Ron Paul: Auto industry bailout "not morally correct"

Discussion in 'Politics, Religion, Social Issues' started by OutThere, Jun 14, 2011.

  1. OutThere macrumors 603

    OutThere

    Joined:
    Dec 19, 2002
    Location:
    NYC
    #1
    What kind of morals are we talking about here? I think Mr. Paul has morality and ideology all mixed up. Would it have been morally correct, as a society, to let the auto industry fail, taking with it hundreds of thousands of jobs throughout the country and world, and a big part of what's left of American manufacturing? No. It would have, however, been ideologically correct, appropriately suited to the strictly free-market 'libertarian' outlook.

    How do you think we'd be doing today, had we, for ideology's sake, allowed GM and others to go completely under, likely taking with them numerous suppliers, freight companies and other affiliated business? Probably pretty grim. These 'libertarians' always seem to get me riled up. ;)

    http://detnews.com/article/20110614...opefuls-knock-bailout-of-Detroit-s-automakers
     
  2. citizenzen macrumors 65816

    Joined:
    Mar 22, 2010
    #2
    It was a strategic political/economic maneuver.

    Morality had little, if anything, to do with it.

    But Republicans are keen on turning anything they can into a morality play. :rolleyes:
     
  3. AP_piano295 macrumors 65816

    Joined:
    Mar 9, 2005
    #3
    Morality = Letting big business dump mercury into kiddie pools.

    Immoral = Saving thousands of jobs with money which was ultimately returned to the government.
     
  4. MadeTheSwitch macrumors 6502a

    MadeTheSwitch

    Joined:
    Apr 20, 2009
    #4
    It was QUITE ironic to see all these people carping about Obama's unemployment rate while at the same time saying businesses should just have been allowed to fail adding to that unemployment rate even more. :rolleyes:

    I have figured out the Republican economic plan...do the opposite of Obama no matter what the consequences are and even if it adds to the problem you complained about in the first place. As long as you can be contrary, it's all good. Does that about sum it up?
     
  5. Zombie Acorn macrumors 65816

    Zombie Acorn

    Joined:
    Feb 2, 2009
    Location:
    Toronto, Ontario
    #5
    We are presented with a false choice at this point. The companies and jobs wouldn't have vanished into thin air. The businesses would have restructured their crippling liabilities so they could compete in a global market again.
     
  6. Naimfan macrumors 68040

    Naimfan

    Joined:
    Jan 15, 2003
    #6
    Yep, good point. Hypocritical even. But nothing new.

    Again, yep. I'd say you hit it on the head.

    That said, I think they should have let the auto companies go to Chapter 7 and liquidate. Some other company would have purchased the assets and continued to develop and build cars, and the companies would have had a close to completely fresh start. While some jobs would certainly be lost, the majority would not--some entity was going to continue to build cars, and thus the fears of an enormous ripple effect were consistently overhyped.

    I think what Paul wanted to convey was his belief that this sort of governmental involvement was abhorrent and 'immoral.' That at least squares with his stated beliefs that the government should have next to no involvement in the economy.
     
  7. rdowns macrumors Penryn

    rdowns

    Joined:
    Jul 11, 2003
    #7

    And who would have stepped in? Virtually every car manufacturer got bailout help from their home governments and from the US indirectly through the Federal Reserve.
     
  8. Naimfan macrumors 68040

    Naimfan

    Joined:
    Jan 15, 2003
    #8
    Who knows? A venture cap company? A corporation with lots of cash and proven management experience, like GE? A group of auto industry executives with cash? Honda? Apple? Who said it would have to be a car manufacturer? Given the abysmal performance of GM and Chrysler, perhaps a non-car manufacturer would have been a better choice than bailing them out.

    The point is that SOME entity would have swooped in and purchased the assets, and continued to develop and build and sell cars.

    Frankly, I'm surprised the GOP wasn't trumpeting the idea that GM and Chrysler SHOULD be allowed to fail, since the almighty market had spoken. Since the GOP did not, I conclude they only use the almighty market when it is convenient. Which, to be fair, is exactly what Dems do also.
     
  9. quagmire macrumors 603

    quagmire

    Joined:
    Apr 19, 2004
    #9
    Technically, General Motors Corporation is in the process of liquidating. So you're wish did come true.

    When GM declared chapter 11, they sold their good assets to a newly setup business owned by the government(US and Canada), UAW's VEBA fund( healthcare costs), and bondholders from GM Corp. Upon exiting bankruptcy, the new company changed its name to General Motors Company and General Motors Corporation changed its name to Motors Liquidation and is still in bankruptcy and will eventually liquidate.

    If GM and Chrysler went down in a healthy economy, sure that would have happened. But, they went down when the economy went down. Companies were laying people off, Toyota posted their first loss since the companies beginnings, etc. There was no one there to absorb the job loss. How about suppliers that rely on the Big 3? They would have gone down to with GM and Chrysler. Who knows how that would effect Ford who mortgaged the whole company in order to get money before the crisis.

    What's important is that GM and Chrysler are back in the black and making money. The Chevy Cruze and Malibu were the best selling cars in their segments in May( ok, thanks to the Earthquake in Japan, but 25,000 Cruze's is not bad though).
     
  10. Naimfan macrumors 68040

    Naimfan

    Joined:
    Jan 15, 2003
    #10
    "Your," not "you're." :)

    Yeah, yeah. You may safely assume I know that. It's called a "prepackaged bankruptcy."

    It would have happened in a down economy also--the only difference would have been the amount the assets were sold for.
     
  11. rdowns macrumors Penryn

    rdowns

    Joined:
    Jul 11, 2003
    #11

    A venture capital company owned Chrysler and GMAC (now Ally Bank and the recipient of billions of bailout plus Fed funds). Cerebrus ring a bell?

    There was no one to buy either Chrysler or GM. Both whored themselves out to anyone and everyone before agreeing to get into bed with the government.

    In hindsight, it is one of Obama's biggest wins.
     
  12. Naimfan macrumors 68040

    Naimfan

    Joined:
    Jan 15, 2003
    #12
    Yeah, I know all that.

    And yes, it IS one of Obama's biggest wins.

    The point is that SOME entity would have purchased the pieces. As I said, the only variable would be the number--at a low enough price, Immelt and GE or even Jobs and Apple could have swooped in and bought the assets and probably created a MUCH improved company around those assets.
     
  13. OutThere thread starter macrumors 603

    OutThere

    Joined:
    Dec 19, 2002
    Location:
    NYC
    #13
    When would somebody have purchased it? Everyone was selling, everyone was losing money. It doesn't count if someone were to buy it 5 years later.
     
  14. imahawki macrumors 6502a

    Joined:
    Apr 26, 2011
    #14
    So do exactly what the Democrats did under Bush... yep, you've figured it out.
     
  15. MadeTheSwitch macrumors 6502a

    MadeTheSwitch

    Joined:
    Apr 20, 2009
    #15
    Some entity? What entity? You assume that there were comapnies willing to line up. Perhaps Honda or some foreign investment company would have sucked up all the assets. Great. Just what this country needs...more foreign ownership. I don't know why you keep mentioning Apple either. Just because they are flush with cash doesn't mean they (or any other company) are going to invest outside their core business into one that is rife with problems and unions. it wouldn't make sense.
     
  16. quagmire macrumors 603

    quagmire

    Joined:
    Apr 19, 2004
    #16
    Honda wouldn't. Toyota certainly wouldn't seeing how they posted their first loss since the company started..... The only companies that I could think of that would possibly have any remote interest in buying up GM and Chrysler in a recession would be the Chinese auto companies and we certainly wouldn't want those rolling death traps in the US......
     
  17. codymac macrumors 6502

    Joined:
    Jun 12, 2009
    #17
    GE was watching the commercial paper market disappear. At the time, they were concerned about being able to make payroll.

    GE's commercial paper liability represented 25% of their debt load in 2008 (per Jeffrey Immelt).
     
  18. Naimfan macrumors 68040

    Naimfan

    Joined:
    Jan 15, 2003
    #18
    In your haste to try to discredit any suggestion put forth, you all missed the essential point: At a low enough price, some entity would have bought the bits. The idea that no one would have purchased the assets at a huge discount is simply wrong. As I said, the only question was at what price that would have happened. We'll now never know.
     
  19. Lord Blackadder macrumors G5

    Lord Blackadder

    Joined:
    May 7, 2004
    Location:
    Sod off
    #19
    As the asking price drops, so does the quality of the buyer. Companies buying other failing companies at bargain bin prices are more likely to strip assets and sell off the carcass in pieces rather than take the huge risk inherent in returning the company, more or less intact, to profitability.
     
  20. Zombie Acorn macrumors 65816

    Zombie Acorn

    Joined:
    Feb 2, 2009
    Location:
    Toronto, Ontario
    #20
    Source?
     
  21. OutThere thread starter macrumors 603

    OutThere

    Joined:
    Dec 19, 2002
    Location:
    NYC
    #21
    We'll never know a lot of things. If I jumped off a bridge tomorrow, maybe I wouldn't die, but would the risk be worth the reward? By not lending a hand to the car companies, we would have been essentially playing chicken with hundreds of thousands of jobs and the future viability of the American economy. So instead we lent money, that came back faster than expected, and avoided potential disaster. Sure, we'll never know how much damaged was averted, but would it have been worth letting the companies go, 'just to see' and to maintain ideological purity? I think not.
     
  22. dscuber9000 macrumors 6502a

    Joined:
    Sep 16, 2007
    Location:
    Indiana, US
    #22
    Say whatever you want about a free market, but you have to admit that bailing out the auto industry was the right thing to do. Not only did they pay the government back in a fairly quick amount of time, but the thought of two of the big three (apparently Ford didn't need it) going under.... It would have been absolutely catastrophic. Not just for Detroit or the state of Michigan, but much of that entire area of the country would have been in a literal depression.

    As for morality... Ron Paul may have just said the wrong word or something. To be honest, I thought he looked a little loony at the Republican Presidential Debate so maybe his age is getting to him?
     
  23. MadeTheSwitch macrumors 6502a

    MadeTheSwitch

    Joined:
    Apr 20, 2009
    #23
    Nah...he's always been a little out there. I was also taken aback by his "I'd be the commander in chief" rhetoric about not listening to his Generals. Geez...he seems to think we are electing a dictator here. He's running for election in the wrong country apparently.
     
  24. macquariumguy macrumors 6502a

    Joined:
    Jan 7, 2002
    Location:
    Sarasota FL
    #24
    Because it worked doesn't make it right. Where is the Constitutional authority for the federal government to bail out private enterprise with my tax money?
     
  25. Dont Hurt Me macrumors 603

    Dont Hurt Me

    Joined:
    Dec 21, 2002
    Location:
    Yahooville S.C.
    #25
    None, we were taken for a ride by Bush and then Obama.
     

Share This Page