Sunday, December 07, 2008

Comment: Could auto bailout trigger trade war?

For decades, the U.S. preached to the world and especially to Europe about the need to reduce government subsidies for industry to promote a competitive "free trade" environment.

Now, with Washington contemplating a major bailout of the U.S. automobile industry, there are grumblings across the pond. Indeed, the original amount requested by U.S. auto execs was more than twice the market valuation of the Big Three auto companies combined.

Current EU president Nicolas Sarkozy has been out in front calling for the European Union to ease restrictions on member's ability to infuse their own auto industries with government cash. The idea simply is that the U.S. bailout money would put other international auto makers at a disadvantage.

During the Great Depression, protectionist moves across the world resulted in a trade war that drastically cut the free flow of goods across borders deepening the economic downturn according to many economists.


Detroit Bailout Fueling Trade Tensions with Europe
TIME - Dec 1, 2008
02, 2008 While Harry Reid, Nancy Pelosi and other Congressional Democrats mull an auto industry bailout plan, it's worth recalling a pair of Republican ...

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Reuters
Report
Dec 05, 2008




Video: Washington Talking $15 Billion for Automakers AssociatedPress

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