Friday, November 7th just three days after his victory, president elect Barack Obama promised that he would take immediate action to help with the current economic crisis. In his first press conference at the Hilton hotel in Chicago, Obama talked about his goals to help the current unemployment rates, plummeting payrolls, and the major Detroit issue. Friday’s reports show that 1.2 million jobs have been lost this year, which is the worst since March 1994. The unemployment rate is currently up at 6.5% from its previous 6.1%. Another report shows that the nation’s largest automakers GM and Ford show a huge loss. GM (General Motors Corp.) facing a $4.2 billion loss, states that it could be broke within six months. Ford Motors Corp. reported $3 billion loss. Both leading automakers state that they are being forced to reduce their staff and reduce capital spending to extend their life expectancy. 
To help these current economic issues president elect Obama, promises to pass a major economic stimulus plan as his first act as president and accelerate the rescuing of Detroit’s auto industry. During his White House visit he asked the Bush administartaion to speed up the assistance on Detroit; “help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the U.S.A.”-Obama.
I personally think that what Obama is trying to do with the stimulus plan is nice and may be the only plan we have right now, but I think there are better plans we can come up with than just throwing money at the problem and hoping it goes away. To me it feels as if we are using another credit card to pay off the last credit card. In the end that money has to be paid back, and who pays for it? We do, either in the short term or long term. As for GM and Ford I think they should have managed their companies better. By laying off workers who make the cars would cause more work and fewer employees which could reduce the quality of the cars since the employees have to work harder. Instead of laying off workers they should reduce the executive’s wages. While the workers get min. wages the executives make millions. The Detroit auto industry also needs to make better cars to compete with leading auto makers like Toyota, Nissan, Honda, etc. By making them more fuel efficient or run off different energy supplies and more reliable.
Press Video
Questions:
1) How do you feel about the stimulus plan and how do you think it will affect us? Will it have a short term or long term effect?
2) Are there any other ways to stimulate the economy?
3) How do you feel about another bail out with GM and Ford? Will it only slow down or lengthen the economic recovery? How will it affect the tax payers and the employees that work for GM and Ford?
4) Should we let a failed or poorly managed company fall and not be bailed out? Do you believe that sometimes you have to hit bottom and start fresh?
3 comments:
Personally I think that the stimulus plan will only have a short term effect on the current financial situation. While the assistance would allow these American car companies to continue operations, they have got to make a product that sells. It is not a problem that we can simply throw money at and expect a long run fix.
I furthermore do not think it is the government’s job to throw a life preserver to every sinking business. While I do realize that the bailout for Freddie and Fannie were necessary, at what point do we (taxpayers) say enough is enough? I mean, anyone who has taken an entry level economics course can tell you that government intervention leads to a decrease in economic output.
I am not denying that a major car manufacturer (GM or Ford) tanking would negatively affect the economy (it would). I am just not sure if it is time to save every failing American enterprise.
I think that the stimulus plan is only going to be short term effect on the current finanical situation. There is no way that bailing out all of these companies and taking trillions of dollars from tax payers is going to have a good long term effect on the economy because the less money people have due to increasing taxes the less money they will spend and the worse the economy will get. This is a big problem and the government needs to reassess how they are going to solve this problem. I think that by helping GM and Ford that they will be helping people get jobs which would make sense with both being large companies that have many workers. However, I do not think that the government should try to bail out every failing business because face it the U.S. does not have that kind of money. It would be impossible. I also think that the government should stop giving money to AIG because they are using the money to take vacations and retreats and then once again claiming they are bankrupt so they just need to be let go. I think that if the government is going to help business it should be large corporations that need the help and are actually going to hire Americans to do the work and get people back to work so that people can keep their homes.
I agree that the stimulus plan will only have a short term effect. I dont beleive that bailing out companies is the way to go because if they do fail, they should be left to fail. That is what businesses do...I think the government may be taking too much control of the situation here. We are in a huge economic crisis, of course some companies wont make it, but bailing them out wont help our economy in the long run.
I think that the government should not bail out GM/Ford. Yes, the many employees will be negativly affected, but again, I dont think the government should be able to step in and bail them out as well. In time another American car company will come along.
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