Oops. I guess I should've learned from the original TARP bill that Congress is pretty much autonomous and does not give into political pressures.
Days after news organizations promulgated that the Auto bailout bill was going to pass, Congress, or more appropriately, the Republican party, vehemently decried the terms of the Auto bailout bill and advised the Auto companies to pursue Chapter 11 Bankruptcy (Click link to read explanation).
The Republican party is a strong proponent of free-market economics and its ideology has been severely challenged by this crisis; It took major efforts to convince them to pass the TARP in the first place. Also, given how recent events have played out -- no real tangible signs of improvement or stabilization in the economy -- the party is hesitant to dole out more cash for companies that it feels are a lost cause.
The events are interesting because it is strange how people's views have changed so quickly. America, a country built on capitalism and free-market enterprise, has resorted to socialist measures to try and and solve its issues (bailing out companies and banks). Almost everyone is also endorsing this idea as if it is our only option and because we do not want to face the consequences of what makes capitalism work in the first place - sacrifice.
Maybe a silver lining in all this is that there is still a system of checks and balance among the government and I must say, it takes a lot of guts to stand firm on your ideas when you're going against the will of the people, the treasury secretary, the president and the president elect.
Alas, the Republican party's resistance will only delay the bill because right now, the treasury secretary, Henry Paulson, is considering using some of TARP's funds for the provision of the auto bailout. If that does not come to fruition, Obama's administration will do something. However, GM has already said that they may not survive this month without the money. I guess we'll just have to wait and see what happens.
Friday, December 12, 2008
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1 comment:
The american auto industry needs a complete overhaul in its philosophy and goals-- and that's not going to happen until the big 3 tanks.
I don't even need to start about how far behind the american industry is in terms of green technology-- a quick browse through GMs fleet of "hybrid vehicles" and you'll find that none market anything higher than 35mpg (highway miles too).
But perhaps comparing mpg is an unfair standard of measurement. Let's simply look at life expectancy of american cars (I mean, 2 cars that get 50 mpg but last only 5 years is more detrimental to the environment than 1 car that gets 25mpg and lasts 10 years). But once again-- asian and european automotive industries are far better known to produce lasting, reliable and durable cars than your average american car which seems to struggle it's way to hit 6 digits on the odometer. (I'd be happy to back up my statements with numbers if you guys so request).
Nonetheless, having the american auto industry tank is going to hurt Americans-- a LOT especially in cities like Detroit. I hope Obama makes good on his promise to create 2 million jobs soon.
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