The Catch 22: Help Americans, or Help the Economy

Any competent businessman or economist cannot stand government intervention in business affairs. You won't see any corporate executive begging for regulations, or any chief economist pleading for price floors and ceilings for specific industries. But when it comes to times in recession-especially bad ones- the government cannot help but get involved in the market cycle. Why? Because the people the government serves will not allow the government to stay out. People need jobs and a decent economy to keep their current lifestyle.

It is not a bad thing, it makes sense. Back during the Great Depression, FDR's deficit-spending plan helped revamp the United States economy. But is it the best thing for the market? Usually in the market cycle, the weaker businesses during recession phase out, while the stronger ones no doubt take a hit, but survive and grow stronger as the market turns around. The consumers choose the winners, not any third party. I know that Congress' hands are tied because they have to help the struggling American families, but they (and some of the economic and business analysts on T.V.) are right about the one reason why the Big 3 shouldn't receive the bailout: they are not competitive. Of course they'll struggle in a down economy if, according to recent statistics, the Big 3 aren't among the top 10 auto sellers in the world anymore. It should be no surprise that is happened.

It is a surprise though, about how this process is going about. Congress is going to award billions of dollars to the losers in the auto industry, when the Big 3 will probably fail anyway. These automakers are so far behind the leaders, it is unfathomable. VW and Mitsubishi are coming out with battery-powered and hybrid cars that will blow away the current models we see on the road. Toyota, Subaru and Isuzu are updating their hybrid and electric models to continue their rise to the top.

I have several recommendations:

1. Create economies of scale by combining the resources of the Big 3. Merge them together so resources can be consolidated and the extra capacity can be used for electric, hybrid and battery powered operations.

2. Take the billions of dollars you are willing to give to the Big 3 and give it to the small electric/hybrid automakers. For example, Tesla Motors Company has technology that is much better than the Big 3. With that kind of money, Tesla can buy stakes in one of the Big 3 can combine its technology with the Big 3 resources to push out high-quality, environmentally friendly automobiles.

3. On the flip side of recommendation 2, give the money to the Big 3 and start talks for the Big 3 to buy small shops like Tesla.

The Big 3 need to do something, or else they will just burn through the money and face this same situation in March. It is true that the recommendations pick winners in the market, but the side-effect of those actions will ultimately help both the market and our fellow Americans.