Are the Feds Running a Scam?
Remember, the $700 billion bailout and the new program, for student, credit card and auto loans with a price tag that keeps changing daily, bailout both require money. The Feds don’t have any money. They have the choice of borrowing or printing or both.
At a point doesn’t the well have to run dry? Even the Chinese, the Feds’ recent creditor of choice, are running their own bailout.
The thinking on this new credit bailout seems to be that we have to give people money to spend so they start buying crap again. I’m of two minds on the student loans, the credit card and auto loan bailouts seem insidious though. Never mind that too many people don’t have any savings and their retirement funds have shrunk. Make credit available to them and they’ll start acting stupidly again, spending money they don’t really have for stuff they don’t really need.
Hasn’t consumer credit dried up for a good reason – that too many people weren’t able to pay it off and the lenders were losing money? So the government should step in and give the lenders more money to give to people who can’t pay it back?
Isn’t this what ACORN was supposed to have facilitated with the sub-prime mess? Lend money to people who can’t pay it back? Aren’t those ACORN people evil? It works for awhile as more money goes in to the scheme and then the investor (here the Feds and their backers – us) gets burned.
I’m beginning to think that we need to do some major economic triage.
Auto industry, let the strongest survive. If GM is going under, let it and let other car companies buy up the assets, stiffing the creditors, a long and honored tradition of bankruptcy law. Do you really think there won’t be cars to buy if GM dies? Yeah, there will be some, a lot of, auto workers out of jobs. We can spend a shit pot full of money for unemployment and retraining benefits before we get anywhere near the numbers we are talking about spending now on the new bailout.
Consumer credit, cut it back and let the economy adjust. More unemployment yes; but, in the long run less money wasted by helping just the unemployed rather than companies selling crap.
I’m glad I’m not Obama. I can opine away here at Rather Than Working with no consequences. He’s got to have a clue. I hope he does.
3 comments:
It seems to me that there will be a demand for a certain number of cars, and that therefore a certain number of cars will be made, requiring a certain number of workers to assemble them. If a few big companies go down, the remaining companies will pick up the slack. You'll have the same number of people employed by the auto industry, they'll just have a different name at the top of their paycheck.
Or am I missing something?
With some down time for the transition Thomas, I think you are right; though, we may both be missing something.
One thing that will change is the labor cost of a car. In bankruptcy, the company can dump its union contracts and start over.
The new model would probably be what Honda, Hyundai and Kia are paying in their US plants. Less than the Big Three pay; but, probably livable wages.
Yes, the Feds are running a scam.
I have yet to get a reasonable answer to the question of why spend $ 25 Billion to prolong the survival of three companies only woth about $ 12 Billion dollars combined?
It seems this economic turmoil is making Conservatives and Libertarians out of a lot of people. :-)
You guys are exactly right about bankruptcy, jobs, costs, etc
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