Remember, what was Detroit’s plan two years ago when they, when they confronted this problem? It was to subsidize gasoline at a $1.99 a gallon if you bought a Hummer or Suburban or a big truck–that was their idea of innovation. So, you know, it was like a crack dealer offering subsidized crack rather than, you know, going to a clinic to get–to get off the drug. And, and who is the enabler of that? The enabler of that were the Carl Levins, all the Michigan delegation who didn’t go to these people. The outrage of these people, "Now they–we have to save these jobs!" Where was their outrage two years ago, OK, about getting them to be more innovative, to getting them on top of the energy efficiency question? They have been enabling the destruction of this industry. So show me a plan. Show me a plan that says if we give you this $25 billion you’re actually going to change. Absent that–remember, Tom, we’re going to charge this $25 billion on our kids’ Visa cards. This goes on our kids’ Visa cards, and we have a moral obligation to make sure this is spent wisely.
I can buy that perspective, I might not completely agree with it. But I can buy that argument.
So what do you say with respect to the financial industry? Remember this is the same interview. Not even a ten minute gap.
But to Tavis’ point, we need to get money to homeowners, and we need to recapitalize the banking system. And people say, "Wait a minute, that’s unfair." Banks who were irresponsible are going to get bailed out, that’s true. Homeowners who shouldn’t have taken out mortgages are irresponsible–were irresponsible are going to get bailed out along with people who worked hard and paid their mortgages. But I–they say that’s unfair. I say–I tell you, Tom, fairness is not on the table any more. There’s only two things on the table. Systemic risk in which we all get wiped out, or we find a way out of this.
WTF!
Bail out the banks, and the financial industry. You know "offering subsized crack" to the financial industry by giving them more money. YET heaven forbid that we do anything for the automotive industry!
Remember TOM, the real cause of the credit crisis is the industry that you are trying support. People should get it through their skull this is not just a GM, Ford, or Chrysler problem. It is a Toyota problem, It is a BMW problem. It is a Renault problem. It is a Fiat problem. BTW Renault is a company that has fuel efficient vehicles!
Here is a refresher on how deep the car industry crisis is:
New car sales in Europe slumped 14.5 percent in October, the sixth consecutive monthly drop as the economic crisis takes hold, the European automakers association ACEA announced Friday.
Only the Austrian car market avoided the sales drop, while Ireland and Spain crashed down 54.6 percent and 40 percent respectively in October compared to the same month last year. The Spanish figures were at their lowest for 13 years.
French car maker PSA Peugeot-Citroen has ordered a 30 percent production cut in response to a collapse in European sales while Renault is to temporarily shut down several factories in France and Europe as the global financial crisis undercuts the economy.
(And you thought you had it bad in the US…. Did you see the Spanish numbers?)
This crash has nothing to do with the car markers themselves, and if you look closer, all of the car makers are crumbling. They simply cannot sell cars!
This is the George Soros effect where when the market ceases to function we have some very serious issues and the free market economy goes out the window.
Today, I kid you not, the German Minister for Business said on the German Meet the Press type show,
"People please buy cars, you are getting the best deals that you will in a very long time. Please buy cars!"
The German minister knows how vital the car industry is, and how much this is snowballing out of control.
Where does this stop? It stops when the banks stop hording cash and start lending again.