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Lining up for a bailout

January 2, 2009

The auto industry’s Christmas present from the government — in the form of a $1 billion loan to General Motors and a $5 billion stake in GMAC — may have left other industries hoping that the giving season isn’t over yet.

The steel industry is pressing President-elect Barack Obama to boost the flagging demand for U.S.-made steel by instituting a “buy American” clause in his infrastructure stimulus package, the New York Times reported.

“As steel production goes — and it is now in collapse — so will go the national economy,” writes the New York Times, referencing the maxim once applied to The Big Three automakers.

But why stop at manufacturing industries? Rep. Frank Nicastro of Connecticut and some of his fellow legislators want to save two local papers, The Bristol Press and The Herald, which are hanging by a thread after their publisher said it cannot afford to keep them.

Which companies are really too big to fail? If you were writing the check, who would you bail out?

(Pictured above: Workers secure a steel beam at a construction site on 8th Avenue and 42nd Street in New York, April 21, 2008. REUTERS/Shannon Stapleton)


Whether or not your native language is English, you are held to high standards because of your occupation. Your title for the article “Who to Bail Out” should be “Whom to Bail Out”. Those of us who have an education get quite insensed by those who don’t.

Posted by Don Pointer | Report as abusive

I would not bailout anyone.


I think that the Auto industries Need it, I know alot of people that work in Sales, The steel industries Also need I really think that the world right now (At Lest the US, Not to shure about the rest of the world) Needs alot of help right now…I work for Ford so I know alot abot the Auto industrie..

Love Peace,

Posted by Mike | Report as abusive

Are people still being persuaded by this nonsense? Why would the American people want to bail out ANY company? What happened to capitalism? What happened to just letting bad companies die? How much more of Americas personal wealth (what’s left of it, if any) is going to be squandered on these damned fools?

Posted by Joe Somebody | Report as abusive

Bail Me Out! It’s my money after all!!!

Posted by travis | Report as abusive

The line for handouts has just begun. When the Fed starts giving handouts to the casinoes everyone will know the end is near; the end for the US government. Who is going to bail out uncle sam? Who is going to bail out the taxpayers? In the past, those who were unfortunate to be on the unemployment rolls could be seen in a line exiting the unemployment office. Those lines have been elliminated by going to a phone or internet system. We no longer see lines coming out the unemployment office because the government does not want anyone to know how bad the crysis is. No lines no crysis. Additionally when your benefits run out you are on your own. You have just fallen into the unemployment twilight zone; you no longer exist until you are lucky enough to find a job so that uncle sam can begin taxing you again. There is nothing like CAPITALISM!!!!!!

Posted by Emile | Report as abusive

From the Reuters handbook:

“who, whom: who is the subject, whom the object of a verb. As a rough guide as to which word to use, substitute he or him for the who or whom and see which makes sense. But we should follow common usage and be ready to use who as the object where this sounds and looks more natural, e.g. Who she met at the midnight rendezvous was not yet known”.

Clearly, Mr. Pointer, Ms. Eichler followed the style guide followed by Reuters. How much time do you spend grammar-checking the internet? Good luck!

Posted by Robert Pratt | Report as abusive

I don’t think there can be a realistic way out of this mess, other than save what we can, bailout or not.
The programs need to focus on jobs saving and/or creation. There must be safeguards introduced to prevent capital abandoning ship and leave the rest of us holding the bag. (After all, what have we done?) Something akin to halting trading at the stock exchange to prevent a meltdown caused by panic: no closures, no labor action for a predetermined period of time.
This may be a good time to introduce (or re-introduce?!) the “French” work week, again, for a period of time and in segments of the economy that need (and can accommodate) it. We all need to pay our bills, feed our families, not just the lucky ones.
Finally, businesses must be made accountable for the mistakes they made during the drive to the brick wall we now all face. It’s not enough to say “oops, really? well let’s send everyone home”. They owe good governance and due diligence not just to make a profit but to keep the place going. We work for wages so they can make money. Fair is fair.

Posted by Laz | Report as abusive

The government should bail-out those industries which may have ripple effect on economies. Although it is fair to stay that any lay-off will have an impact, but financial industry anywhere and the auto industry in US failures could cripple the economy. Instead of just handing out checks, the government should consider other incentives e.g. tax breaks, forcing local companies to “buy American”, etc.

Posted by Tarun Arora | Report as abusive

I’ve changed the headline of this blog in order to direct the conversation back to its intended topic. Thank you for your comments.

Posted by Leah Eichler | Report as abusive

I’m not a big fan of bailing out crooks (or companies who’s committed crimes too big, I should say). Why don’t those suckers file for chapter 11 and let the government take care of welfare. These companies dug their coffin-pit themselves so why should the average joe american be responsible for pulling them out? They’ve acted as slaves to the unions, and isn’t it time now to show unions that they’ve gone too far? Hands off, Mr.Obama , or as John Kerry might say: Laissez-fair, Monsieur O’bama.

Posted by Jake | Report as abusive

OH PLEASE! I’m sure it will some airlines, aircraft manufacturing, anybody with a NASA contract or a company that has been cowed by organized labor. Probably by the time this next administration is done… there will be shoe stores getting a bailout! Good luck United States. You are peering over the precipice of your own dismantling.

Posted by blake | Report as abusive

To borrow a once popular phrase, “kill them all and let God sort them out.” Nobody, and I do mean nobody, is too big to fail. We as a country are headed down a very dangerous path; one that I hope the people of this country will realize is only a road to utter and total ruin.

Posted by Fred | Report as abusive

There is no such thing as “Free Enterprise”. Have any of you tried to start a business in this country? Everyone has their hand out! Market entry barriers such as business bonds, license requirements, Insurance, ect. have killed this nation. And now, us lifeless zombies, raped of our desire and soul, have no future but to pay for the mistakes of the super-rich.

Posted by Larry Fahle | Report as abusive

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” – Alexander Tyler 1787 – Tyler was a Scottish history professor that had this to say about 2000 years after “The Fall of the Athenian Republic” and about the time our original 13 states adopted their new constitution.

Posted by John | Report as abusive

how about instead of giving bailing out failing companies just let them go the way of the dodo bird. There will always be other car companies to pick up the slack in the u.s. We as a nation need to stop giving hand outs for failure and bonuses to over paid over paid ceo whoes companies are in the business of wasting your investments on their lifestyles.


I work hard for for a very large company that so far has done everything right and now a good part of the wage they pay me is being taken and given to companies that are being ran into the ground by people who think that they really need and deserve millions in bonuses on top regular salary. They pay thier workers way to much and the product that they produce is way over priced. I raise my children by myself , I make way less than half of that of the average auto worker and we are doing just fine. It is all about living within your means. We are all a bunch of pigs who think we deserve to live like kings as compared to the rest of the world. Our parent worked hard for a honest wage and then helped who they saw fit, simple. And to the first blogger, Don , instead of wasting your vast education on correcting journalists that are trying to raise puplic concern over an issue they find important, please go out and save the world….we could use your help!

Posted by Joe the Printer | Report as abusive

Can you make my bailout check certified please? With all the bailout checks I don,t want mine to bounce. With the Governors requesting 1 Trillion in bailouts and every industry under the sun requesting money. I think I am going to start an ink company. I will sell green ink to the Tresuary, red ink to the U.S. Budget department and black ink to Walmart and invisable ink to Bernard Madoff.
Sincerely John Gerena


John’s quote from Alexander Tyler is interesting. Mr. Tyler apparently knew Aristotle’s Politics. The observation about democracy ending in fiscal crisis, if I remember correctly, goes back to him.

Posted by Paul Terhune | Report as abusive

I’m a nobody with no education, I came to this country, in 2002 and from that point on it has been great, and only because of the auto industry. In the las 4 years i have made in over $120,000 anual bought a house, and lived a life I would never imagine anywhere else.

Yet, I belive that the Auto Industry does not need help.

We just need to let it happen. My income went from $151,237 in 2007 to $90,000 in 2008, and probably 48,000 in 2009, but it happens and we all need to adjust.
it will all come arrownd.

Posted by Billy | Report as abusive

Didn’t consumer spending pop up a good part of the economy? Instead of taking the American people’s money and giving it to corporations, how about bailing out the rest of the ordinary people? Fix the mortgage foreclosure situation and the rest will follow. We need consumer confidence back in the game.

BTW, Mr Pointer, incensed does not equate to insensed. Any educated person would know that. :-P

Posted by jack P | Report as abusive

I know there are those of you that are working that don’t want to give anything to anyone. And then there are those that are not working that want everything. So here is what we do. All the tax dollars we have given to the government needs to stop. All the bailouts need to stop, no government programs, no government, in the wilderness all alone. Now that’s really stupid.
The capitilist system needs to work. Let the companies fail and then clean up the mess. Isn’t that what capitalism is? LET THE SYSTEM WORK.

Posted by Rob | Report as abusive

Who would I bail out if I was writing the check?
As intended, some of the funds should have been used to stabilize the mortgage market to keep people in their homes and stop communities from becoming ghost towns.
Small businesses need emergency funding for working capital to retain key employees, debt restructuring and inventory. The funds could be delivered through the SBA and regional and state agencies and sound, local banks not caught up in the mortgage debacle. Credit eligibility requirements need to be relaxed since most small businesses have not so great credit right now.
Doing these things is cheap compared to auto bail outs and wall street bail outs and investment at the grass roots level like this is the best way to revitalize communities and restore the middle class.


Maybe we should bail out absolutely everybody. I should think any economist can work out how to do that once we decide to print the money required, so I won’t go into detail. Or we could bail out nobody; take a totalitarian holiday of a year or so going on a thousand and just dictate the handling or real goods and services while the paper burns.

Posted by Pete Cann | Report as abusive

Too big to fail? They are too big to succeed. Layer upon layer of management who have forgotten, if they ever knew, what making a profit is all about. Back in the day you would have had too much pride to go crying to the government for a quick fix. Our no-fault society puts no blame on anyone for failure. It’s someone elses fault that these companies have failed. The management and the workers are world class all stars.

Posted by jimmy of old | Report as abusive

The auto manufacturers received a LOAN, not a bailout. When the government made a loan to help Chrysler years ago, the government made money. I still wonder why the auto manufacturers are treated so differently from the way the financial institutions are treated. Not just with the fact that the financial institutions received an outright bailout rather than a loan, but no CEO of a financial institution had to give up a bonus, sell a corporate jet, reduce employee salaries and bonuses, stop throwing pricey corporate parties and retreats. What’s wrong the this picture, people?


I’m with Pete Cann. As it is, the taxpayer is the one taking the hit. (Assuming a $11 or 12$ trillion debt will ever be paid.)With 10% of the U.S. population owning 80% of the financial wealth and 80% of the population with 9% of the wealth, why should that 80% have to bail everybody out?
Wall Street and Vegas casinos are merging in concept. Nothing but gambling and money changing hands with no real goods produced that a real consumer can use.
Between cheap foreign labor, illegal immigrants and robotics, this country is going down the tubes. Rapidly.

Posted by Ray | Report as abusive

The government itself needs a bailout. There is no quick fix, they’ve tried that for decades and got nowhere yet seem not to have noticed. Theres HUGE DEBTS out there and everyone seems to think that everyone else will pay it. As the DEBT is so HUGE who in their right mind would want the responsibility SO NOBODY TAKES IT and it just goes round and round and round. The odd war helps of course it detracts us from the HUGE DEBT and once again we make loud noises up the arms industry and take our debt to another (iraq) country. PLEASE WKE UP BEFORE ITS TOO LATE

Posted by hopesome | Report as abusive

I thought the auto industry should get cheap loans, but then Ford announced it was releasing, TA DA! a parking systme! I don’t need parking systmes, I need inexpensive low gas milaege cars that last to 180,000 to 230,000 miles! Paying 20K for a car that is expected to need certain expensive repairs (per the dealer repair) at 60K miles is ridiculous! I will not buy American cars any longer. I can’t afford it!

Posted by Rebecca | Report as abusive

Not all educated people have contempt for the uneducated. Mr. Pointer is not a nice person. Further, he probably did not graduate near the top of his class or he would not be so eager to flaunt his ignorance. If the checkbook were mine, I would buy an ethics class for Mr. Pointer.

Posted by Don Farmer | Report as abusive

The bailout racket needs to be terminated with extreme prejudice. All bogus bonuses, private jets, offshore hot money scams, etc. must die. Just what did AIG do with that money anyway ??? Feinberg and Cerberus Capital must be nailed to the cross.

Posted by Bill | Report as abusive

Dear Billy,

I am a nobody with a lot of education. Five years after arriving I was bankrupt, two years after jobless, pennyless and hopeless. So you are not doing too badly.
But you are right, it did turn around.
Best regards and good luck!

Posted by Laz | Report as abusive

I agree with all of those who said the burden must be shared by all. As far as capitalism working, does it look to anyone like it is, really?
At the very core of this debate the world over is this question. Or, at the very minimum, is the current version any good?

Posted by Laz | Report as abusive

My solution…….. instead of bailing out banks and big corporations, it would be cheaper to give $1 million to every household. The mortgage foreclosures end, and the housing industry would come alive again.

Since most people (instead of saving the money) would go crazy buying all kind of things, even if they don’t need it….. you can be sure that the SPENDING FRENZY would really JUMP-START the economy…. and the government gets more money collected through sale taxes.

Posted by Charlie Rivers | Report as abusive

Bail out? Our government is a joker, and the large corporations are a bunch of jokers as well. Heard of BOHICA? This is how the tax payers like us feel. Bend
Over Here It Comes Again. Mr. Jack P is right on man!!!
Bail out the little guy first, at the end, aren’t we the
foundation of everything?

Posted by Anthony Martin | Report as abusive

Just one question with our government giving away money like they are now. What happens if the money runs out? Will this country go down the hole? Think about it, if the government runs low on cash. HOW IN THE WORLD WILL THIS COUNTRY RUN? AND who will have the cash to run it? The government needs to find a better solution to our economic problem, instead of giving away money to wall street. WE as a nation can’t afford what the government is doing. We may be a rich and powerful country but thats only possible because the government has money. And if they run out, what we’ll we be?

Posted by Dan Arno | Report as abusive

They should take the 2 trillion in past and impending bailouts, stuff in in a boot, and give all of us a big smack in the head with it. Maybe that’ll recalibrate our demented conception of value and stop this rapid contraction when that conception’s bubble snaps.

A house isn’t worth anything unless one’s willing to buy it, regardless whether the shoebox has hardwood floors and a subzero fridge. A lifestyle isn’t worth anything if charging it is digging you into a bottomless pit of spending. A government program isn’t worth anything unless it has tangible and proven benefits apart from vague sappy arguments by self-interested advocates.

What creates value is better ways of doing things. But when we are gullible, huddle like sheep and live off marketing rather than common sense value analysis, of course our country will get slammed repeatedly by rapid economic contractions. Let’s each take responsibility to understand and plan our own lives. Let’s demand both businesses and government do things better and more efficiently. Let’s take a good hard look at what everything, including our expectations, rights and values cost us.

Posted by Sam | Report as abusive

Sam has the right idea about what to do AFTER the storm has passed. But first, we have to make it there. And that’s what this is all about. How do we survive the present AND not make the future all but impossible to happen.
And yeah, we had better have found the old brain by then.

Posted by Laz | Report as abusive

The way it works is, after a disaster there is relief.

So lets just let it happen, Rob is right “Let the system work.” The companies that need to fail will fail, Chrysler has been “failing” since the 1979 and it got gov. bailout in the late 1990′s same thing JUST LET IT HAPPEN, THEY NEED TO GO DOWN. Hopefully now GM and Ford will start to make GOOD CARS, not disposable ones.

Posted by Guillermo | Report as abusive

For now the US must stabilize the recession no matter what the cost. I’m not in favor of any bailouts, but it is necessary. The financial institutions must be stabilized (bailed out)and obviously the auto industry. Who’s next? The current and future unemployed citizens. All of this is ongoing. That’s as far as it should go. Franklin Roosevelt and Congress waited almost 30 months to take decisive action. And our current leadership isn’t repeating that mistake. In addition, a massive undertaking of rebuilding infrastructure is needed and will mimic the solutions of the Great Depression. It worked then and it will work again. Long term the US has three other important financial matters to address. 1)Better enforcement of current financial regulations, and new ones that will prevent a recurrence of the present collapse. 2)Since 1976 the US has had a trade deficit and it has grown every year. Our largest trading partner is Canada with a population just under that of California. That needs to change. The US must produce and market products the rest of the world will purchase. The current trade deficit approaches 800 billion dollars. 3)The total US public debt approaches 10.6 trillion ($37,300.00 per citizen). The US public debt currently equals approx 12% of total US assets. That’s right girls and boys that means 12% of the value of all US holdings, real estate/equities/personal property…. you get the idea. The US is poised for a major economic correction and no amount of money (new debt to the tax payer) is going to stop it. Long term the US must once again become an exporter and the debt must be eliminated. True prosperity is decades away. ps; buy American products. It will make a difference.

Posted by Steve | Report as abusive

We do not need any bailouts. However, the government can (and should)
buy equity stake in troubled companies. This is good for everybody:
the company gets cash and the government gets a share for very low price

Posted by abel | Report as abusive

Bail us all out, then we leave town …

Posted by Rob | Report as abusive

Recessions (and depressions) start when companies have stuff to sell, but people are not buying as quickly. When this happens, the companies start to lay-off their employees – and this starts a chain reaction as more people reduce their spending because they lost their jobs…

What caused peeps to slow down their purchases in the first place in this particular case? Economists say it was unchecked spending on credit – and not saving anything “for a rainy day.” We all know about the people who got Adjustable Rate Mortgages (ARMs) on homes they could not afford as soon as the introductory interest rate ended, but we also spent too much money purchasing the latest gizmos on credit. (I could not believe how many kids had expensive iPhones within weeks of their release by Apple/AT&T! And kids purchasing a $140 pair of tennis shoes? OMG.)

So, as people got into financial trouble, they stopped spending and as they stopped spending, companies made less money. So, companies could not afford to keep all of their employees – and the lay-offs started. And then even less people could afford to buy stuff, and more people had to file bankruptcy petitions because they had no jobs and no savings and tons of credit card and installment debt. (This caused some companies who were owed money by these bankruptcy debtors to lose even more money – and to lay off even more employees – and some stores had to close altogether, cuz they had borrowed $$ to purchase the products they sold to the debtors who were not paying for the things they purchased on credit.) So, even less people could afford to buy things.

Bush’s odd policy of letting the financial sector (where his friends are) keep the profits PRIVATE, while NATIONALIZING (making the tax payers PAY for) the losses is simply not a true Republican policy. Frankly, it is closer to a fascist policy than a capitalist, Republican policy. But it is clear to the entire world that our Republican Party has seriously lost its way – and that the fault lies somewhere between the control exerted on Bush/Cheney by the Christian Right and the control imposed by the NeoCons. (Sadly, the financial institutions that took the $Billions in bailout money, simply pocketed it to pay their gynormous salaries and bonuses.)

But I digress. What can we do NOW to stop the Recession from proceeding to its logical conclusion; DEPRESSION? Is it too late for Obama’s team to cure the economic illness that is enveloping the entire world? In my opinion, it really is far too late. The train wreck is in progress. Humpty Dumpty has fallen off the wall and cannot be put back together again. We cannot stop more companies from closing their doors and laying off more people. Obama can do nothing about this. And it will take more than one year before things get any better.

But what Obama CAN do right now is start working on the recovery – at the other side of the depression. And that is to get people back to work again so that they can start spending again. This is not done by lining the pockets of management in Wall Street, as the Bush Administration did. I hate to say this, but we need to get back to “Main Street” to get actual people working again. Since there will be significantly less companies in business, Obama is wisely concentrating on rebuilding our very old, worn out infrastructure. Freeways, roads, seaports, greening America by replacing old structures with energy efficient ones. There are lots of infrastructure needs that have been ignored by our American Military Industrial Complex. Now is a good time to bring our aging country into the 21st Century with new, and better things.

When construction/renovation begins, construction workers will have money to spend. And the construction companies will need to purchase steel, concrete, wood, copper, tools, office equipment, etc. Small companies will start up to meet the demand – and they will hire staff. Coffee shops near the construction sites and supply companies will even need more staffing. The engines of industry will start to turn again; slowly at first, but they will gain as construction continues.

Science will be reintroduced in the new White House. Legitimate research in medicine, energy independence, and environmental issues will begin anew – and it will once again be honest, rather than “faith-based!” (I am really looking forward to this! I’ll never understand what scares fundamentalists about the development of science, especially since they can assume God gave us the tools to develop scientific theory in the first place… But I digress once again!)

All these things will improve our economy. But it will not be a quick fix. It will take six to eight years to accomplish a recovery, after the bottom is hit (and we’re not there yet.) Nevertheless, we must get started working on the recovery in an intelligent, honest way.

That’s my Two cents.

Posted by zelduh | Report as abusive

NO!NO!NO!NO! How many times do people have to tell you folks in the press and those people in Washington that all this bailout/payoff stuff is a bunch of fece de toro. Read the blogs! WE don’t want this money to be paid out. If Washington wants to give these failing businesses money then take it out of their paychecks NOT THE TAXPAYERS! John

Posted by ginsengjohn | Report as abusive

Hi there,
I wrote that story. Just to be clear, the Connecticut politicians are trying to find a buyer to keep the papers open, and trying to lure one with tax incentives. That’s not a buyout in the way that the automobile and financial services sectors got a bailout. I do use the story to talk about that idea, but that’s not quite the way to describe what’s happening in Connecticut. See our blog entry on this point: 01/02/tax-breaks-not-bailouts-for-newspa pers/



With all due respect to an informed and intelligent comment, trade barriers and protectionism are NOT the answer by a long shot. The only way the US and the rest of the world will come out of this is if they do it together. Besides, if selling American goods abroad is so important, and it might be, how are you gonna do that if others outside of the US don’t have the money? Yeah, but they earn it by selling to the US. Tricky? Maybe. Catch 22? Don’t think so.
You’re right, the products the US will try to sell will have to be relevant and buyable. No more wal mart nick-nacks. A good start might be to spend as much on innovation as on buyinhg it.

Posted by Laz | Report as abusive

The trillions of dollars in bailout economics during the past few months is trickle-down on steroids. Trickle-down is the way of the world. Wall Street rules the planet. National debt means nothing — it’s your kids and grandkids and grandkids’ grandkids problem. Baby-boomers have one motto: IN DEBT WE TRUST.

Posted by T | Report as abusive

I say let them crash and burn. Why on earth should we bail out the stupid people?

If you remember, this entire recession was caused by banks giving out loans to people without checking to see if they could pay it back.

Just to go off on a tangent, the definition of a recession is the economy shrinking for two quarters in a row, or more.

Now, what say ye?

Posted by Katriona | Report as abusive

So do I believe that these companies should be given my money. I am sorry – I was looking for the ‘Hell No’ button.

Enough is enough. I agree – we should make the money available to them – say loan it – and then charge them similar to what IRS would do to you if you owed them money – yeah – no double standards please.

this is ridiculous.

Posted by Concerned Citizen | Report as abusive

So who is going to bail me out? And a few million others who could not save, who could save but spent anyway and the state governments that spent when they have surplus, but asked for bailout when they are short of money. And the companies that were run to the ground. Bail out is supposed to be the “right” thing to do to help. But mostly likely it will end up encouraging those spender to continue to spend in the good days. It is always easier to spend other people’s (meaning yours and mine) money.

I managed to live a life without a cell phone. Always buy second hand clothes, don’t eat out, drive a 15 year old car and send kids to the public schools.. just so that I can save a few hundred dollars a month. Now those spenders want me to pay for their spending habits and their irresponsibilities, why should I pay? No bail out.

Posted by indi | Report as abusive

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