Week 2 Government Intervention Doesn?t Have To Be Fancy, Just

Bailout of U.S. auto makersNameInstitutional affiliation Details of the interventionThe big three in the American automotive industry were undergoing freefall bankruptcy in 2008, forcing the manufacturers to plead to Congress for bailout from the government. Leading causes of the fall include:The energy crisis of 2003-2008The financial crisis Reduced spending by households Paulson requested the Senate to approve a $700 billion bailoutIn October 2008, Bush signed the Troubled Asset Relief Program (TARP) into law.The Treasury spent $80.7 billion to reorganize the motor industryThe treasury recovered the money by December 2014, less $10.2 billion Arguments for government interventionSave the American manufacturing base Save over one million jobsPrevent the loss of tax revenues Who may be helped and who may be hurt GM and Chrysler benefited from the bailout. The entire American auto industry also benefited from the stable auto industryHowever, Honda and Hyundai in Alabama were hurt because the collapse of the big three would have propelled the two companies to the helm of the American car industry. Unintended consequences of such interventionDiscontinuation of some carsGain of union power Lack of support for pre-bankruptcy cars Cost trend of the intervention success of the intervention$10 billion gain from the total bailout processPrevented the