How Many More Times?

Trumping the news of President Obama's stimulus plans is GM and Chrysler's new request for $39,000,000,000 in aid to remain afloat. That figure is much larger than anticipated and rekindles the debate of the fate of these iconic companies and whether the taxpayers should honor the latest requests on top of the billions they have already received. As much as you want to say "enough is enough" to GM and Chrysler, within the larger context of the bailouts it is hard to shut them out. Wall Street has received trillions of dollars from the Treasury, the Federal Reserve and the Congress. How can we give Wall Street all of this money and then shut down America's last bastions of industry?

The stewards of finance made mince meat of the nation's financial backbone and we have injected trillions of dollars into the financial industry to keep it afloat. Yet, for all of this money, none of these banks and investment houses (well the remaining investment houses are all banks now anyway) created jobs - they laid off hundreds of thousands and they did not start lending again - there was no credit available to keep small businesses solvent to retain their workers and/or to make payroll or to provide consumer credit to purchase homes and vehicles. They didn't turn around and do what they should have done after all of that money was pumped in to minimize the liquidity crisis.

I suppose we cannot fathom the damage had the financial industry crumbled yet they have received an awful amount of money and failed to behave as expected. Who can forget the $18+ billion dollars in Wall Street bonuses handed out? The stimulus package is laced with verbiage referring to the creation of jobs and to the preservation of jobs. Jobs that are saved are just as valuable as jobs that are created. It is hard to accept the realization that all of those trillions injected into the financial system have not amounted to enough and the first half of the original $700,000,000,000 in TARP funds, Congress' first round of funding, seems to have been sucked in without remorse. Now Congress has passed another $787,000,000,000. How can it possibly be enough?

Whatever the case, we are now doomed to continue to dole out the funds to save whomever is on the "too big to fail" list including those auto companies. But wait, upon closer inspection, GM states that it will close plants, discontinue brands and reduce the workforce by 47,000. I suppose it is better to save the rest of the remaining company and jobs than let it go altogether. Maybe GM really cannot survive, maybe the situation is beyond itself, beyond us. Unfortunately, the bailout stage has been set, it means that any "also-ran" that may have died in the regular course of economic business is now treated as a viable entity regardless of whether or not it would ordinarily be sustainable; this has happened for the auto companies.

If we think back to the amount of industry that has been economically devastated through the years, we might think of how many we could have saved with taxpayer dollars or we might logically think about the fact that a company had a bad business model or failed to secure good management or failed to recognize the sign of the times and adjust their business accordingly. Polaroid died last week essentially acknowledging that their product was obsolete and that the company has to either reinvent itself or die. That is capitalism. Now that the government has broken all the rules with bailouts, how does this all shakeout? Ok, ok, ok. Will it be luck or connections that will keep your company and/or industry from failing?

When do we re-evaluate who wins or loses going forward? The government simply doesn't have enough money to bailout everyone unless the people who overspent over the last 8 years suddenly change their minds.