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The positive side of bailout is not to bailout

Updated on September 6, 2012
The BIG three got their share so now what do they do with it.
The BIG three got their share so now what do they do with it.

Bailout creates codependency

If the banks are the economic engine of the world than money is the fuel that makes them run. Therefore, if we don’t fuel them it becomes harder for us to go from one point to the next. If you really think about it, in theory a company’s earnings and revenue should increase at the same rate as inflation over time but somehow that is not what's happening. Therefore, until that can could be achieved their stocks will continue to depreciate in value. We recently witnessed the bailout of AIG, the intimate relationships of JP Morgan Chase with Bear Stearns, and the federal bailout of the two mortgage companies, Freddy Mae & Fannie Mac. And now we have the automobile industry, the big three where does it stop? It seems to me by bailing companies we’ve created a codependency between companies and American tax payer’s money.

It’s reasonable to believe by bailing out companies every time they fail; we have also eliminated the consequence of failure which thereby causes companies to be strategically careless. For example, If every time I miss out on my mortgage payment because of over budgeting my uncle ditch out the remaining balance, sooner or later I will become dependent on that remaining balance. So in a sense bailout is a government promise that must be broken or reform.

  • They are those who shared concern for not bailing out the American automobile industry. They would say to us if the tax payers can bailout the banks why not General Motor, Ford and Chrysler. In a sense they’re comparing the failure of the banks with that of the big three companies, as if they really were a comparison to be made. It seems to me that the Bank failures were a result of accumulated debt from unpaid loans, high consumptions of foreign goods which resulted in an increase in capital flight as well as inflation.

  • The big three on the other hand operate on a lower level than that of the Banks. Although the reason for the Banks failure shares a direct relationship with that of the big three one can argue that this relationship that they share partially affected the performance of GM, Chrysler & Ford.

  • If the relationship was the main reason for the failure of the big three than companies like Toyota, Nissan and BMW would have also showed a greater decline in sale that is as detrimental as the big three. Looking at it from that perspective, indicate to us that the strategies that were used to promote sale for the big three were not only differs to that of Toyota & Nissan, but one seems to have been more advantageous than the other.

  • Beside, comparing the Banks with General Motor, Ford and Chrysler is the same as to compare a financier with the finance, the one who lends with the one who borrowed. Had we allowed the Banks to fail; it would have created a wave that is so catastrophic that it would have made Tsunami looks like a good day for surfers. They is really no comparison there folks. The failure of the Banks would have affected people all over this glob while the failure of the big three will only affect a great number of American workers. Since we’re not ready to start from scratch, bailing out the Banks was after all a bright idea.

  • What if every company that wants the option of being rescue by the government engage in what is to be known as a backup bailout plan. A plan that would require companies to pay into a government security bonds quarterly for an X number of year until government requirement is sufficient enough to rescue that company in case of an economic crisis.

  • Since yearly performance of a company always varies, the company’s worth will also be reevaluated yearly, for the percentages that they would be required to place into the backup bailout plan would vary. For every decade that passes without a crises, the government would pay the company X amount of dollars in dividend for investing their money.

    As an incentive, the tax payers will offer to match the company’s deposits by 10%. Which mean for every $20.000 that the company invests in this plan; the tax payers will match it with $2,000. Let’s say that the government takes 3% off the interest accrued from the the money invest to help manage the agency that would be controlling these types of activities. Wouldn’t that be a better idea? It would also be mandate that every company who wants to be part of this backup bailout plan would be required to hire X number of American workers each year as long as demands call for it.

  • I mean I’m no expert but at least I’m thinking, something must be done about this economic crisis, but a bailout will not resolve our problems. If anything, a bailout will offer workers temporary relief. The problem lies in the strategies that were implemented for the benefit of increasing sale. Somehow, that strategy seems as though it didn't workout for the big three.

  • My most concern about bailout relates to debt. Since we’re already in debt, it should be obvious to all of us that we don’t have that $25 billion to give to any company. In a way if we were to agree on the bailout, we would have had to borrow this money from some where, which would bury us in debt even more. Now what we should be asking is who is going to lend us that kind of money? Where would it come from and if it's China that lends it to us, under what condition would they have lend it? It’s logical to admit if I borrowed money from Joe with a promise to pay him back, it’s relevant for him to ask me for a back up security in case I can’t deliver on my promise. What is that security is what us tax payers should want to know. What are we giving as collateral for borrowing money from other countries?

  • Although I’m not totally against the bailout but when you really think about it, it’s not feasible at this time to bailout any company. The national deficit has reached $10 trillion sky high. In a sense to bailout the automobile industry is to add on the national deficit. If our tax money is being paid to bailout the automobile industry than it’s evident that it's not being used in other places such as the repayment of debt owed. We owed China so much money that we may as well start calling them daddy.

  • It should be the responsibility of the corporate companies to make sure that they don’t fall behind. Perhaps they should consider changing they slogans. While Toyota, Honda and Nissan slogans reflects affordable, durable and easy maintenance; Ford and GM slogan pertains to big, strong, heavy duty. I’m sorry to say, but this country is now faced with a tight economy that is subject to operate under globalization, the slogans that are more likely to work are affordability, durable and easy maintenance.

  • Toyota in most part of the world is known as a poor people's car. Easy to work on and its parts can even be implemented. I guest allowing Toyota to enter the taxi industry wasn’t so much of a good plan after all. They are now more Toyota taxi cars than ever before, that must have contributed to the failure of the American automobiles, the big three. So then should we enact new laws to protect our behinds or should we leave them naked to be pecked on. OH! I almost forgot, the world trade agreement did left us butt naked, that’s part of the reason why our economy been on a down slope.

  • For every economic crisis that ever existed, opportunities have fallowed alone. While the great depression opens the door for new manufacturing jobs, citizens invested in hard asset. They were then forced to abandon the gold stander which served as a measure for the needs of creating money. The gold stander did provide more security to our monitory system, but since we didn't have sufficient back up of gold to create enough money to fund the war, we abolished it.

  • The war provided new opportunities for the manufacturing industry, but at the same time it kills the security of our monitory system. Now, it seems as though the country's wealth is being sucked through this process that comes to be known as "the bailout". It almost seems as if they selling the country under our feet. We're buying into this bailout BS that provide leverage to rich folks. They tell us that it will help our people gain back their jobs, meanwhile they marketing gimmicks plus how they do business remains the same.

  • I honestly think that the time have arrived for our monitory system to change. Our big savior I guest is going to be the North American Currency, The Amero. How do you consolidate a national debt that huge ...well, you combine currencies. Will it help, perhaps yes, but they will be advantages as well as disadvantages that will accompany it.

The Europeans have the Euro and so far it seems to be working for them. One of the advantages I see so far is that it may help hold the value of our hard assets which are now depreciating in value. Since the Amero is a combination of the currency of Canada, US & Mexico, perhaps if one country is faced with an economic crisis, it may not matter much because it would be balanced out by the economic performance of the other two countries. Well, I guest we just have to wait and see what happen next.

How the tax payer view the bailout


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    • Coolbreezing profile imageAUTHOR

      James Dubreze 

      10 years ago from New York, New York

      Hi! Mike I NV you my friend - you are truly a man of thoughts.

      I understand your reasoning clearly, for many economist have already made it clear. Your view is highly supported and you need no backing for it. Now, since I already know that we're on the same page, so I ask you -- what do you think of Jack Fresco's economic model.

    • jiberish profile image


      10 years ago from florida

      I have some reasons the government should bail me out, what do you think, should I ask? Great info!

    • MikeNV profile image


      10 years ago from Henderson, NV

      At some point the system will crash PERIOD. The perpetual debt model of the Fractional Reserve Banking system only accomplishes one thing. It puts the power of the Worlds (Not just the United States) Governments in the hands of the Wealthy Elite and NOT the people. The problem these wealthy elite have is they have created a system that is not infinitely sustainable.

      There is as much logic in the Fractional Reserve Banking system as there is in this statement.

      If you are in a plane that is about to crash all you have ot do is jump out just before it hits the ground.

      The system has failed repeatedly. The lies used to put it into place were flawed at inception and still are. The Federal Reserve (Central Bank) was supposedly created to stop market fluctuations that would cause the economy collapse? How well did that work during the First Depression?

      So you let it crash and fix it now or you pretend like todays problems are only temporary, put your head in the sand and hope it gets better... but it won't. At some point it crashes entirely. You can not sustain an economy on a perpetual debt model. There is so much debt in play now that it can never be paid back.

    • Coolbreezing profile imageAUTHOR

      James Dubreze 

      10 years ago from New York, New York

      We need more stories like that, although nowotny's maybe telling the truth, his telling doesn't have that much leverage if only one person makes a claim.

    • profile image


      10 years ago from National City


    • bgamall profile image

      Gary Anderson 

      10 years ago from Las Vegas, Nevada

      I believe that the codependency mainly describes the banks who are raiding the treasury of the United States are in control. This is a fascistic relationship between the big banks and the government. These banks should only be helped by the government if their bondholders take a hit just like the bondholders of the banks.

      But the bondholders of the banks are mainly hedge funds that are leveraged to those senior bonds. The hedge funds don't want to fail because I lot of rich people, well connected, would be hurt. Larry Summers is a hedge fund guy and he doesn't care if the US treasury is robbed. He just wants to protect his cronies. Pathetic.

      I say quit doing business with the big banks and walk away from their unfair loans.

    • Coolbreezing profile imageAUTHOR

      James Dubreze 

      10 years ago from New York, New York

      What were you able to do with it- did you use it for your class or something.

    • linjingjing profile image


      10 years ago

      The positive side of bailout is not to bailout

      This article is very helpful to me

    • Coolbreezing profile imageAUTHOR

      James Dubreze 

      10 years ago from New York, New York

      It is easy said than done. If we all were to use cash the system would crash so fast, it would left us wondered where did our money goes. You and I both know that the bank rely on individual bank account for money to survive. The bank doesn't have your money, your money is invested in other projects while you receive penny on the dollar for it. The system can work but we the citizens must change our spending habits. We need strict regulations and government oversight. I would like to see GM, FORD AND CHRYSLER survive in the world economy. Business as usual is no longer acceptable under globalization. They will have to find a way to reduce the total cost of production, labor, war material & marketing. Quality, affordability and reliability are the key components for the big three's success.

    • bgamall profile image

      Gary Anderson 

      10 years ago from Las Vegas, Nevada

      It is all about the banks. Too bad that we, the middle class, are controlled by the banking system. I say we avoid loans and pay cash and stay out of debt. They can't touch us that way.


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