retired aviator

GM: More Bailout-Worthy than Citigroup

Gotta disagree with the author - Automakers don't deserve bailouts but financial big players should be propped up to avoid the chance of a run on the banks. Also, the auto indutsry is probably LESS deserving than the financials, despite the widespread opinion that the financials are run by liars and crooks, which is not really accurate.

The big 3 automakers really do have a history of footdragging, even actively lobbying, against every government effort to do something for the public good - the lobbied against seatbelts, airbags, fuel efficiency and only recently put any real effort into cleaner energy autos. So even though Bill Ford and some execs have shown genuine interest in being more public-good minded, the track record overall is pretty lousy.

However, I do not blame them for producing so many SUV's! If your dealers keep ordering SUV's because they are selling off the lot, you have no choice but to keep producing them. What is the option? Car dealers order Explorers to replace the ones that were sold, and Ford ships them Escorts instead? It's the public to blame for driving gas hogs when they could buy something lighter. Pickup trucks and even SUV's deserve to exist as some people really do need them because of their line of work or where they live in the boonies.

However, since the big 3 have histories of fighting any change for the public good, there's no way the government should bail them out. I also don't like that type of precedent (yes, I know Chrysler in the 80's, but that was several administrations ago, so a very old precedent that doesn't mean anything). So I'm against automaker bailouts (even though I own shares of GM).

Citigroup, however, until recently was our biggest bank and a very symbol of our financial system in this country. The big financials dying one by one is a real possibiity that could cause major panic from depositors, which could derail our whole economy much more than the credit freeze we've seen since October. Washington Mutual ultimately was taken out in fact by a depositor run, not it's load of subprime mortgages! It was even fairly well capitalized at the time.

The carmakers' dying would hurt Detroit and certain cities badly (like the slow death hasn't already taken a major toll for years), but it won't derail the country and would arguably create a positive environment for a new auto industry that would be unshackled from a bloodsucking union that made it impossible to be competitive with heavy pensions and labor costs sinking them. (GM could lay off skilled workers, but had to pay them nearly full salary for years anyway to do nothing!)