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article image$14 Billion Auto Bailout in Jeopardy

By Leo Reyes     Dec 11, 2008 in Business
This is about the ailing US automotive industry and the proposed government bailout to prevent its collapse and to preserve the million of jobs that the industry provides.
The US automotive industry plays a major role in the overall development of the US economy. The industry is a major source of family income for millions of workers that are employed by the giant automobile manufacturers. Many smaller companies with thousands of workers are dependent on the major players in the industry either as suppliers of spare parts or as service providers.
The US government is left with few options to save the ailing industry from imminent collapse. One of these options is to bail out the major industry players in order to save the automotive industry and preserve the millions of jobs that the industry provides.
Just like the banking sector, the manufacturing industry is very much affected by the current financial crises and economic slowdown. Some business forecasters predict an even worse scenario for the next few months. Others are saying that the general economic slowdown will linger for years.
As a precautionary measure to save the ailing industry, the government had to ask congress to allocate funds to bail out the rapidly deteriorating financial position of the major industry players.
The house has committed to pass the emergency measure after a decision was made on the rescue package. With a vote of 237-170, the measure was approved. The measure will provide immediate money for the cash starved companies like Ford, General Motors and Chrysler.
The measure suffered a major blow in the senate because of probable politicking by some senators. Even a number of democrats are non-committal. A number of arguments are being raised like preconditions on environmental issues, wage cuts and debt restructuring.
The measure provides for a powerful position of a “car czar”, a job title that will be created and provided for in the proposed measure which will oversee its implementation including the handling of appropriated funds. White House Deputy Chief of Staff said the Bush Administration will work with the Obama team on the choice of the industry czar.
The proposed measure carries major safeguards on the bailout money including limits to compensation by the industry executives, dividends, profit sharing, etc.
President-elect Obama defended the measure as necessary in the light of a possible collapse of the major automotive players of the country and the resulting effect on the workers who are dependent on the industry for livelihood.
More about Busines, Politics, Automotive industry, Bailout, Economy
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