Governments Role in the Auto Industry

Government and Business

The Governments role in the Auto Industry

Due: By July 5th 2009 at midnight

Introduction:

There has never been a period in since the industrial revolution that so many private business constituencies have had to rely on government funding in order to avoid financial turmoil caused by mass bankruptcies. The current world economic and financial crisis has left absolutely no sector unscathed. It is hard to decipher where it all started, and who is to blame. There are those who would argue that this crisis has been in the making for well over a decade. There are others who would argue that it was inevitable because of sloppy policy by government, and inattention to detail by business over several decades. Whatever the reasons may be, and what ever the time frame it took to get to this point, there is no one who would argue against the fact that the global economic crisis we are now in the midst of is one of epic proportions; never seen since the market failures that spurred the great depression of the 1930’s. There are so many obstacles that world governments are now being forced to deal with. Some blame the bursting of the housing bubble accompanied by the sub-prime mortgage crisis. Others blame volatile commodities. How about the banks that sold the risks associated with defaulting mortgages out at a ratio of 30-1, when any basic economics or finance text would indicate that fundamentally those risks should not be parlayed out at a ratio greater then 3-1. Luckily, the banks in Canada were not as ludicrous as their American counterparts when it came to this practice; and they are substantially healthier at this point because of it. However, as seen in any other part of Canada’s economy, when the U.S. suffers due to their greater acceptance of risk, we too are susceptible to the consequences of their wanton behaviour and policy choices. The governments of both Canada and the United States have stepped in with...