially propping up home values. It won't work, it can't - it can only delay the inevitable, which is the determination of the market finding the bottom in home prices, at which point people will begin buying homes again WITHOUT artificial incentives, which themselves could possibly begin the inflation of another housing bubble.
Here's a great article by Brian Sullivan of Fox Business News on this exact point:
http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/
The message is clear: cheap money helped get us into the mess and cheap money is going to get us out ... The solution may do more damage long-term than the current problem. Pressing artificially low interest rates in the short-term will simply create a generation of homeowners who either can’t or will refuse to move because the subsidized interest rates that funded their purchase will vanish, leaving them with no hope of an equal montly payment on a similarly priced home.
The Journal confirms the worst fears by noting that the Treasury is all but admitting it desperately wants to pump back up the housing bubble:
Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.
The government cannot hold rates down forever. And when the markets are allowed to work on their own, rates will eventually return to median levels. As those rates rise, homeowners may literally be stuck in their homes, not able to find a home that can meet their previous monthly payment. $2,000 goes dramatically less far at 7% then at 4.5%, and home prices will ultimately fall to reflect that. In “helping” to solve the housing problem, the government may end up actually stranding the new generation of buyers. Even if they can afford to move, who wants to give up a 4.5% interest rate for a rate that will likely be nearly double that? Add on another room and stay put, Myrtle, we ain’t moving.
Regardless of price predictions there is another pressing issue. At the core of this it is very simply impossibly unfair to many American homeowners. The Journal makes clear that this program would only be available to home buyers and not those who currently own and are looking to refinance. While refi rates are very favorable right now, they are generally now about 100 basis points (1%) above 4.5% for non-jumbo loans and over 7% for those who buy home over $417,000 (though the “jumbo” home loan amount was raised to $729, 750 until the end of this year). The government is thus enacting a defacto penalty on those who currently own a home and artifically benefiting buyers.
If the government could not figure out how to run the House of Representatives cafeteria at a profit, then what the hell do you think they're going to do to US?
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Don't compare apples to
Don't compare apples to oranges!
THe CEO of AIG voluntarily agreed to reduce his salary to $1 and the company's top execs are foregoing bonuses and, are not accepting pay increases.
The BIG 3 auto execs are also only willing to reduce their salaties "IF" the bailout is approved.What divisions of the Big 3 are they willing to sell off? Did any of the financial companies use corporate jets to beg for money? Does the financial sector have a union that has to be fed in all of this?
In regards to the financial sector, millions of Americans rely on their products and services to keep their businesses and families going. While the loss of American jobs is the ONLY reason to keep the Big 3 going, who says that businesses and families rely on the cars these 3 make? There is always Toyota and Honda.
I agree that greed got us here - it appeared to have been the American way. I am hopeful that America can heal itself and head in a better and more productive for ALL of its citizens.
Ah, Yael, I guess you must
Ah, Yael, I guess you must have missed paying attention to the overwhelming number of Americans who were against the $700 billion bailout if you're making this statement:
"But Americans ought to be equally outraged by the hundreds of billions being quickly poured into U.S. financial institutions, with much less public scrutiny."
Ah, we actually ARE outraged - in fact, we haven't STOPPED being outraged at the bailouts and new plans, most of which is being done without our knowledge of who's getting money and what kind of collateral they're posting, if any.
A CNN poll was released yesterday showing over 61% of Americans are also against bailing out the automakers, and they're fully aware of the consequences of not doing so. But they don't want their tax dollars being used to prop up poorly run private companies who in actuality have no guarantee of success in the near future, and in fact have had their market share tumble from over 60% in 1960 to about 20% now, a share that has continually declined. If success is such a guarantee, then how come they can't raise the money from private capital sources?
The answer is obvious - I am watching the Big 3 show on the Hill today and an economist was testifying that the eventual cost ($34 billion is only the start - remember it was just $25 billion three weeks ago?) to the taxpayers will most likely range from $75 billion to $125 billion dollars, before they can even pay it back. And how long do you think it will take them to pay THAT off?
Please, stop giggling ...
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