Friday, November 28, 2008

Bailout=Bubble

I'm not an economist, but I think it fair at this juncture to ask everyone from the Obama on down at what point the bailout of banks and financial institutions, which have already brought us the "bubble and bust suite for whiners in zed minor" becomes the next great bubble--the great bailout bubble, "money for nothing and the chicks for free," as Mark Knopfler says. Watch the way the markets gyrate or vibrate in tune to the latest large figure bailout given one of their own without strings or consequence and then ask yourself, would i turn that down? What incentives do the financial institutions have to clean up their acts, as long as they can run to the federal government for tens to hundreds of billions more. Maybe these banks are currently "too big to fail," in which case the minimum price for bailing them out must be their break up. They must be brought back to manageable size. They also must be forced to account for all of these "toxic" loans, to prove the problems are what they claim they are. For its part, the government must withhold more handouts until the accounting is made and financial penalties are assessed against the principals involved in creating the mess. Without that accounting and those penalties, we are left feeding the great bailout bubble--the greatest of them all.

As to the auto industry. I would hate for working people to suffer for the sins of their managers, but I don't want to reward the auto companies for their decades of obstructionism, either. They have fought energy efficiency and pollution control--not only fought but also evaded those regulations that do apply. They have gleefully profited. while refusing to back reforms, like universal health care, that would help make their domestic operations more competitive. Beyond that, I don't buy American cars, so why should I want to give the company money for continuing to make the same crap that brought it here?

Far better, I think, to shore up workers' pensions and enact single payer national health care. Then the government should let the auto makers management figure it out--that is come up with a plan to reconfigure themselves and their products toward energy efficiency: economy, including price of purchase and operation; and safety. No more SUVs or light trucks, except stripped down models that each company can easily modify with plug-ins and that meet the same mileage and emissions standards as cars, The government should also make small, directed investment in new businesses, including those designing and building new vehicles.

The government also has the responsibility for establishing uniform standards for hook-ups for recharging centers and devices, so that time and money are not wasted on different protocols that will not talk to each other. The key here is to build on the already extensive and uniform gas station sysem, so that people in electric vehicles scan receive a rapid recharge or new battery pack in the time it now takes to fill a car with gas--or not much longer. As solar cells improve, there is no reason they can't be built into the car for recharging on the fly.

Finally, the government should put research and development money now being wasted on "star wars" defense systems that don't work into developing a flywheel that will work to power electric cars--into solving the flywheel problem, as it were. Simply, the flywheel would capture and store energy as the car rolls and use that energy to power the car.

The point is that we had better get a huge return for this staggering investment or we are sunk. As nearly as I can tell we are currently getting squat.

1 comment:

George said...

Agree with your views. The bailouts are unfair, unaffordable and create moral hazard. See here:
http://www.geocities.com/zurakowg