There are a numbered few who can recall the bread and soup lines that came to define the Great Depression. Nowadays, the federal government is administering a whole new kind of assistance, and the CEOs of our economy's most powerful corporations are waiting in line for their share of the dole.
The chief executives of the Big Three (Ford, General Motors and Chrysler) are clamoring for some kind of aid. Unfortunately for these once-colossal American car producers, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, alongside President Bush and most Congressional Republicans, oppose providing loans to the automotive industry, whose tactics and management have gotten them into their current predicament. The Congressional Democrats are the only sect championing the proposal for assistance.
The automotive industry's executives feel as if they are helpless victims of these tough times, when in fact they had a very big hand in the ongoing crisis. If one kind thing could be said about sub-prime lenders, it would be, "At least they don't discriminate." Whether a borrower is buying real estate or merely looking for a car loan, there are agents ready and willing to fork over a bundle of cash while charging interest rates that would inspire Pope Benedict XVI to reinstate the Roman Catholic Church's ban on usury. After that borrower defaults on said car loan, the property that is then repossessed is a used automobile with a seriously diminished resale value.
Detroit-based General Motors threatens bankruptcy while Ford and Chrysler portend the jobs that will doubtlessly have to be cut, all so that politicians will cut them a check to make right what they have run afoul. This is an industry that, when oil prices were soaring above $150 per barrel, attempted to sell more SUVs. The Big Three have squandered years that could have been utilized for innovation, instead relying on tricks like subsidized fuel prices, ignoring the demand for fuel-efficient vehicles.
Jaime Lerner, a politician, planner and architect once said, "Creativity starts when you cut a zero from your budget." We shall see how creative the loss of nine zeros will make the new Detroit.
Photo: Courtesy of Laron Fomby
