Should the auto-makers get the same bailout as the lenders did?
The automakers are going to Washington this week to ask for money too -- are they entitled to the same assistance as Freddie Mac and Fannie Mae?
Best Answer
951 points
Grudun answered 3 months ago …
While there is an argument that could be made to offer them favorable loans from the Fed, they are in no way entitled to the same assistance as Freddie and Fannie. Freddie Mac and Fannie Mae were created as government sponsored organizations and the federal government has always been a shareholder and has also had some obligations to support them. The takeover is just the ultimate ending of those obligations. Automakers have so claim to government sponsorship. The best thing the government could do is help the automaker renegociate the ruinous contracts the unions forced on them decades ago and allow them to recover by themselves.
Read more from Grudun great answerAnswers
2703 points
MNSL answered 3 months ago …
I do not think government can bailout almost everything.
Bailout out is not a good thing for the economy in the longrun.
3127 points
EthanR answered 2 months ago …
Since the banks gambled and lost, and since the car makers gambled and lost, I guess it means that following the car makers bailout, the government will now take their act to Vegas. I can see them setting up a little stand on the street, with a sign that says "Government Bailouts for Gamblers! Sign up here!"
To answer your question, I feel these bailouts are terrible, but designed to keep the financial system from falling into serious recession or depression. It reminds me of the spouse of an alcoholic, buying the beer so the alcoholic doesn't become mean and abusive. That's called "enabling". So what is it called when Uncle Sam does it?
105 points
fwkeith answered 2 months ago …
It's called socialism. We've made the transition from home ownership being a priviliege to being a right. So rather than saving for a down payment and, heaven forbid, paying a higher interest rate (my first mortgage required 20% down and carried a 9% rate) we allowed disreputable real estate brokers and inept bankers to force feed loans to people who shouldn't have been able to qualify for a credit card much less a mortgage. Welcome to Amerika.
Read more from fwkeith flag as abuse great answer408 points
SallyG answered 2 months ago …
No. Even Lee Iacocca, who got a loanfrom the federal government to help Chrysler, said in his recent book (I believe it's called "Where Are the Leaders?") that he would never have done it if he could have seen what would happen to that company after his tenure. Capitalism means taking risks, and those with the "winning" products get the profits. Iacocca, whom I greatly respect, also said that when the Japanese manufacturers came in and talked about energy-efficient cars, Detroit laughed, not seeing what would lie ahead. He also reports that American car companies couldn't offer a warranty over 5 years to compete with the Japanese 10-year warranty; American cars wouldn't last more than 5 years and warranty claims after that period would have bankrupted them. The only constant is change; those who prepare for it best (and, to some extent, have luck on their side) will survive best.
Read more from SallyG flag as abuse great answerMore from this Category
Is it better to buy automaker's stocks or bonds right now?Asked by Informer in Energy and Industrials one week ago
Will the bailout for the automakers come too late?Asked by Intern in Energy and Industrials one week ago
