I’m divided on how I feel about the recent Freddie Mac and Fannie Mae bail-outs by the government.
While I don’t like our government saving private corporations (if they go bottom up, that just shows their bad business sense, and we should let the market sort it out–kind of like Darwinism with corporations), I understand that a lot of homeowners could have been hurt by either or both of the two companies going under. However, I read this article from the Wall Street Journal and I felt myself agreeing with the author: Detroit’s Blackmail Attempt Is Beyond Shameless. Here are my views on it:

1. If Chrysler, GM, and Ford are doing so badly that their collapse is imminent, then to avoid that they need to change their business model. Maybe they should hand out fewer executive bonuses along with making cutbacks in other areas, while responding to what Americans apparently want by observing and mimicking the traits found in the vehicles Americans are buying.
2. I don’t think all three of them are going to collapse, or if they do, it won’t all be soon or at the same time.
3. I think if they were to collapse, Honda, Volkswagon, Toyota, Hyundai, and other foreign companies would see an opening in the market and attempt to fill it. This would help take care of some of the jobs lost by the collapse of the Detroit Three.
4. It is not our government’s job to go bailing out private corporations that don’t cut it. Yes, Americans would lose jobs, but see my #3 above. It isn’t like, were these three to go under, Americans would have no other vehicle companies to buy from. Also, it isn’t like there wouldn’t be other American jobs in the automotive industry (take Toyota’s jobs in Georgetown, Kentucky for an example).
5. If the government were to do a similar kind of bail-out with the Detroit Three like it did with Fannie Mae and Freddie Mac, I think it should only be done with a big list of stipulations to the loans. Namely, that the companies stop giving so many grandiose bonuses to their executives, and also that they invest some amount of the loans into research and development of more fuel efficient and environmentally safer vehicles.
6. Perhaps also, if a bail-out were to be done, the government should only pick the company doing the best out of the three, since it would be at the smallest risk of losing the taxpayers’ money if the company were to collapse anyway, after receiving the loan.
7. The United States has a crappy economy right now, hence even if the Detroit Three collapsed, foreign companies might not fill in the gap completely, because the demand just isn’t there for new cars right now. However, I think when we have a new president, the economy will start to improve, regardless of who gets elected. Even before the new administration has had a chance to do anything, I think things will start looking up if only because there will be the sense that, with someone new in office, changes will be made that will help the economy eventually.

Note: I adapted this entry from an email I sent to my dad and uncle on the subject. The family that debates together stays together!