Thursday, September 11, 2008

GM, Ford and Chrysler Tell Taxpayers "Well as Long as You're Writing Checks...."

Following the stunning bailouts of Fannie/Freddie, Bear Stearns, and word that the Feds are trying to prepare a package to "save" Lehman, surprise, surprise, guess who's shown up in Washington with their hat in hand? Yep, GM, Ford and Chrysler.

Apparently, because no one in the Auto industry could have ever foreseen a day when consumers might actually want a fuel efficient vehicle, the Big Three are asking the US Government to finance a $60 billion "retooling" of factories to speed the move to small, more fuel efficient cars.

This is the slippery slope that the US Government has started down. Save one bank to save the industry, then another, and another, and another. Now, the Big three say that without this money they run the risk of failure and the big car companies are viewed as too big to fail.

I call BS!! The reality is that Michigan is an important potential swing state and the big car companies are leveraging that fact to take advantage of you and I.

"Congress has already given the auto industry $US30 billion in low interest loans gradually over a period of 12 years, but with the big three in dire straits because of plummeting sales in trucks and four-wheel drives, and with credit drying up and fears one of the three might go bankrupt, Congress is being asked for five times that amount and to make it available almost immediately.

The three carmakers are in a hurry to get a deal. They want congressional agreement before November's election because a new president and new Congress could delay access to the loans."

Someone has to stop this nonsense. The carmakers made their bed when they continued to deliver poor performing, gas guzzlers for two decades. The US carmakers have lost at least a generation of buyers. Practically no one between the ages of 20 and 40 wants to drive a US car and no bailout is going to change that fact. The message to the carmakers should be this - make a safe, reliable, affordable sedan that gets 40mpg or else plan to join the ranks of PAN-AM.

Unfortunately, in today's age of political pandering this loan will probably go through and you and I will end up paying for it in many ways.

How exactly? Well, the value of the US dollar is a function of the stability of the US Government and our ability to meet our future debt obligations. The more bailouts we offer, the weaker our long-term prospects, and the weaker our dollar. Since so many commodities are priced in US dollars, everything gets more expensive when when the US dollar falls. There, now you know more about global economics than 88% of the people running for Congress.


On a lighter note - this is clearly the funniest real estate ad ever....

I absolutely love the fact that the Christmas Decorations are included.

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