All this talk about bailouts and stimulus packages and tax cuts and quadrillion dollar deficits until after we’re all long dead have gotten me thinking about what the founding fathers would have to say.
Most economists today are in semi-agreement that deficit spending is necessary to counter a recession when used properly in a counter-cyclical manner. Even I agree with that to a certain degree.
However, this particular fiasco was largely caused BY the crackheads in Washington, not by the general population who are now going to foot the bill. Almost any average person, if asked, could have told you that giving low interest rate jumbo loans to hobos was a recipe for disaster, yet the government allowed – nay, encouraged, nay MANDATED that financial companies do just that.
It is my firm belief that the best way for our country to succeed is to have a basically unfettered free market. That means FREE from government tinkering aimed at making things “fair.” What always seems to happen when the government tries to right a wrong is that everyone ends up screwed. Has it helped the hobos of the country that we gave them loans? Of course not. They’re still going to end up homeless, and now they get to have a foreclosure forever on their record. Thanks congress.
In a free market, smart, efficient companies succeed (Toyota, Honda, etc.) and stupid, moronic companies (GM, Chrysler, AIG) go out of business. This is not a bad thing… on the contrary, failure of big, stupid companies end up helping everyone. That’s because when a big, stupid company fails, a lot of enterprising, smart people come along and pick up where they left off. So instead of having a GM monolith that can’t make a profit to save their lives, we have stronger companies (like Ford, and all of the foreign ones) come along and make a better product, and make it cheaper.
I don’t know about you, but I don’t think using tax money to keep morons from failing is a good idea.
People always say “but what about the unemployment, what will happen to my warranty, woe is me. They’re too big to fail.” Poppycock!
Smaller, smarter, more efficient companies will JUMP into the void left by a GM failure. The GOOD people from GM will find work with one of those smaller companies, who will realize that GM going out of business means they can help out consumers and make a few bucks, too. How long do you think it would be before someone came up with a very lucrative idea that would honor GM warranties, while still being fair to consumers? About a week. And how do I know that it will be fair to consumers? Because in a free market, if you have a crappy deal or a crappy product, NO ONE WILL BUY IT!
Those of us still employed are going to be paying for GM employees to keep their phoney-baloney jobs and continue making crap products.
You probably saw that Hyundai is now offering a money-back guarantee if you lose your job. That’s the kind of free market innovation we’ll start to see from the SMART companies. The dumb ones, however, will just spend their time lobbying for more handouts.