Bailouts and more bailouts... Stop the madness!

Back to reality-it is not going to stop.

So- if the government is going to bailout the auto industry, or any other industry, there should be some rules:

First, there should be no bonuses for executives at ANY company that receives a bailout from the federal government. (Remember, please, that the federal government has no money. This money is coming from the pockets of Americans who are increasingly worried about their own jobs, their own children and their own financial future.) Any executive of a failing company who expects a bonus is irresponsible and unethical. These executives should publicly refuse any bonus offered.

Second, executives across industries seeking bailouts should have their salaries chopped. These failing  industries do not have the revenue to justify the $1 million dollar, $2 million, $10 million salaries to which their CEOs have become accustomed.  Let the market work- as more Harvard MBAs are looking for work, the salaries should come down. If these failed CEOs can get a better deal somewhere else let them go.

Next, to the UAW and to employees of any other troubled industry- wages must be lowered. Union or no union, it is ridiculous that people working for a failing industry do not accept the fact that their wages are now too high. Would a person rather be employed at $40,000 per year or even $30,000 per year or unemployed because the company couldn't afford the $57,000 plus benefits in the union negotiated salary. (See UAW website for figures.) The world is changing quickly. Pouring money into failing industries is only delaying the inevitable. 

Again, if these UAWs or others in troubled industries can get a job anywhere else for the money they are making with their skill set then let them go looking. They will find that their wages have been artificially high and have contributed to the financial disaster facing their companies. They will not find any other job at the pay they think they deserve. That should tell them something.

The same can be said for people in the airline industry, the banking industry and every other industry in financial trouble.

These bailouts must stop or they will not end until there is nothing left to give. Now its the auto industry, next it will be the airlines, then the hospitality industry, then the manufacturers and so on.

These bailouts are an expansion of the welfare system. Instead of paying unemployment or welfare to people who lose their jobs in the economic downturn, we will pay them to keep working in jobs the market would otherwise eliminate.  And we will pay them far more than they would receive through unemployment or welfare payments.  

Click on this link to the Economic Policy Institute to use a calculator to determine approximate unemployment benefit payments.  People should be glad they have a job and stop complaining about a lowered wage.

Finally, maybe before the government bails out American Express or Citibank or any other bank or credit card lender it should first put some regulations into effect.  How about requiring credit companies seeking government aid to lower interest rates from 29% or even 30% to 10%.  (Any bank or credit provider not seeking government aid should be left alone.) These banks can now borrow money for next to nothing- if interest rates get any lower the money will be free. While banks get sweetheart deals they continue to charge consumers exorbitant rates. 

Is it at least possible that many people now defaulting on their debt payments are defaulting not because they want to but because they can no longer afford the interest payments? Is it possible that fewer people would default on credit cards if their interest rates were slashed? Maybe some of these people with more cash in their pockets might then have the ability to make their mortgage payments... 

Maybe the consumer credit industry has reached a tipping point at which the combination of high interest rates and late payment fees now discourage repayment. 

Maybe if the credit industry thought there would be no bailout it would be more interested in working with the debtors to renegotiate terms that would be mutually beneficial.

I do not believe the government should be in the bailout business.

If we are on a train that can't be stopped and it is inevitable that the government bailout has just begun, then maybe the government is fixing the wrong problems first.  The trillions of dollars flowing to corporations are not trickling down to consumers, who still have no ability to get out from under their debt.  Maybe the government ought to attach strings to any bailout program and those strings should require fiscal responsibility and an effort to work with debtors first.

Again, NO to anymore bailouts. The only way to save the baby is to make sure the cradle falls before it gets any higher. Let the bough break. NOW.