Two major car companies, General Motors (GM) and Chrysler, went bankrupt during the Great Recession. The Government had to make a choice; to get involved with helping them, which would help the economy, or let them fight for themselves. Both choices would leave some American citizens mad at the government. The Government decided to help them by establishing the Auto Bailout along with other programs like TARP. Although some think the Auto Bailout didn’t help small supplier companies, it was the right move for the government to take because it helped stop our economy from going further into a depression.
The Auto Bailout started in 2008 after the Great Recession occurred in 2007. Its purpose was to loan money to GM and Chrysler to keep them from shutting down. If the car companies went bankrupt, the supplier companies would also go bankrupt and many citizens would lose their jobs. Giving loans to them would increase economic activity and help bring the US out of the Great Recession. At first, the Government was only going to loan $17.4 billion for the bailout. GM wanted $13.4 billion and Chrysler wanted $4 billion. The total cost was around $80 billion. This extra amount of money came from the Government when they bought all the stocks from GM and forced them to get a new CEO for equity. Chrysler was forced to let the foreign car company, Fiat, run Chrysler for the time being. The Government did this to try and help both car companies from making decisions that would impact the economy negatively. All the stocks bought from GM were sold which helped to make up money owed to the Government. With this “final sale of GM stock, [this] important chapter of our nation’s history is now closed” (Treasury Secretary, Jacob J. Lew). The Auto...
... middle of paper ...
...t. 2010: n. pag. Issues and Controversies. Web. 21 May 2014.
Bump, Philip. "The Auto Bailout Saved 1.5 Million Jobs - and likely made $50,000 on each one." The Wire 9 Dec. 2013: n. pag. Print.
Franchi, Rod. "Guided Notes on Curing the Great Recession Lecture." Novi High School. Lecture.
Frontline: Inside the Meltdown. Dir. Michael Kirk. PBS, 2009. Film.
Hassett, Kevin A. "Obama's Auto-Bailout Fiction." National Review 3 Apr. 2012: n. pag. Print.
Rattner, Steven. "Delusions About the Detroit Bailout." The New York Times 23 Feb. 2012: n. pag. Print.
Roth, Carol. "US Auto Bailouts Weren't a Success." CNBC 10 Dec. 2013: n. pag. Print.
Shao, Maria. The U.S. Auto Bailout was Necessary, argues Rattner. N.p.: Stanford Business, 2011. Print.
Vlasic, Bill. "U.S. Ends Bailout of G.M., Selling Last Shares of Stock." The New York Times [New York City] 9 Dec. 2013: n. pag. Print.
The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
Amity Shlaes tells the story of the Great Depression and the New Deal through the eyes of some of the more influential figures of the period—Roosevelt’s men like Rexford Tugwell, David Lilienthal, Felix Frankfurter, Harold Ickes, and Henry Morgenthau; businessmen and bankers like Wendell Willkie, Samuel Insull, Andrew Mellon, and the Schechter family. What arises from these stories is a New Deal that was hostile to business, very experimental in its policies, and failed in reviving the economy making the depression last longer than it should. The reason for some of the New Deal policies was due to the President’s need to punish businessmen for their alleged role in bringing the stock market crash of October 1929 and therefore, the Great Depression.
Another $102 billion would be used to help victims of the recession with unemployment insurance, health care, food stamps and job training, while jobless aid would also be increased by an extra $25 a week. As we can see, the evidence is clear and growing by the day, the Recovery Act is working to soften the greatest economic downfall since the Great Depression and is laying down a new foundation for economic growth.... ... middle of paper ... ...
During the Great Depression, every work place was hit hard and many were out of work. The demand for vehicles declined, and the automotive industry took a hit. Once the Second World War began, the automotive industry was given a push in the right direction, and their vehicle production flourished...
As a result of the Great Recession of 2007 to 2009, the United States government implemented various fiscal policies in an effort to stimulate the economy. How the government responded as well as how those responses will affect the U.S. economy into the future are the focus of a proposed research study. In order to ensure an appropriate focus for the proposed research study, problems in existing literature must be evaluated.
In the midst of the current economic downturn, dubbed the “Great Recession”, it is natural to look for one, singular entity or person to blame. Managers of large banks, professional investors and federal regulators have all been named as potential creators of the recession, with varying degrees of guilt. No matter who is to blame, the fallout from the mistakes that were made that led to the current crisis is clear. According to the Bureau of Labor Statistics, the current unemployment rate is 9.7%, with 9.3 million Americans out of work (Bureau of Labor Statistics). Compared to a normal economic rate of two or three percent, it is clear that the decisions of one group of people have had a profound affect on the lives of millions of Americans. The real blame for this crisis rests on the heads of the managers that attempted to play the financial system through securitization, and forced the American government to “bail out” their companies with taxpayer money. These managers, specifically the managers of AIG and Citigroup, should be subject to extreme pay caps for the length of time that the American taxpayer holds majority holdings in their companies, as a punitive punishment for causing the Great Recession.
Every few years, countries experience an economic decline which is commonly referred to as a recession. In recent years the U.S. has been faced with overcoming the most devastating global economic hardships since the Great Depression. This period “a period of declining GDP, accompanied by lower real income and higher unemployment” has been referred to as the Great Recession (McConnell, 2012 p.G-30). This paper will cover the issues which led to the recession, discuss the strategies taken by the Government and Federal Reserve to alleviate the crisis, and look at the future outlook of the U.S. economy. By examining the nation’s economic struggles during this time period (2007-2009), it will conclude that the current macroeconomic situation deals with unemployment, which is a direct result of the recession.
The total cost of the Recovery act to US taxpayers was $787 billion dollars. The bill itself was created with the belief that increases in spending on the federal level would create and save jobs during recessions. More specifically, the purpose of the bill was to create jobs, drop the unemployment rate, stimulate the economy, have better quality of schools, and have better quality and efficiency of everyday life. The allocations of funds designated by the law are as follows: $81 Billion for protecting the vulnerable, $43 billion for energy, $59 billion for healthcare, $144 billion for state budget relief, $8 billion for other needs, $111 Billion for infrastructure and science, $53 Billion in education and jobs training, and the largest portion $288 Billion in the form of tax relief through the use of tax credits and increase business deductions.
Florida, R. (2009). Passing the Buck-Economy in Crisis?. In g. Goshgarian & K. Krueger (2011),
I think General Motors is responsible for the economic problems of Flint, Michigan. The Chairman and CEO of General Motors announced that ten plants would be closing, including one in Flint, Michigan. The reason behind this is to ship business and jobs to cheaper countries such as Mexico, where workers do not have to be paid much for the same amount of work. This saves the company millions of dollars. The General Motor plants closing was the catalyst that caused more problems for the working class economy of Flint. Plant workers did not have extra money to spend, causing local shops to close or move to different cities. People lost their main source of income, their house and their trust in General Motors. While this might have been a great
The Great Depression was one of the greatest challenges that the United States faced during the twentieth century. It sidelined not only the economy of America, but also that of the entire world. The Depression was unlike anything that had been seen before. It was more prolonged and influential than any economic downturn in the history of the United States. The Depression struck fear in the government and the American people because it was so different. Calvin Coolidge even said, "In other periods of depression, it has always been possible to see some things which were solid and upon which you could base hope, but as I look about, I now see nothing to give ground to hope—nothing of man." People were scared and did not know what to do to address the looming economic crash. As a result of the Depression’s seriousness and severity, it took unconventional methods to fix the economy and get it going again. Franklin D. Roosevelt and his administration had to think outside the box to fix the economy. The administration changed the role of the government in the lives of the people, the economy, and the world. As a result of the abnormal nature of the Depression, the FDR administration had to experiment with different programs and approaches to the issue, as stated by William Lloyd Garrison when he describes the new deal as both assisting and slowing the recovery. Some of the programs, such as the FDIC and works programs, were successful; however, others like the NIRA did little to address the economic issue. Additionally, the FDR administration also created a role for the federal government in the everyday lives of the American people by providing jobs through the works program and establishing the precedent of Social Security...
The US government’s role in the Great Depression has been very controversy. Different hypothesizes argued differently on the causes of the Great depression and whether the New Deal introduced by the government and President Roosevelt helped United States got out of the depression. I would argue that even though not the only factor, the US government did lead the country into the Great Depression and the New Deal actually delayed the recovery process. I will discuss five different factors (stock market crash, bank failure, tariff and tax cut, consumer spending and agriculture) that are commonly accepted to cause the depression and how the government linked to them. Furthermore, I will try to show how the government prolonged the depression in the United States by introducing the New Deal.
...avoiding even deeper collapse of the global GDP and of employment. The government also created the Troubled Asset Relief Program (TARP), for the establishment and administration of the treasury fund, in an effort to control the ongoing crisis.
Thomas Jr., L. (2011, September 19). Greece Nears the Precipice, Raising Fear. The New York Times. Retrieved on February 10, 2013 from http://www.nytimes.com/2011/09/20/business/global/as-greece-struggles-the-world-imagines-a-default.html?pagewanted=all
Fueled by the 2008 recession, the automotive industry suffered a crisis that hurt the United States’ national economy.