Should the government bail out the auto industry?
In the middle of talk about government loans, the question may be whether short term loans would be a better solution to the crippling effects the current economic downturn is having on the automobile industry.
The President of the United States has requested the resignation of the current CEO of General Motors as part of some management changes that are part of the government’s recovery plan for the auto industry. Whether this is because of suspicion of mismanagement or just a way to cut costs will probably not be known for months, if at all. However, there is no doubt something must be done quickly to save the auto industry from bankruptcy.
Short and long-term effects of a declining auto industry
When you look at the short-term picture in regards to the auto industry, it may not appear very bleak. So what if Chrysler and General Motors shut down—that still leaves Ford and the import market. However, it isn’t as easy as that because the demand for cars will remain the same leaving the remainder of auto manufacturers to pick up all of the slack from the demise of two giants.
The world today relies on motor vehicles and the loss of two of the largest manufacturers would cause a more severe economic downturn than we are now suffering. Without the auto industry, raw goods would not be able to reach their destinations which in turn would push us back a couple centuries. Certainly that seems like a healthier choice but it is not one the country could endure quickly.
What is the right solution to the problem?
As one continues to follow the newspapers and sees the effect such a decline will have on the country and even the world’s global economy, we have to be honest and agree there must be a workable solution to the problem. The answer lies within the larger sphere that is the world and what is the best solution for everyone.
Whether that answer is short term loans or a complete economic government bailout remains in the hands of economists and those better able to analyze the long-term effects that may be felt if we allow even one of the automobile giants to fail.
The world’s entire economic structure depends on making the right decision and providing assurance that the auto industry returns to a stable condition. It is not something that will happen in the next few weeks and maybe not in the next few months, but it’s essential that the solution be forthcoming and a commencement of plans to rebuild the stability of the industry top the agenda.
Economists predict a turnaround the early part of 2010, but the auto industry needs recovery before then or there is not likely to be a turnaround for them. There is not likely to be any other industry that has such an impact because the auto industry is the means for delivery of goods from every other industry. Without it nothing else can survive.
I’m not sure how many short term loans are really going to help the auto industry. We certainly cannot afford to keep bailing out companies that are failing because they put too much stock in manipulation of funds to pad their bottom lines, when they should have been concentrating on competing well in the market, which GM and Chrysler, sorry to say, have not been doing so well. It is lamentable that it should be so – these were titans of industry at one point, and there’s no reason why they shouldn’t have been able to keep up.