Image by Public Citizen via Flickr
There are multiple parts to bailouts without letting corporations take the dive in the natural progression of corporate life and death. And it’s actually a nasty business. Think about it. As a taxpayer, you basically have no say in having to pay more taxes to “help” these corporations that were mismanaged to survive and keep on being mismanaged.
The life cycle of a corporation is based on how its managed and what profit margins it holds. Unfortunately, those that have been “bailed out” and the mismanagement of many of the financial and automobile sectors, you have to seriously wonder why these corporations are allowed to keep on going with the same management and not be entirely restructured. Yes, every single corporation in the sector is suffering the blow, but some not as bad as others. There are those in the automobile industry that are buckling down but not declaring bankruptcy. There are those banks that have cash reserves because they were scoffed at before in doing only normal loans within their means of lending but not are actually one of the stronger ones to hold out in these tough times. The point is that, regardless of how bad it’s getting, a corporation only lasts as long as it can survive. No one gives the mom and pop shop down the street “bailout” money when they can’t make the grade. So why should it be any different for large corporate structures?
We’ve already gone down the slippery slope. In a terrible way. First it was the banks. Then insurance companies jumped on board since they make their buck by investments. Now it’s the automobile industry. In world news, I’ve seen that DRAM makers are now looking for bailouts in Taiwan. Every industry is chipping in since they all have jobs to lose and profit margins that are getting cut. So where do you stop? When do you say no? The entire thing was a bad thought to begin with if you can’t define the stopping point and with the entire employment issue, it’s used as a crutch to get the money instead of fixing the problem of actually being an efficient corporate machine.
Unemployment is at its all time high in the United States, but in the same instance, there was a time that there was no such thing as a “bailout”. So far, there has been no technology “bailouts” and yet there are thousands of jobs being lost due to cost cutting. So the issue is that it ties directly to the slippery slope. If you (as government) falter to union pushes, then what about those of us that have contracts which don’t allow unions? Or the industries that haven’t taken a beating because we have to adjust with the market more quickly due to how our competition works worldwide? It just doesn’t fly well when you look at the slippery slope.
Let’s not forget. We as taxpayers have to pay for all of this. It’s not a reserve slush fund somewhere that the government has put away. Every single time we bailout an executive that has mismanaged their corporation without actual restructuring or even firing of the executives is one more time that we’re allowing the rich to get richer and the poor to get poorer. Least anyone forgets, the middle class is the one that is getting laid off here and yet, their taxes are getting pushed up for these senior management types that are getting paid in well over the six figure range to continue to do the same things they have been doing. Don’t believe it? Take a look at AIG’s “retention payment” plans.
Where’s the education?
I’ve seen so many people in the media report about how the government is trying to “help” individuals that bought into the ARMs. Personally, I’d be curious as to if these people are actually buying into more than they can afford. I’ve heard some pretty nasty stories about individuals buying homes that they didn’t have the salary to afford or any assets to even settle. It’s the same issue as those people that drive sixty or seventy thousand dollar vehicles, but only make forty. It just makes no sense. The point here is to “live within your means.” If you’re not doing that, I don’t feel sorry for you and I have no sympathy. In fact, no one else should either. The government shouldn’t be extending lines of credit or telling banks to do so to these people. They should be extending education on how to manage your bills and pushing for people to only pay for what they can afford. There’s a reason why credit cards are tied to your FICO score. Education is a lot more important for those that are suffering from the ARM deals than extending credit since you’re just letting people put themselves in more jeopardy since they don’t understand and the rest of us pay for it.
In the end, the entire thing is a huge sick joke on the taxpayers, in my opinion. We’re bailing out big businesses so that they can continue to screw up, and more and more corporations are jumping on the bandwagon on how “bad off” they are. Those that don’t have homes anymore are crying out for help even though they technically could go back to renting like how everyone else started out. We don’t set examples or educate those that need the finance management educations and we allow senior management types to continue to pull outrageous salaries for running their businesses into the ground and taxpayers keep paying for these mistakes.
Throwing ourselves off the cliff?
The entire thing just seems like a giant slip-and-slide to economic ruin. And we’re just pumping more water on that baby hoping that it’ll slow us down instead of taking a hard look at solving the right problems with the correct solutions.