Thursday, March 26, 2009

Poll Results: No Option on Bailouts?

Poll, Bailout, StimulusMany of you voted on my most recent poll asking if you believe letting companies fail is a viable solution. Besides a few outlying votes, most of you believe that we won't solve anything by letting companies fail. (Image: CNN) Though the vote was split between Maybe and No, I tend to agree with the sentiment that we have seen enough damage to Wall Street. So what do we do? Bail out every business in this economy? Every citizen too?

Here are the results:

No, obviously that doesn't work. We witnessed the stock market crash after the Bush Adminsitration let Lehman Brothers go bankrupt. That single major investment bank's failure is credited with the Dow Jones Industrial Average dipping to 8000. But who should the government target to prop up?

Well, the theory of putting the money into banks seems logical. Failing financial institutions would make money disappear and cost the federal government more than bailouts. Why? The federal government insures your bank account up to a certain figure; that means that if a bank fails, the government gives you the money covered.

So banks make sense, but what about other industries? Let's speak quickly about the auto industry. Publicly held companies with no other backing like Ford and GM represent a valid option because they employ so many. Many industries like auto parts also rely on these companies. But, what about Chrysler? Chyrsler is privately held. It's parent company, Cerberus, has holdings that can prop up the business, but it has refused to thus far. This is why I agree with the "Maybe" stance more in this poll.

Major industry-driving companies and banks are fair game for bailouts in my opinion. I draw the line with smaller, privately held companies. I also think businesses should be required to do more. GM and Ford are going somewhere with their plans, but Chrysler is a big mess. The company matters! Smart bailouts help; too many bailouts burden.