Financial Analysis

Most business deals today involve some level of risk. It is a known fact that most successful businesses are those that are unafraid to take risk. In fact, in order to become successful, our culture and economy is designed to revolve around a certain amount of risk. Usually the businesses that are the greatest risk takers are the ones that see the greatest return on their investments. Modern societies around the world have proven that markets gain financial stability quicker when risk is involved. America is no different. Recently, the Government sponsored the Cash for Clunkers program in an effort to help the car industry, which has suffered from the recession. The program offered customers a rebate up to $4,500 toward new, more fuel-efficient cars and trucks. The program has been a huge success for automakers Ford, Toyota, and Honda, but not so successful for Chrysler and General Motors.
Some believe that the government acted too quickly, while others think it was a good idea that could not have come sooner. They believe that this will give a bigger boost to the economy. According to Luke 14:28-30, we have a responsibility to be good stewards of that which the Lord has given us. Our word is our bond, we must be careful not to give a promise without considering the consequences. Wise men and women always count the cost before making major decisions. With that in mind, the argument can be made that the car companies got what they deserved and the government should not have given them any assistance. When we are frivolous with our spending or lazy with managing it, we run the risk of losing that which we have been given.
On the other hand, it can be argued that if the government did not step in and provide some type of assistance to these companies the economy would have gotten worse. We have here a situation similar to the story in Matthew 25:14-30 where a man was going on a trip. Before he left he called his servants and gave each of them money according to what they could handle. When the man left the servant that was given five bags of gold invested his money and got five bags of gold in return. The servants that received two bags of gold did the same thing. However, the servants that received one bag of gold buried his gold. When the man returned he was well pleased with the two servants that invested the gold. The man was very disappointed with the servant who buried his gold and commanded that his gold be taken and given to the one who had five bags of gold. Believing the Bible and this story makes it hard to have a condemning view of the car companies Ford, Toyota, and Honda. They can be compared to the men in the story who invested the bags of gold and was able to give the man a return on his investment when he returned home. General Motors and Chrysler, on the other hand, can be seen as the man who buried his bag of gold. They were very unsuccessful at capitalizing on the Cash for Clunkers sales because they ignored earlier signs of change in the car industry. While Ford, Toyota, and Honda was researching and making fuel-efficient cars before the recession, GM, and Chrysler was still making gas-guzzler. For this reason, the argument is being made that the government should not be in the business of saving companies that refuses to adhere to and adapt to the changes in society.
At the end of this discussion, we hope to conclude that the government used wisdom in making the decision to use taxpayer’s money to bailout businesses. 1 Timothy 6:17-19, deals with the importance of using wealth responsibly, and as citizens of the United States we should be able to trust the government to act responsibly when handling our money. That is not to say that we should have not bailed out these companies, but that the companies have a responsibility to the country to have good business practices. When businesses act responsibly, they should not be held back by a struggling economy.

Having a great day today