Bailout Part I
The Calm
November 21, 2008
As a lifelong Democrat, I cannot possibly express how disappointed I am in the utter lack of leadership in the House and Senate. Ms. Pelosi’s apparent lack of integrity (assuming that she possesses enough native intelligence) approaches that of Republican leaders John Boehrer and Mitch McConnell. Mr. Reid’s apparent incompetence in a dysfunctional party in which seniority trumps competence is as close to “Alice in Wonderland” as I have ever seen in American politics.
Hillary Clinton has no choice but to seek the post of Secretary of State because she has no chance, whatsoever, to be a power in a Democratic led Senate, despite being, by far, the most qualified to lead the body. Rham Emanuel’s chance of leading the House is equally impossible, thus his choice to become President-Elect Obama’s Chief of Staff.
The recent dispute over the fate of the American auto companies is a perfect example of the combined abject stupidity (President Bush) and abject incompetence of both his Administration and the Congress. A functional President Bush would, of course, commission a study (where are you James Baker?), perhaps a panel involving Mitt Romney and Andrew Card and a few intelligent Democrats.
Perhaps, they might examine the two most popular suggestions: Bankruptcy vs. Bailout. What are the advantages of Bankruptcy? Some advantages: Creditors would not get 100 cents on the dollar. Management would have to develop a reorganization plan that includes new auto designs, energy considerations and realistic predictions of cost. Labor will have to negotiate new, more reasonable agreements and take some sort of “hit” on wages, pensions and cross training. The major disadvantage: no matter how sincere the government is in assuring the public that the industry will not collapse, people may not buy a product whose warranty may not exist months from now.
What are the advantages of a raw Bailout? It will save jobs, millions of jobs. What are the other advantages? (Silence) What are the drawbacks of a raw Bailout? The second, third, fourth… Bailouts.
Not being a financial authority, let me ask a simple minded question: Why can’t we take virtually all of the advantages of the Bankruptcy package and put them in the Bailout package??? With a virtual guarantee that the automobile companies would survive, people might feel safer in purchasing their vehicles. Another idea, suggested to me by my brother, would be for the companies to sell their vehicles at 30 to 40% discounts, thereby constituting a virtual economic stimulus package in itself. This could significantly enhance viability of a Bailout.
Allen Finkelstein, D.O.