Letter to senators

Please vote against the auto bailout.

Here is why I believe that you should vote against making these loans:

  1. You have no safe, viable, honest source for this money.

    Government loans must come from:

    • Taxes – From whom? Higher taxes in down times are not a good idea.
    • Borrowing – We are already too far in hock. And shouldering aside private borrowers by undercutting them is not a recipe for good times.
    • Plunder – Americans do not plunder others.
    • Inflation – Stealing from the fiscally prudent has never been a clever move.
    • Replacing de-leveraged money (that is, printing money without causing inflation) – This is dangerous skirting with real disaster – not the minor stuff we have seen so far. Available financial knowledge (relative lack of transparency) does not allow gross manipulations to be done from a central control point, as has been demonstrated by the current crisis.

  2. Buy the companies!?

    The market caps of these companies is below the loan amount. It’s cheaper to buy the companies. If that doesn’t make sense – and it certainly does not – then how can these loans make sense?
  3. Have you personally loaned money to these companies?

    If not, why not? How can you ethically loan other peoples money on terms you would not take, yourself?
  4. Loans should not be made available to only particular companies.

    Why not make cheap loans available to all of the auto companies? Or all companies? What is special about these companies that they should get a special deal? Even if there is nothing unethical about the deal, there is a clear appearance of corruption of public officials in this bailout. Appearances count.
  5. These loans set a bad example for other countries.

    America has provided leadership to the world. There is no reason we should stop doing so.

    Do transnational companies headquartered in our country deserve a special boost? What do they need to pay to government officials for such special treatment? Does such behavior sound like something we should be doing, as Americans? Can we be surprised or upset if other countries follow the same path?

    If we want to go to economic war with other countries, then we have an easy, crushing win by simply slashing corporate income taxes and opening up H1B and green cards to higher-end foreigners. Do what has worked for every single successful economic unit in post-industrial history: make it easy to start and run a profitable business.

  6. Taxpayers should not be in the auto business.

    There is no reason to expect that either the American citizen at large, taxpayers, or Congress-people have the expertise, time, inclination, or ability to be car builders. I might be highly skilled at my vocation. You might be highly skilled at yours. But that makes neither of us highly skilled at designing, building and selling cars. Let’s not fool ourselves into arrogantly thinking otherwise.

    When we make a loan we had better trust the person we loan to. And we need to verify that they are not frittering away the money. But, we have no business doing their job or calling the shots for them. If the loan requires that we do so, let’s find another place to loan the money.

If there are legal reasons – able to be reversed by congress – that make it impossible for these particular companies to get loans from people who are loaning their own money, then please fix that problem. Please do not try to fix that problem by making another problem.

Let’s address various arguments that could be made for these loans:

  1. These loans will keep a huge number of people employed.

    How? Can these people build a competitive car? If not, then why, exactly do we need to buy their product? If so, then why, exactly, do they need to be treated specially? They can, after all, support themselves by building and selling cars!

  2. These loans keep a key manufacturing capability inside the country.

    How do sweetheart loans to particular multi-national companies do this? Can Americans (or more accurately, American robots) not manufacture competitive cars? And, why is this particular industry so specially needed? We are not currently on schedule to fight WWII again. Why take money that could be spent on beefing up strategic American strengths in cyber-tech or bio-tech (for instance, if we insist on going in hock to bet on particular industries) and fritter it away on the last war’s weapons?

  3. These loans somehow say that the US refuses to fall in to a depression.

    They say the opposite. That last depression was an artificially drawn-out, final transition out of a farming based economy. Do we need another depression, war, and new generation of people to get us mentally out of a manufacturing-based economy? Our economy is no longer based on employment in manufacturing no matter what sentimental, rosy-eyed reactionaries may think.

    Thank God.

    Those “good jobs” in manufacturing were horrible jobs. Ask those who have worked “on the line.” And, please do not make the mistake of selecting a special-case time period (like the late 40’s and 50’s in the US) as a counter example. Those wonderful days of manufacturing look very, very poor compared to the wonderful days of web-programming of the late 90’s internet bubble. Special cases are easy to come by. But they are not examples of how to handle ourselves in other times.

  4. These loans will somehow give confidence to those whose lack of confidence is an impediment to better economic times.

    Who might those unconfident people be?

    • Investors?

      Investors (and I speak as one on the cusp of “retirement age”) are rightfully worried … worried because with all the normal uncertainties that must be dealt with, we must add the uncertainty of a gigantic government floundering around the financial world, taking our savings, side-tracking the fruits of the labor of those who support kids and old folks, and generally providing theater rather than clarity, honesty, and prudence.
    • Others who might make such loans?

      Others who might make loans are certainly not foolish enough to compete against someone with a multi-billion dollar weapons system budget and who, as de-facto world policeman, gets first divvy when loans go bad.

  5. These loans are a great deal.

    Others who might make these loans are charging way, way too much out of fear?

    Right. And we needn’t worry because we, the taxpayers, will find a greater fool.

    We might safely pay attention to someone with a track record of successes in such things, and who makes this argument shortly before piling their own money on to this particular bet. But this argument is notably not made by such people.

    We can safely assume that we, the taxpayers, are in great danger of conning ourselves when we believe this argument.

  6. If the loans are not made, the taxpayer will pay the automakers’ pensions.

    No they won’t. And, sure, some assert otherwise.

    Both “arguments” are simply assertions.

    The WWII generation had a lot of babies to support them in their old age. The early baby boomers did not. Caring for the old folks will be a problem soon. This is a problem that should not be solved piecemeal by handing out goodies to those who use their power to elbow their way to the front of the line.

  7. These loans are a way to inject money in to a money-starved financial system.

    If true, is targetting money toward particular, politically connected recipients the way to do this? Or should the recipients bid for money on equal terms with everyone else?

    Too, what mechanisms are in place to remove this money when the financial system returns to providing the trust they sell for a living.

  8. If we do not make these loans now, we will do something even worse when the new congress takes office.

    The Democratic “branding” of the new congress might suggest this, but such a reality cannot be counted on.

    There has been enough panic and pass-the-buck behavior as it is. Help put a stop to it. A lot of professional financial people are scrambling to shuck their losses. They are doing rather well at this as they have a supply of rubes to take the bag off their hands. Time is on the rubes’ side here. Time for more sober thought. Let that time pass. And do not do the cynical thing and make a foolish move with the idea of blaming the outgoing administration for everything when the move turns sour.

Managing our resources and money is hard enough to do without needing to write legislators in desperate attempts to escape enforced spending.

Please do your part to stop the irrationality and vote these bailouts down.

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