wrote in message
...
On Dec 16, 12:16 am, "Canuck57" wrote:
wrote in message
news
On Mon, 15 Dec 2008 23:06:30 -0500, BAR wrote:
Chrysler should have been left to go bankrupt back in 1980. If it
wasn't
for the M1 Abrams the government never would have stepped in.
Maybe, but then the government would have missed out on the $335 million
profit they made on the $1.5 billion loan guarantee.
Today has 2 major differences.
First, $1.5 billion is about the burn rate for GM, Chrysler and Ford in 1
week! It is estimated for GM alone, $75 to 125 billion is needed for
solvency and sustainability. Assuming Chrysler needs about the same and
say
$50 billion for Ford, further assuming their numbers are accurate and not
cooked they collectively need $250 billion. And that is if they instantly
fix the problems, which historically, it is like investing in NorTel. By
the way they too need a bailout. That is about $1250 out of each middle
class workers pocket. 2-3 car payments for cars they don't own. Oh, and
parts suppliers like JCI and Magna, extra.
Second, what do you do with the other 98% of the people and businesses out
there? Screw them with $1250 more taxes? The last points bill must be paid
or the next loaf of bread might as well cost $1000. You can't print out of
debt on this scale without at least a working generation of recession.
Keep
in mind, government revenue is going down at an alarming pace. The war in
the middle east will not end with peace, it will end in bankruptcy of the
government and currency itself.
North America can no long afford these dogs. Will make some good case
study
for Harvard and Yale is the only redeeming value GM and Chrysler has left.
This is going to come down to American bankruptcy into the currency.
Said it before, so did several others. Give us middle class folks a
voucher to help pay for a new car. We get a bailout, GM gets to sell
cars, then put folks to work building new ones.... But the Union
doesn't want that, it would mean they would have to go back to work to
get the money...
---------
Really, you hit the nail on the head. The middle class has slowly become
debt ladden and can no longer afford more. Worse yet, the defaults are
crushing the very system itself.
By some estimates we are only about 1/3rd through the unwinding with ARMs
and others coming up soon. Some say the worst has yet to come because it is
as least as big as what we have seen and the economy is already weak. There
is no question this is a long lasting recession at best and is in reality a
depression. Historically, this will be as bad as 1929. Forget 1982.
You are 100% correct though, it is the middle class that needs a bailout.
It is also the only way out. You can bailout others but there is no point
so long as the middle class is in trouble. Case in point, so what if GM,
Cerberus Chrysler is bailed out? Families are not just dumping homes but
autos to reduce costs. Without credit they must live inside their means.
Used to have 2 or 3 cars? Now 1 or 2 cars. It will take at least 5 years
for demand to rise. At GM's burn rate of 2 billion a month that is $125
billion just to keep them going! Add another $125 billion you have 1/4
trillion just for GM.
All of this bailout BS has to be paid in time, and guess what, the middle
class pays it. Further reducing their ability to spend to drive the
economy.
This guarantees a long recession or depression as in fact like the middle
class, the government too is broke. They are printing the money as they too
can't borrow. This is going to at some point cause a large inflationary
wave that will further put the middle class at a disadvantage. Why is
government doing this? Simply put, survival of government.
Government should be scaling back, exiting a war they can no longer afford
or win, and reducing it's size and spending in a huge way. Targets like 50%
reduction in size and spending. Returning more to the middle class in
income tax reductions to they can pay their bills.
I don't know if it is just plain stupidity and massive denial, or a
conspiracy, but the finacial system as we know it is bankrupt. And the
government seems less worried about the country and more worried about the
rich that will not have a musical chair when the music ends at our expense.
Many today, even newborns will not see the end of this event sad to say.