Why Congress has no business bailing out anybody
Today's Financial News - Posted December 10, 2008
Two vital marketplace signals are the profits that come with success and the losses that come with failure. When these two signals are not allowed to freely function, markets operate less efficiently. To be successful a business must take in enough revenue not only to cover wages, rents and interest but profits as well.
by Walter E. Williams
Baltimore — (TFN): Let’s not allow Congress and members of the bailout parade panic us into allowing them to do things, as was done in the 1930s, that would convert a mild economic downturn into a true calamity. Right now the Big Three auto companies, and their unions, are asking Congress for a $25 billion bailout to avoid bankruptcy. Let’s think about that a bit.
What happens when a company goes bankrupt? One thing that does not happen is their productive assets go poof and disappear into thin air. In other words, if GM goes bankrupt, the assembly lines, robots, buildings and other tools don’t evaporate. What bankruptcy means is the title to those assets change. People who think they can manage those assets better purchase them.
Next Article: Signalling theory pays off for General Electric (NYSE:GE) investors
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December 11th, 2008 at 2:26 pm
Who is allowing this kind of stuff to happen? The government is handing out all of our hard earned money to a bunch of greedy banks who turn around and bend us over on car loans, house loans and any other way to get our money. BUT when a REAL Business is in trouble like gm, ford and chrystler they make them beg and change this or that and still wont release a dime to them. This “gov't” of ours didnt hardly hesitate to give money to banks who spend it on vacations that most americans can afford. AND now they think they should have control of the auto companies because they need help? I think its our government who needs to rearrange their system and start thinking in terms of american people, NOT the american dollar.