Auto Industry Bailout

November 18, 2008 12:34:16 AM PST
Car dealerships say economic uncertainty, and a tight credit market are keeping buyers out of their showrooms, and causing the car makers to collapse.Brett Hedrick, of Hedrick Chevrolet is hoping congress helps keep General Motors and other U.S. car companies alive. "I think for all of us, the economy as a whole needs a boost, I would hate to see what would happen if GM had to go into bankruptcy or anything like that. That would be devastating." Hedrick says.

Economist Henry Nishimoto, of Fresno City College believes the government has no choice but to bailout the car companies. He says,"I think not saving the auto companies would have disasterous effects on the economy, simply because so many other industries that depend on the auto industry."

Congress is currently debating a 25 billion dollar measure to help the car makers stay on their feet. But Fresno State economist Rufus Waters, thinks it's a mistake. "Life support doesn't help. Life support doesn't help. Not in economics." He said.

Waters says the American Auto Companies should be allowed to go bankrupt, and let other companies take them over and run them more efficiently. " I would urge Mr. Obama that he say no to them because this is not the way to generate a flexible, productive automobile industry in the United States. Ready to meet the challenge of globalization which it has failed to do so far." Waters says.

But General Motors remains the world's largest car company, and sells more cars in this country than Toyota. Ford outsells Honda and Nissan. Chrysler sells more than Nissan and Hyundai. Nishimoto believes the automakers have themselves to blame for most of their problems, but says at this point, the government has to act. "As an economist there are no limits. The government has to do what it has to do, otherwise the economy will go into a free fall." Nishimoto says.

Congress could act on a bailout measure for the car makers this week. But Republicans may try to stall until President Bush is out of office. President Elect Barrack Obama has indicated he supports some form of assistance to U.S. automakers.

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