Bailout Mistake!

Well, it’s been an interesting week. Since the big bailout of our banking industry has proven to be so successful congress is now considering supplying an influx of taxpayer cash to the ‘poor US automakers’.

Speaking of success, let’s recap a bit. Here’s an interview with Senator Ron Paul from August – before the monster bailout passed.

A good analysis if whether someone seems to be a person of wisdom is to look at some of their former predictions and see if what they were talking about actually came to pass. All the gurus (and even our president) were warning that if we did not pass the bailout package, our investments and 401K plans would be in jeapardy. Ron Paul and other voices of reason were trying to explain that propping up a failed system would not only not fix the problem but would actually make it worse and prolong the pain.

So, let’s look at what actually has happened to date. On 9/19/08 – the Friday close before the date of this video the DJI average ended at 11,388.44. At the close of day today, 11/20/08 – a mere 2 months later the Dow closed at 7552.29. I’m certainly glad that they took immediate and drastic action to protect our 401k, investment and retirement accounts.

Which brings us to going with what’s working. Since the bank bailout worked so well, congress is now considering a bailout request from the big three US automakers. So, this week the CEO’s of all three companies traveled to DC to plead their case. The only problem is that they are so incredibly out of touch with the real world and have such a sense of entitlement that they thought nothing of coming to the soup kitchen for a handout in their ‘Rolls Royce’. That’s in a figurative sense of course – what they actually did was fly in on 3 separate private jets.

They really need to let these companies die in their own stupidity. It’s the price you pay for years of mismanagement and inefficiency. They’ve been pushing overpriced vehicles on us for years, using cash incentives to make us consider purchasing new vehicles before we actually need them. Don’t ask us to now reward your corporate greed and entitlement mentality.

Let the party begin! Companies line up for bailout money.

Now that the federal government is eager to pass out $700 billion of Americans’ hard-earned money, a long line of companies are in fierce competition for their share… unfortunately it’s not just the banking industry that wants a handout.

The congress approved bailout fiasco gave Treasury Secretary Hank Paulson a broad range of lattitude in where the money goes and the terms by which companies can request it leaving lobbyists and special interest groups scurrying into action. According to a New York Times article entitled “Insurers are getting in line for piece of Federal bailout,” the Financial Services Roundtable has already jumped in. This lobbying group in the financial service industry on October 24 asked the treasury to broaden the $700 billion windfall to insurance companies, auto companies, broker-dealers and even foreign-owned financial institutions.

Even Democratic presidential candidate Barack Obama has weighed in on the action with his support of the auto industry requests. Despite a recent Congress approved $25 billion loan to automakers downward trend in the economy has caused a drastic reduction in new car sales. Despite blaming this on economic factors, the US auto makers have been losing out to foreign companies due to a failed business model. Faced with exhorbitant labor, benefits and ‘legacy’ costs these companies need to be left go into bankruptcy and reorganized in an efficient manner. But that’s a subject for another article.

Back to the bailout – bankers are claiming that bailout money is being used to pressure them into mergers and takeovers that will re-shape the entire financial sector. National City realized that it was not on the receiving end of any bailout money and so accepted an offer from PNC Financial who used most of it’s 7.7 billion dollars of your and my money for the purchase. Similar to that was the Wells Fargo takeover of Wachovia.

Thus begins our governmental encroachment into the private sector and a dangerous step toward socialism.

What are your thoughts? Any chance that common sense will prevail?