http://www.nationalpost.com/story.html?id=1343240
This article is actually a columnist's point of view about the automotive bailout as well as more information on what is going on with that situation. John Ivison, the columnist, states that The Big Three--GM, Ford, and Chrysler--are in really bad shape as many analysts can't see GM or Chrysler surviving without the government helping them. Ivison sees that the biggest reason to go against a government bailout would be the fact that this wouldn't be the last time it happens. He believes that no matter how much taxpayers would have to pay, the government wouldn't be willing to take over an industry that is collapsing and also employing 500 000 Canadians. However, it has been predicted that GM's sales will return to their 17-million-unit sales by 2014. Along with that, The Big Three are currently restructuring to reduce costs of labour and to improve their range of products. Reductions in supply, dealership, and management costs have already been done with GM and Chrysler. Tony Clement, the Industry Minister, remains optimistic and has said that he wants to keep The Big Three up and running so that they can be a part of "a new revolution" for manufacturers.
A concept of Chapter 6 involves the fiscal policy, which is the government's policy on spending that influence macroeconomic conditions in hopes of controlling the economy. One of the things the government can do is to bail out companies. This relates to The Big Three automakers, as those companies have practically begged the government to save them from having to declare bankruptcy. Bailing out companies may help those companies with saving jobs and continuing business, but one may wonder, how exactly does this help with the recession going on right now? Well, David Emerson, a member of the Conservative Cabinet, says that if the government lets the auto companies go bankrupt, it "results in such a blow to confidence that it would deepen the recession." Everyone is already in fear of the current recession, so Emerson's point of view is saying that if The Big Three declare bankruptcy, everyone's fears will only grow stronger.
The Big Three have been in trouble for quite some time now. I'm hesitant to say that the economy has too much to do with this, because I've heard the other automakers like Toyota have been making a record amount of sales in the recent months. I believe that it's more of the fact that consumers are shifting their views on which vehicles are better. Also, some consumers prefer to purchase one brand over the other (it's a marketing term in which I have forgotten already), and many consumers can influence other consumers to think a certain way. Although I agree with the fact that people will lose even more confidence if The Big Three declare bankruptcy, I don't think the recession has anything directly to do with their declining sales and whatnot.
Kind of random--not exactly part of Chp6 blog--but I'll stuff this in anyways...
I recently read a blog post about the economy by a blogger/photographer/traveler by the name of Randall Shirley. He spoke up about the fact that if we want the economy to improve, it's up to us to make it better. We can't just sit around, complain, and be scared because that's not going to help the economy. I completely agree with Shirley's points because our economy is a reflection of our thoughts and behaviours. Right now, it's evident that people are scared and unwilling to spend money. It'd probably be best to not continue to say that people are cutting back on spending and instead, encourage everyone to think positively and spend more. Also, when you look at the big picture, the economic conditions aren't that bad. There are still people going to the mall and hauling around shopping bags, and there are still people--myself included--going on vacations. I recently took a look at the seating plan for my flight to New York in June and most of the seats are all filled, which just goes to show that not everyone is cutting back. Although those kinds of things may not help The Big Three, it could help bring the economy out of the recession.
2 comments:
I agree that the automobile companies probably would not be able to survive their financial crisis' if it wasn't for the government lending them money. Although, the article I wrote about stated that, since GM has a high chance of going bankrupt, GM has received a total of $82 billion in the last three years from the government. Each year, the government is spending billions of dollars in trying to keep the company alive, but it did not seem to help much. I think the reason for this is that too many people are still saving their money.Like you said, though, people are still going shopping in malls and going on vacation, but it is the decrease in car sales that is really hurting GM.
K. Chan
Block F
I see why you would think that the recession has nothing directly to do with The Big Three declining sales and whatnot. However, I think that the recession is one huge factors on their sales and profit. This is because during the recession, most people more saving instead of spending. So even if there are consumers who wants to buy cars, they will most likely save and wait till later. I agree with you on how it depends on the company's marketing strategy and I do think The Big Three is lacking on that. I also agree with you on how The Big Three automobile companies probably would not be able to survive their financial crisis' if it wasn't for the government Bail Out.
Carbo Ngai
Block E
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