The Bailout of Car Companies

Let us now return to my opponents implied resolution and his corrections of it. 1. Our country (system) has operated under the laizze faire (let do) economic system for the past 200 years. "This is how our system has worked (and quite well I might add) for over 200 years. " My opponent has conceded that our system has not operated under the Laissez-Faire economic system for the past 200 years when he declared in R3 "These cases are true" My opponent then goes onto state that this debate is one not on facts but on principle. While this may have been acceptable if my opponent stated "This was how our system should have worked or was designed to work for over 200 years" this logic would have been perfectly acceptable, however my opponent clearly has stated in his resolution that "our system >>>has worked for the past 200 years<<< Implying that we have operated under the Laissez-Faire economic system which it clearly has not as has been highlighted and explained by me in R2 and conceded by my opponent in R3. Then my opponent goes onto say that I have attempted to make the Laissez Faire economic system look like "a bad thing. Nowhere in my argument have I critiqued the Laissez-Faire economic system in anyway. I have merely denoted that our system has indeed not operated under it for the past 200 years but rather the contrary. I have then gone onto state the current benefits of the "capitalist mixed economy" which we currently now and have previously operated under. 2. By bailing out car companies we are not capitalist. My opponent to back up this resolution simply states that Laissez Faire principles ("things") are capitalistic and gives an accurate converse statement of my previous example. I would like to state for the record that I not once in my previous argument made any declaration that the Laissez Faire principles were anything but capitalistic. In fact I myself denoted them as being a form of capitalism when I stated: "2. Laissez-Faire economic system is a type of capitalism, however it is not equivalent of capitalism. " Therefore I do not correctly see my opponents reasoning in attempting to refute a point I affirmed in my opening argument. Since my opponent has not offered any coherent logic on how the United States is not capitalistic if they do indeed bail out the auto industry (as the capitalistic mixed economy is the most common type of capitalism present today), then I do have to find that my opponent has conceded this point in his resolution by not addressing it. 3. Laissez-Faire type capitalism is superior to all other forms of government. My opponent has offered no proof (as the burden of proving the resolution rests upon him) of how the Laissez-Faire type capitalism is a form of government. My opponent has also offered no proof on how the Laissez-Faire type capitalism is superior to all economic forms especially the current form we have today. My opponent does offer a notion that the bailout of the auto industry might not work. :First of all, the bailout MIGHT NOT EVEN WORK. He offers no proof as to how it might not work nor what the bailout essentially is. The bailout which my opponent has been touting as a waste of tax dollars and a reward for screwing up is essentially a loan to the industry (that must be paid back in full) in exchange for a large chunk of preferred stock. . http://www.cnbc.com... This loan is only given out if the company has a strong business plan highlighting how they plan on getting out of this mess. My opponent then essentially details a large example which essentially loses its effect on me. I do surmise that his main point is that bailouts defeat the sense of competition. However no sources are used to back up this premise. And the financial and auto industries are certainly far more complex than a lemonade stand. Essentially the global economy is in one of the greatest de leveraging periods that we may see in our lifetime. Additionally my opponent has not refuted the point I have made about how the financial bailout essentially quelled fears about the financial industry. For a clear example simply study this graph of the LIBOR Rate, which is essentially an idea of how frozen the credit industry is. The London Interbank Offered Rate (or LIBOR) is a daily reference rate based on the interest rates at which banks borrow unsecured funds from banks in the London wholesale money market (or interbank market). It is roughly comparable to the U. S. Federal funds rate. . http://en.wikipedia.org... Here is the graph . http://www.contrahour.com... As you can notice the credit crunch is slowly coming to a halt (at the very end of the chart) as the bailout is taking effect detailing how the bailout has essentially prevented one of the largest credit freezes in the history of the United States. My opponent then essentially resorts to one - liners that provide no real substance nor provide any credible sources. Since I do have extra room in this debate I will address one of my opponents points in his one-liner category. "4) Banks putting out risky loans out of greed because the government would pay them back any losses on it was a major cause of the mortgage crisis. " First off there was relatively no precedent for the government for backing these loans. Secondly the sub-prime mortgage crisis was not do to bankers being greedy but the notion of variable rates whereas the people accepting the loans took low variables rates when the economy was at its best, but were simply unprepared for when the rates changed when the economy worsened. It is not the bank's nor the governments responsibility to prevent stupidity of its citizens. At least that is not a capitalistic idea. Additionally the current credit freeze is not because of a few bad loans. It is due to the Fed pouring too much liquidity into the market during the . Com crash and not mopping it up afterwards which made it extremely difficult for banks to pay their profits which led to the sub prime mortgage crisis. If a finger must be pointed, point to Allen Greenspan the former Federal Reserve chairman. Additionally the bane of the current mess is due to the unregulated derivatives on derivative trading that occurred throughout several financial institutions such as the Lehman Brothers and AIG which in turn triggered the global freeze we are in. However I digress. Since my opponent has conceded two parts of his resolution and did not defend the other notion with any logic or facts, I will ask him politely to provide logic for his resolution in the final round. I would like to thank my opponent for such an interesting debate and appreciate his kind and thoughtful remarks. I look forward to his final round.