Anyone else noticed that somehow the banks and brokerages and so on getting all the huge bailouts don’t seem required to come up with a plan for "long term economic viability", but somehow the Big 3 do? Why is that? If it’s true that this financial crisis is such that banks can’t be expected to be viable on their own, why is it that Detroit has to be?
Last Thursday I was at a friend’s place and I did something I rarely do: I watched the 24 hour news shows. They were covering the failure of Congress to come up with a bridge loan for the auto companies and what struck me was the sense of anger and hostility that almost all of the talking heads displayed. They were skeptical and dismissive of Detroit’s request for help, and it showed in the tone of their voice. I found it very odd: Detroit was asking for 25 billion, not 700 billion, and yet the media was far more hostile to them than they had been to the financial sector when Paulson came begging for 28X as much money.
This despite the fact that letting the big 3 go under would cost about 3 million jobs, and probably doom the US to a depression. Even Obama’s plan for new jobs is only 2.5 million jobs in 2 years, and that assumes no other job losses.
I think the hostility probably arises because the media is so isolated from blue collar workers and from the sorts of people who buy American cars. White collar to the tips of their manicured fingernails, few reporters have worked in blue collar jobs; associate with blue collar people or have anything in common with them. On the other hand, with the core of the broadcast political media living in Washington and New York they’re not just familiar with, but interbred with America’s financial elite.
Such built in bias is the only way I can explain this blase attitude towards what would be an economic apocalypse for America: the loss of a major export sector, 3 million jobs and the devastation of entire state economies, with no state in the union spared the fallout when the dealer networks collapse.
I can think of nothing more likely to ensure that this turns into a Great Depression than letting the car companies go under. So I think the government had better figure out how to make them viable, even if it costs a couple hundred billion or so. Given that the government has committed 7.7 trillion dollars to the financial sector this is literally peanuts. But the consequences of failing to do so will smash through the real economy.
Oh, and as a special message to the broadcast media’s talking heads: boys and girls, go ask your advertising departments how much advertising comes from auto companies, especially from the local stations who buy your network’s shows. Then take a long look at your throats in the mirror, because it’s those throats you’re cutting with your hostility to helping out ordinary blue collar Americans rather than your white collar friends.