Governments Preparing To Bail Out DRAM Makers 494
An anonymous reader writes "DRAM makers are facing one of the worst downturns in their history and governments around the world are lining up to help companies through the mess. Taiwan, Germany and South Korea all appear poised to offer some assistance to their DRAM chip makers. The chip makers' problems are indicative of global woes. Easy lending terms and a bright view of the future prompted them to build too many new DRAM factories. Much of the new output was aimed at Microsoft's Windows Vista, which has higher memory requirements than XP."
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Re:Bailout Bandwagon (Score:5, Informative)
I hardly expect anyone to read that, so I'll summarize. In 1979, according to this article, the Carter administration offered 1.5 billion dollars to Chrysler in what was referred to as a bailout (also called, somewhat quaintly, a "tide-me-over"). Amazingly, the company was proposing a shift to fuel-efficient cars that would get them back to profitability "by 1981". This is all before my time, but I do know that if they ever followed that business model it can't have lasted very long. And so we find them today, stuck in the same ditch they'd driven into back in 1979.
We've all heard that history repeats itself, but this is one of the most startlingly clear examples that I've seen. The difference today, as far as I can tell, is that in 1979 the bailout package called for Chrysler to have a clear plan going forward, and laid out strict conditions (I won't cite them here, but feel free to click on that big ol' link up there). By contrast, I've seen snippets of the recent hearings on a present-day auto-industry bailout. Irrelevant grandstanding about jets [bbc.co.uk] aside, these execs manifestly do not have any plan, and have admitted that they really don't know if the bailout will be enough to save the industry.
We should not stand for this. The whole tired show has been seen before. The only difference, again, between the bailouts of today and those of yesteryear is that we no longer ask for any sort of accountability. That, and a couple orders of magnitude.
Re:Bail Out Madness (Score:5, Informative)
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been about 200 years. These nations have progressed through this sequence: '>From bondage to spiritual faith; From spiritual faith to great courage; From courage to liberty; From liberty to abundance; From abundance to selfishness; From selfishness to apathy; From apathy to dependence; From dependence back into bondage.
Alexander Fraser Tytler (1747-1813)
Re:What about bailing out people? (Score:5, Informative)
The usual quote "eternal vigilance is the price of liberty" naturally applies. However, don't forget that intervention *is* the purpose of government. It is the official mechanism for imposing the will of the people, whatever that will happens to be.
Re:Bailout Bandwagon (Score:2, Informative)
That much is obvious. Perhaps the words "Financial Crisis" didn't make it to Fox News yet?
Fox News covers it. Neil Cavuto, for example, has had Dr. Paul on several times [campaignforliberty.com] to talk about it. Peter Schiff gets interviewed on various Fox News programs as well (one thing I miss about Glenn Beck on CNN was his frequent Peter Schiff and and Stephen Moore interviews).
Re:Bailout Bandwagon (Score:4, Informative)
This economic crisis is just a revaluation of how much the US is worth.
Re:Bailout Bandwagon (Score:2, Informative)
The Chrysler of today isn't the Chrysler of 1979. Mercedes/Dahmler bought them, realized it was a huge mistake, and sold them to Cerebrus. Cerebrus basically buys companies, breaks them apart, and resells the pieces. GM and Ford have ownership stakes in "foreign" auto companies. GM and Ford have an international presence. Chrysler has been stripped of those things. At this point, bailing out Chrysler isn't saving jobs, it's saving a capital management company that made a bad bet.
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Re:What happened to "risks of doing business"? (Score:3, Informative)
As with much of the current economic downturn, the problem is liquidity, not capital. All of the manufacturers have very expensive assets (their fabs) and make things that have a large market. The problem is that due to decreasing liquidity everywhere, fewer people are buying RAM suddenly. In the long term, it is expected that this will end and people will start buying again. Once they do, the manufacturers will make large profits again. Until they do, they have large debts from building their fabs that need servicing, and not enough income to do so. If one of them goes bankrupt, then whoever buys their assets will make a killing.
In a more healthy economy, a bank would look at them, judge them a good medium-term risk, and lend them the money to cover their outstanding debts with a relatively high interest rate. Once the demand recovered, the bank would then get its money back plus a large percentage. At the moment, however, there is a shortage of banks with sufficient liquid capital to be able to make such a loan.
The alternative is for national governments to step in and guarantee their debts. This allows the manufacturers to keep operating in the short term. If done correctly, it will mean that the taxpayer will see a long-term benefit, since they will have the bail-out amount repaid with a reasonable amount of interest when the market recovers.
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Re:Bailout Bandwagon (Score:2, Informative)
Re:Bailout Bandwagon (Score:3, Informative)
Here's the deal : burning hydrocarbon products causes measurable economic damage to other people besides the entity burning them. I.E. : if you burn a gallon of gas, you create air pollution. Also, your country may have to fight a war to make sure that gas is available.
Economists call these things "negative externalities". The correct approach to fixing negative externalities is to charge a tax on the activities that cause a negative externality to other people.
This would have the net effect of making alternative energy relatively cheaper, stimulating more investment in it, and eventually replacing the use of hydrocarbons for energy altogether.
Re:Bailout Bandwagon (Score:1, Informative)
It is better for gas to be at $5 a gallon *constantly* than at $0.50 one year and $2 the next.
Price stability allows individuals and companies to predict their costs and adjust. Call it kind of "economic evolution". Swings from $1 to $4 and back down in short periods of time kill both,
* industries using oil and polluting everything for free (non-competitive during spike)
* industries investing in tech other than oil (non-competitive after the spike)
So, you see, the entire problem is the inelastic supply-demand of commodities, and more specifically, fossil fuels. Carbon Taxes are there to mitigate these spikes by allowing alternatives to be competitive.
Think of it another way: why can fossil fuels pollute everything for free? Is the mercury pollution (90%+ from coal) in oceans and almost all lakes "free" to clean up? No impact on society?
Carbon tax is a way to put a tax on pollution. Ideally, you'd want revenue neutral carbon tax, where the tax is returned as a tax cut/credit in income taxes. In that case the free market drives innovation instead of gov't subsidizing some special interest groups like it is done now.