The recession has caused so much panic among Americans that it has addled their minds.
According to a new poll from The Washington Post and ABC News, most citizens do not favor a bailout of the auto companies. Fifty-five percent don’t think Detroit should get a dime of government money.
According to MSNBC, "Most Americans continue to oppose a government-backed rescue plan for Detroit’s Big Three automakers as majorities blame the industry for its own problems and are unconvinced failure would hurt the economy." The survey data show that most US workers are fools
While the estimates about unemployment caused by a failure of the auto industry are too high when they come from the mouths of car executives cowering in front of Congress, it is entirely believable that a bankruptcy of GM (GM) and Chrysler would kill several thousand jobs. If the two companies were combined many estimates are that 60,000 jobs would be lost. A bankruptcy judge would undoubtedly void all or some portion of the UAW contracts, allowing the Big Two to take out more jobs. Auto suppliers would almost certainly get cents on the dollar for their receivables. They would have to cut people to survive.
There would be some ripple effect from a Chapter 11 at GM and Chrysler, beyond auto company employees and supplier personnel. States and charities which need auto money to survive would have to let people go. Most of the stores in downtown Pontiac and Flint would be shuttered.
The car companies want the public to think that if they are forced into receivership that three million people could lose jobs. They want to public to believe that the event would cause the next Depression. The majority of economists don’t buy that, but the idea that a collapse of Detroit would have only the most modest effect on the economy is naive.
A bailout may make people feel that socialism is at their doors, but the rescue of the banks has already made that a reality.
Maybe no one favors a bailout until he is laid off.
Douglas A. McIntyre
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