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Dec 14
Economy, Free Market, Bailouts No comments
Seems to me, if you can't weather a storm, you probably shouldn't be out in it to begin with. If you're so fragile, that you break because of a downturn in the economy, you probably shouldn't be in business. Instead, our governments have decided that they should fund these inefficient and unsustainable businesses. Why? To save a few jobs for a few more weeks. Do they never learn?
There's been numerous bailouts over the last few months. It all started with the American banks crashing and burning. Then, not far behind, were businesses providing loans and mortgages. Next, the big 3 auto makers announced they were in deep piles of smelly stuff. It isn't going to end any time soon, so are we going to bail out every single business out there? Only time will tell, I guess.
I have heard, in the past, that every person in a normal life span, will experience 2 minor stock market crashes and 1 major one. That seems to be holding true. I have deliberately stayed away from purchasing a house, since I sold my last one in 2007, because of what I saw. Overblown prices, to start. Next, a large number of people unable to afford what they have and need. Lastly, unmeasurable successes in certain areas. With regards to that last one, I am talking about oil prices hitting an all time high. It was the "calm before the storm".
I'm going to focus a lot on car manufacturers. They seem to be being hit the hardest now, and for good reasons. It isn't all their fault, but they can definitely be blamed for part of it. I'd next look to the Unions that their employees are controlled by (no, that choice of words was not a mistake). If you haven't read my thoughts on Unions, already, please do. (Note that, if you like unions, you aren't going to like me much after reading it.) Back to the car manufacturers. Their respective Unions have forced higher and higher wages, more and more benefits, and longer and longer vacations. This is not cheap for the automakers! When you have tens and hundreds of thousands of employees, even a $1/hour raise can change your balance sheets in the hundreds of millions of dollars per year. $1/hour * 100,000 employees = $100,000/hour * 8 hours = $800,000/day * 260 days (assuming 5 days a week and paid vacation) = $208,000,000. That's just the added amount. Not the total, including the previous wage amount. That is, also, just monetary, that doesn't include benefits, disability claims, or lawsuits. If you've been wondering why cars have gotten so expensive, there's your reason.
Back to the topic at hand, though. These are the companies that our governments are bailing out. First they bailed out numerous banks in the USA. I'm betting this is a, "We're doing you a favour. If asked in the future, you will do us a favour. Understand?", situation. Governments are addicted to money and power, so this just puts things in their favour. Next they are, most likely, going to bail out the big 3 automakers. Chevrolet and GM have both said that they may be bankrupt in as little as 3 days to as much as a month from now, if they don't get the money. They are unable to make huge changes because their Unions, Canadian Auto Worker's Union in Canada and United Auto Worker's Union in the USA, refuse to make any concessions on their contracts. They don't care who they hurt, they just want to make their, free, money.
This is, in my honest opinion, a time when our economy is in dire need of a good slap on the "ye-ole-reset" switch. We need to allow these unsustainable companies to fall and allow new and more efficient companies to take their place. We need to reset the insane cost of living to manageable levels. House prices need to fall, car prices need to fall, food prices need to fall, etc. This is our chance to let it happen. It will hurt, for a little while, but in the end we'll end up being stronger than ever. "No pain, no gain" as people have said.
I know I've likely hit some buttons in this one. Feel free to comment below!
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