Wednesday, November 12, 2008

Henry Paulson's Bailout Store: Time to Open

The government figured they would ask for 700 billion dollars. They didn't have a plan exactly, just a dollar figure. They say it was going to banks and insurance. Then the auto-industry collapsed, so they need some too. Circuit city declared bankruptcy, where is theirs. You see, the economic bailout has kind of become similar to opening times for a store. I worked retail and service for years. On every location, there was a posted opening time. Now the big debate always came when a person would come to the door early. It is only 5 minutes, do you open it up for them, so you do. Then a person comes 10 minutes early and 15 minutes early. At what point do you stop letting people in. What good has your posted opening time become at this point.

For Henry Paulson it is even worse. He created this nightmare so don't give him any sympathy. He has to deal with customers coming and asking for bailout money and he doesn't even have a store hours sign to fall back on. All of these programs are slippery slopes, you go down but never get back up. It leaves the taxpayers asking when does it stop. The best thing would have been to never have opened up to begin with.


Kansas Bob said...

My son asked a good question about the auto industry when he wondered why their factories need to be in Detroit instead of places that don't cater so much to unions.

If we bail them out we need to make sure that labor and executives are constrained in their compensation. The bottom line is they need to be able to compete with Japanese auto makers.

jrchaard said...

Oh bob, you really touched on a good point. What goes un reported is how unions have destroyed the autoindustry by increasing labor and retirement cost beyond what can keep them competiive. And we need to have autoplants for defense reasons. That will be a future post.

Mike S said...

The only way GM can be profitable is to jettison the pension/health care costs. They could only do that in a bankruptcy, and maybe the government would pick it up through the pension guaranty corporation. I hate to say it, but I think maybe short sighted government thinking might try to throw a bone, maybe 25-50 billion to stave off the 19B per year and growing pension. It will never work, there is no way GM will ever be profitable that way. They are losing 30B per quarter. Rick Wagonner is calling this a liquidity problem. No, don't believe it. It's more short sighted executive talk. It is a solvency problem!

jrchaard said...