Monday, November 24, 2008

Home Work Assignment


Last week Congress sent the Big 3 automakers home with their tails tucked between their legs. The Big 3 were told to draw up business plans of how they would go forward and change their business to prove they deserved to be bailed out.*

I'll say this now, the federal government, and hence American tax payers, will bail out the automakers. And ultimately, although I'm torn, we probably should. 100,000s of jobs, concentrated in a one region, are directly connected to the auto industry. The ripple effect of the Big 3 failing is estimated as high as 3 million jobs.

* Many people don't want to call this a bail out. The money would be in the form or loans or an equity stake in the companies. But if these were good investments then the government wouldn't have to do it. Private cash would be flowing in. Ultimately we may get some money back out of them. We might even make a profit. But it's a bad bet and this is a bailout.

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