Is the Auto Industry Seeking Bailout Money Again?

Although the fact that the subject about bailing out the American automotive industry has become quite controversial, the fact remains that it is simply a small distraction when faced with the scope of the economic meltdown overall.

Many critics ask why doesn’t the ultra-profitable oil industry loan the measly seventy five or so billion dollars to the American auto industry to jump start it rather than expecting taxpayers to foot the bottom line of the loan?

The oil industry makes hundreds of billions in profits on top of expenses yearly, they could easily afford to bail out the auto industry if they actually cared about saving it, many critics have pointed out various times.

This proves to many that it is simply a small distraction from the overall disaster looming ahead in the within the horrific reality of credit default swaps and derivatives.

The reality of the financial meltdown is that there is a great imbalance in the world economy, and that is there is a large force consuming vast amounts of wealth without redistributing it creating a vacuum or liquidity crisis.

This reality of people hoarding money and not spending it, combined with the fact that banks loan out up to nine or ten times their actual reserve holdings through credit loans thus creating massive risk in the event that the loans go into foreclosure, has helped cause the crisis.

Hoping that by that bailing out failing corporations we can somehow solve the almost totally unrelated problems of bank loaning practices and financial inequality, will in fact only make the problem worse rather than better.

Auto Industry Seeking Bailout Money

Many critics believe that because many holding management positions within the automotive industry are simply not fit for management and are not educated or focused on their job, that this has greatly contributed to their insolvency.

By spending most of their time using company funds to party and travel to exotic locales for meetings, corporate executives have shown they are not interested in fair business, but rather in using corporations for their personal indulgences.

Many view the auto industry seeking bailout money as simply a way to extend their party just a little longer at the expense of the taxpayers.

This is generally referred to as incompetent management, and the solution has historically been to fire the manager and possibly restructure the entire company to make it profitable again.

If it cannot be made into a profitable enterprise, than the solution is to discontinue it entirely and close the doors.

These may be difficult decisions for many people to swallow, but wise citizens know that it is economically sound and that new jobs can be created in new more profitable industries.

Auto Companies Unprofitable

There are many reasons why American automotive corporations have began to fail, and several of these reasons have been known for a very long time.

One major reason is because American vehicles gained a unfavorable reputation among Americans in comparison to cheap Japanese models which were very reliable and economically efficient, partially due to the lack of high tariffs on imports.

Because of their reputation for falling apart so quickly, and their reputation as ”gas guzzlers”, American vehicles have been frowned upon throughout the world including America because of their reluctance to progress.

Combined with poor management and wasteful practices across the board, the corporations begin to fall into negative profit quickly.

Too Wasteful

The way that the American automotive industry has formed over the last several decades in the United States has had a considerable impact on its eventual bankruptcy and led to the auto industry seeking bailout money.

They produce such a massive inventory of new model vehicles each year and send them to dealerships at such a deal where the dealer feels compelled to sell the vehicles no matter what the cost, and so a huge problem has developed.

The realization that the market was over saturated with cars from all parts of the world and that used car markets with thriving with massive inventories has caused the modern car industries to either change their production model or face bankruptcy.

If the management of the companies had any real foresight into the reality of the car market, they would have known decades ago how to prevent the problem.

The auto industry seeking bailout money is simply a result of these factors causing the industry to go into insolvency, but many wonder why the ultra profitable oil industry doesn’t foot the loan for the auto industry?