We have been discussing labor and output in class along with savings and investment behavior. One of the many headlines garnering a lot of recent attention is the proposed “assistance” to American automakers. Since there is no real proposal to “assist” General Motors (GM), Ford, or Chrysler, I would like you to consider the options that are on the table. I have listed the general ideas as “fix” meaning the government would do something to change the fundamental structure of auto manufacturing; “rescue” meaning the government would simply help the automakers through this difficult period and transition; and “fail” where the government would do nothing, and allow the companies to possibly progress towards bankruptcy. You might also consider a mix of these options. I would like you to think about some of the following ideas and consider alternative viewpoints. Also, I would like you to consider the different costs to taxpayers and workers.
1. Who would get the money in a “rescue” or “fix” plan? Try to find supporting evidence.
2. If the automakers are allowed to “fail” why do you back this plan, and what do you believe the fallout would be? Try to think through the chain of events and remember that bankruptcy does not necessarily mean the company ceases to exist at that moment.
3. Consider the political feasibility of any plan of action. We currently have an unpopular lame-duck President, and an incoming strong Democratic majority Congress.
4. Consider the financing arms of these auto-giants. GMAC, Chrysler Financial, and Ford Credit are all in possible trouble as well. What plan do you support for them?
5. Think about savings, investment, and interest rates. How do all of these bailouts change affect the future of our economy.
For each of these, you need to find your own sources (there are many stories out there). You should NOT use some random blogger’s story or Wikipedia to support your opinion. Try to stick to reliable news sources and facts. Remember that for these assignments you need to put forth your opinion and back it up with facts.