What are some reasons why the auto bailout is a disaster and will not work and possibly make the economyworse?
zack l asked:
I was just wondering for school research why the auto bailout could make the economy worse?
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why is this in insurance? phlegm
One reason why the auto bailout won’t work is because people aren’t buying gas guzzlers anymore.
Another reason is because people aren’t able to get financing to buy new vehicles [or anything, for that matter]. Even if the auto industry goes “green”, people are still unable/unwilling to make purchases with loans.
Because people are so scared to make any type of big purchase, even if they could get the financing, most of us have learned our lesson from the past few years. Put your money back and pay cash for your purchases. Until you have the cash, go without. dark eyes
The REASON why they need the bailout, is twofold: 1. because they operate based on slim profit margins, and credit, and when the credit dried up, AND sales fell, they can’t make enough money to pay their ongoing loans and operating expenses and 2. they’ve been selling cars for YEARS to people who can’t afford them, via easy credit loans – when the easy credit dried up, people who can’t afford the cars can’t get the loans, which seriously impacted sales.
How it could make it worse? It’s just like giving a drunk a drink – it’s enabling them to keep making unsound business decisions, while burdening the taxpayer with an astonishing amount of debt PLUS INTEREST to pay back. Meaning the taxpayers will . . have less money to buy things, like cars. mbrcatz