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6 Responses to “Peter Schiff On The Auto Bailout And Obama’s Make-Work Bailout”

1. Justin Gardner Says:
   November 25th, 2008 at 2:11 am

   So Schiff’s advice to the government is to do absolutely nothing, let the majority of companies in every major sector fail and ultimately let people starve?

   How does Schiff (and you) not realize that the government will end up supported these unemployed Americans anyway? Seriously, how do you guys not understand this? Because we will absolutely not let people starve. It won’t happen. We don’t live live in that world anymore. So we’ll be spending TRILLIONS on keeping people alive.

   So no, the market doesn’t get to reboot in a pure, unfettered way, but that’s the reality we find ourselves in now. The do-nothing approach was tried before and we ended up in the Great Depression. That can’t happen again.

2. Doug Mataconis Says:
   November 25th, 2008 at 6:30 am

   Justin,

   There’s a difference between opposing a bailout of the dinosaurs of Detroit and saying “letting them die”

   I’m not saying, let them die. I’m saying, make them change.

   A bailout from Uncle Sucker won’t do that. Bankruptcy will at least give them the chance they need.

   And if they still don’t succeed after that, then I don’t see the rationale in using taxpayer dollars to keep inefficient companies alive.

   This idea that the American auto industry will disappear if Ford, GM, or Chrysler go out of business is nuts. What do you think is going to happen to all the plants ? All the skilled labor ? The parts and distribtion networks ?

   I’ll tell you what. Someone — Toyota, Honda, Hyundai, or maybe even SAIC out of China or Tata out of India — will come in and buy them. Maybe they’ll have better luck running them.

3. Justin Gardner Says:
   November 25th, 2008 at 9:32 am

   Doug,

   I’m saying “make them change” too, but if you’re in favor of a traditional bankruptcy, you may as well be in favor of their deaths since the auto industry couldn’t go through a protracted 3 year bankruptcy.

   Also, it’s magical thinking to expect that during this huge global economic downturn (where nobody can get credit) that any of those companies you’re talking about will come in and make even the slightest dent in our employment woes. Nobody’s buying cars, not even Hondas. So it’s not like any of the major banks will think, “Well, we didn’t give the Big 3 $25 billion, so let’s give it to these other companies.”

   So basically what this boils down to is you’re hoping that our auto industry won’t disappear, when there are many indications that it could very well happen, or disappear for a long enough time to really cripple our economy. How long will it take for other companies to spin us back up? 6 years? 8? By that time, the damage will have been done and nobody will trust those brands anymore. Also, if history is a good indicator, manufacturing jobs are ridiculously hard to get back after they’ve been lost so a good portion of these jobs could very well be lost forever.

   But getting back to Schiff…the guy obviously wants the entire economy to fail and reboot, right? I think we can agree about that. He thinks the whole thing is false and he advocates no action whatsoever, not even if it means tens of millions laid off. But what the ignores is the idea that we’re going to have to make sure those people stay alive, and his “the government doesn’t have any food” comment showed just how acutely dispassionate he is about actual lives…and that’s not a realistic POV.

4. Doug Mataconis Says:
   November 25th, 2008 at 10:23 am

   if you’re in favor of a traditional bankruptcy, you may as well be in favor of their deaths since the auto industry couldn’t go through a protracted 3 year bankruptcy.

   First of all, who says it has to last three years.

   And, if we come out of it with the Somewhat Smaller Two instead of the Way-Too-Big Three, why is that such a bad thing ?

   This idea that we can somehow through non-existent Federal money at this problem and preserve the American auto industry for time immemorial is absurd.

5. Doug Mataconis Says:
   November 25th, 2008 at 10:23 am

   Justin

   And as far as what Schiff wants, I’m not a mind-reader so I don’t know.

   If what he’s forecasting is true, though, then his motives are basically irrelevant.

6. 2Justin Says:
   November 25th, 2008 at 12:58 pm

   So basically you are saying screw Americans, Americans did not want to buy bad products from GM, Ford, So lets disregard their will and take there money by force and give it to GM, Ford.

   Oh and since you brought up Honda, here is a good article from forbes about how Honda has never had an unprofitable year. It has never had to lay off employees

   http://www.forbes.com/forbes/2006/0904/112.html