The Next Round Of Bailouts

I just read on AutoBlog.com that Bush has decided to greenlight the "$17.4 billion in low-interest loans to General Motors and Chrysler (Ford Motor Company has said it does not require relief at this time)." Props to Ford!

At this time I would like to extend a very special thank you to the UAW. Thanks for not supporting a reduction in the wage rages for those you represent (sarcasm intended).

For years we have seen inexpensive and high quality import cars flooding into America. These cars are built by hard working individuals for about 1/2 of what US union auto workers are paid. I don't understand how simple economics has escaped the big 3. If you are paying too much for labor which causes you to no longer be competitive in a market, why aren't you allowed to cut wages?

But let's also focus on the R&D and marketing efforts of the big US automakers. The way I see it, the US car manufacturers had a choice a while back. They could either research, develop and market fuel efficient vehicles OR they could have picked a different route. The alternate route was the one they ventured down.

"Hey, I got an idea, let's make the biggest, most inefficient vehicles that we can muster (Hummer, Suburbans, Escalades, Excursions, The Hemi, etc) and when gas peaks out at four something a gallon, let's panic."

The pain of $4 gas caused an almost overnight shift in consumer behavior. Unprecedented by most standards, this shift in buying patterns and lifestyle choices happened fast and will take a long time to change, if at all. People won't soon forget the $4 pain at the pump and have made changes in their driving and buying patterns that will last for quite some time.

Now that car dealer across the country have HUGE, unpaid inventory of trucks and SUVs that aren't moving, the juice on the floor plan is putting some out of business.

Granted, this isn't free money. The $17.4 Billion is in the form of low interest loans. But I ask, where do we draw the line? How big do you have to be to get bailout money from the Government? What about the lifeblood of our economy, small businesses? I am sure there are plenty of small to medium sized companies that are feeling the recession pain. $17.4 billion would go a long way if small businesses were allowed to get up to $500,000 in low interest loans. This means that 34,800 small to medium business would be able partake in a similar loan program that, in my opinion, would go much further in stimulating the economy.

I wonder how many people are employed by 34,800 small to medium businesses across the country. AND how much in taxes do those same businesses pay? Am I being ignorant or naive? Do you know of any small businesses that could use 500 large?

What are your thoughts on this whole deal?

Have a great weekend everyone.