The "bailouts" will be a huge drain on the US for decades to come. I am hugely disappointed in both the current and incoming administrations.
The jails should be full of the Wall Street types that packaged the "sub-prime" mortgages as AAA investments.
Much of the discussion has been around the auto industry, and below are my comments on this sector of our economy.
I live in Tennessee, and Nissan has a huge presence here, as well as the main Saturn (GM) plant. I don't claim to have all of the answers, but I do think that there are a lot of reasons for the problems of the auto industry.
#1 - Unions. Regardless of whose numbers you use, UAW workers earn more than their piers in domestic non-union plants. The blame for this lies squarely on the shoulders of the management of the "Big Three". They should have understood the implications of this in the late 80s and early 90s, when the Japanese manufacturers were starting to built plants here. My biggest problem with the UAW is that they seem to be more than willing to sell out their retirees. They have made promises to these people, and that should be honored.
#2 - Product Design - The European and Asian manufacturers have been much more effective in product design than the "Big Three" I love the aesthetics of the current Ford Mustang and Dodge Challenger, but would never spend my money on either. The domestic manufacturers were far too accepting of regulations regarding fuel efficiency. The American auto industry is based on the truck, SUV, and "Muscle Car" market, and has been for years. Why would they accept the average MPG requirements that have been increasing for years? There are also numerous poor management decisions involved. Ford owns Cummins, probably the best diesel engine manufacturers in the world, and has for years. Why would they continue to put the clearly inferior Navstar engines in their trucks?
#3 - Basic Common Sense - All of us know that we can't live on more than we make. GM and Chrysler especially, but the "Big Three" in general, have played the credit game way too long. The service on their debts is the real issue. Two of the three have debt obligations that are unsustainable. I still do not understand the need for credit for a publicly traded company. If you have a solid expansion plan, you can issue additional stock to raise the needed funds. Yes, it dilutes the existing shareholders value, but it is a good bet if the business plan is sound.
It is my opinion that we should not be bailing out anyone. Look at the result of the AIG bailout as the perfect example. What do we get, not better run companies, but corporate junkits that cost us all.
The orphan that we now call an "economic crisis" has no father. But, there are countless parties responsible. People that signed mortgages for more than they could pay, banks that where willing to lend that money. Car companies that got into the mortgage business, etc
My wife and i have kept our lifestyle below our means. Why should we be cast as the villain for being responsible. By most modern measures, we should like in an $800k house, have two car payments, and $50K in credit card debt. Instead, we live in a modest home, have no vehicle or card debt to speak of. The result of our responsible lifestyle, is a promise of higher taxes. Only in America.
) ----- but something that stuck with me was said by Newt Gingrich --- paraphrasing, he said something like: "Not only is the government meddling in free market affairs, but backing the losers" ------ complicated as all of this is, that simple implication rings loudly.
