After the initial outlay of funds committed to the financial industry bailout, we find ourselves left with a situation in which other industries are trying to cash in, while providing the same lack of transparency as the banking industry and its cronies in an administration that is yielding to the deeply curious public.†
Financial issues are guiding all sorts of decision-making right now, from what kinds of jobs our alumni will be seeking, how much we will be taking on in school loans from semester to semester and even our choice of major and how far we will be taking our education.
We need a strong economy, even as college students, with a relatively insulated financial footprint. We have lessened pensions, which will lead to delayed retirement, a depressed job market, lessened likelihood of loans to college students and a general financial downturn.
Contrary to the ’80s, trickle-down economics still damages the have-nots, and greed is not good. Investor overconfidence and reckless risk-taking on the part of our high finance companies have led to severe financial casualties in the short run. In the long run, it’s even worse.
The speculative real-estate markets are where bond insurers make massive amounts of money. These same insurers are the entities backing municipal bonds, such as those voted on for school district expansion and additions to housing developments. The community then pays back the bond through tax allotments and other governmental monies.
The problem comes when there is a rise in interest rates of the insurer, or a collapse of that entity that provided the backing – and lowered interest rate – on the bond. The rates of repayment are renegotiated based on the new rate, and the entity contracted to provide security for the initial investment becomes a liability and drags the whole community down with it, in terms of raised repayment rates, interest and shortened term.
It’s bad enough when it happens to one entity, but this is an industry-wide crisis and has compromised the backbone of the financial structure.
Enter the mechanistic financial crisis of Detroit steel: American auto manufacturers. Long-resistant to change, and another short-term beneficiary of ’80s and ’90s deregulation of safety standards, fuel efficiency and technological development, the auto industry is a carbuncle on the face of American innovation.
With the responsibility of the gas-guzzling SUV trend and the lack of a functional fuel-efficient vehicle until Japanese auto manufacturers created one, there is little incentive to bail out the last great American bastion of underperformance. Except, that is, for the jobs.
It’s like blackmail. Jobs are alternately the political carrot, or goad, and an issue that carries the day when it comes down to public opinion. The industry needs significant reform, regulation and new leadership to compete in today’s world – issues it has avoided through nationalist propaganda for years. The idea of natural consequences of one’s actions are valid for small children, but apparently once salaries and fiscal effect become significant enough, industries get a pass on common sense, and on the precepts of technological innovation and industrial responsibility that are a crucial part of today’s global marketplaces.
Bailing out the auto industry, in the face of the lack of reform or transparency in the financial sector, seems foolhardy at this stage. If these companies go bankrupt, they will be forced to reorganize in a more efficient manner, shedding some of the dead weight of the stultified executive leadership. Acquiring assets then, as part of a federal move to assist the workers of these companies, might be more reasonable.
If the American public chooses, on an individual basis, not to buy a substandard product, committing public funds that would otherwise go to public programs to prop up the floundering industry would be clearly flouting the public will.
Mohammed, an anthropology freshman, can be reached via [email protected]
