Is bailout evil?

WHILE I’m writing this blog, the big three, Ford, GM and Chrysler are heading to Capitol Hill to submit the bailout proposal in their bid to access to the $25 billion in federal aid. Bailout certainly make no sense in the eyes of economists

 

No doubt Japanese are the better carmarker in this industry. In a simple economic sense, why are the Americans hogging onto an industry in which they have lesser competitive advantage? Probably, the only reason I can think of is to cure the cancer cells of this portion of economy before it spreads to the rest. It does make sense in short term, as seen in the recent Dow Jones slight rebound from it’s lowest, the question is how long can it lasts?

 

Some argued that it is still best to let the tax payer to decide where the money should be flowing to, i.e. cut the tax and let them decide what to do with the excess cash. It is perhaps effective but also a slow way of letting economy to die out first. Time is definately not on the side of US economy, that’s perhaps why the politicians are calling bailout of these poor autocar makers and the financial giants.

 

Still, people are confused why their money are bailing out the delinquents. Is bailout neccessary, is bailout evil? Well, I only know that bailout is not easy to comprehend by all.  According to Merriam-Webster, the #1 word of the year 2008 is actually – “Bailout”. It received the highest intensity of lookups online over the shortest period of time. What the ….?

 

PS: Bailout actually means: You still get present from Santa Claus even if you misbehave… get it?