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Detroit Bailout Isn’t Looking at Real Economy

December 2, 2008

stuff of dreams

stuff of dreams

It’s the stuff of dreams. The Big Three will be profitable by mid-2010. Congressional leaders are demanding to see details about how U.S. automakers will start making money again before they will agree to have a vote on the $25 billion federal loan package that the industry is seeking this time around. This time around is exactly right because few are looking the big economic picture and the constraining forces that are beginning to sink into the width and breadth of the economic recession.

Detroit’s only hope seems to cobble together a few hybrids that most American’s can ill afford at a time when consumer credit across the board is expected to freefall into oblivion over the next few years. GM has a hard time getting their new technological marvel, the Volt, around the block for a test drive. Bankers are using new regulation regarding unfair and deceptive practices as the grand excuse to cut their risks before coming record credit card and consumer defaults. As a result, those Americans with viable employment are projected to have a harder time getting the goods they need, including automobiles. The auto industry must meet a recessionary, corrective market.

With a record contraction of the housing market expected to be at least 40% over the short term, the carnage of record corporate job losses and the loss of investment in the stock market and Wall Street, the economy is due for truly hard times when many were hoping for an end to this recession about mid-2010. The government through the American taxpayer is left holding the ball in hopes of sustaining a bankrupt economy.

plug-in-technologyAny hope of the Big Three or the auto industry hinges on demand for their products rather than containing employment and retirement costs. Existing SUV plants are being converted to produce smaller cars, but there is no talk about improving technology, gas mileage or reliability. The Big Three simply hope to survive. Auto sales are down to 10.5 million units so far this year. They need sales of twelve million units a year to survive and that hope is waning fast with the current scope of the economy and even moderate projections into the future. Americans cannot live on dreams and whimsy alone. We must get down to business. ~ E.Manning

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One Comment leave one →
  1. thinking hard and fast permalink
    December 3, 2008 10:45 am

    Most loans are not owned by banks and that’s the problem, a big problem. The people who own the loans have NO idea what they have, and what part of it is good and what part of it is bad.

    But we have computers today and we could shift through to find out what needs to be renegotiated and what not. But that’s too much work. It is better to dump the bad paper to the government and get the billions.

    I will stop here because I get too worked up thinking about the criminal aspect of this meltdown.

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