I know I said I’d be starting a Bailout Watch 2 series on Monday, but events have once again overtaken us. And to avoid confusion, I’ve decided to simply continue the orginal Bailout Watch series, as it’s all pretty much of a muchness: your tax money for GM, Ford and/or Chrysler. This morning, Barrons reports the inevitable: The General is looking to hit-up the U.S. Federal Reserve for a little walking around money. “How much the car producer would seek is unknown,” Barrons says. “but it needs $5 billion to meet its goal of completing a $15 billion liquidity program, much of which actually is coming from cost cuts.” So, can they do that? Of course they can! “Under the law, GM would pay a rate of interest that is higher than the top one charged to banks for cash advances. The Fed can lend to GM without demanding collateral if it gets the votes of five of its board members.” Check this from the Fed’s Discount Window Website: “In unusual and exigent circumstances, the Board of Governors may authorize a Reserve Bank to provide emergency credit to individuals, partnerships, and corporations that are not depository institutions.” Strangely, both this story and the GM Chrysler merger non-deal rely on “two persons with first-hand knowledge of the situation.” Same two? Never mind. This one we believe.
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It’s not our tax money, RF. We’ll borrow every cent of it, and then some.
It’s all okay until lenders decide that U.S. debt has become risky. That’ll be the true financial crisis that will make the current mess look like a minor bump in the road.
Well, in a country where “socialism” is anathema, it is interesting how eager your leaders are to engage in even more corporate welfare. Perhaps completely elimination of all taxes for people making more than $1,00,000 a year would be the way to save GM. Sure, their products would still be junk but if a little patriotic spin were added, it would fly with the public.
I just heard on the radio that the Canadian financial system is still in fine shape, because they never allowed subprime mortgages; never allowed zero-down home loans.
The US ranks 40th or 44th, below countries I’ve never heard of!
This is appropriate, since making cars is just busy work to put employees through- in the grand Soviet tradition of which the US automakers are now a part, GM pretends to make cars.
The real source of revenue to run operations is of course the American taxpayer. The US automakers being, in reality, nothing more than welfare queens suckling at the public teat.
Zoom, Canada has a very conservative banking system. There is nothing here like the turmoil that is going on in the USA. However, you have to realise that in Canada, rich people actually pay taxes and then that is redistributed to lower income people.
It is perhaps better to take lower income people’s tax dollars and redistribute them to multi-millionaires like Rick Wagoner and Bub Lutz because GM’s turn around is just around the corner. It must be, since it has been for the last thirty years or so.
Canucknucklehead,
I know that U.S. politics is of little concern to you (we are a different country, and I don’t follow Canadian politics either), but both Houses of Congress are controlled by Democrats that really think socialism is the way to go.
George Bush sold himself as a compassionate conservative, but that just means he gives money to anybody while cutting taxes.
Nobody outside of the political class and the media is in favor of these bailouts.
Adub, US politics of great concern to Canadians because 80% of what we export goes to the USA. Canadians DO follow US politics very closely.
The USA has a hugely unfair taxation system where the wealthy do not pay their share and the poor pay too much. They then cannot afford to buy things.
No other developed country employs this taxation model. One of the reasons we are weathering this crisis so uneventfully is our “socialist” policies and of supplying health care and help for low income families. If this comes at the expense of golden parachutes for billionaires I am all for it.
As far as Canada is concerned, there ARE people who care about what is going on in the US, as it JUST may be their home nation (along with Mexico) if the NAU goes through. Re. those peaceful, apolitical Canadians, take a look at this:
http://www.youtube.com/watch?v=cfzuV3a0cMY
So, If I were a Canadian, I would tune in to what your fellow countrymen/women already know…the sleazebags in power will use a “global CRISIS” to come up with a “GLOBAL *SOLUTION*”…get it??? The EU is a model of what they are trying to do to the US, Mexico, and Canada…why ELSE do we have between 14-18 million illegal “immigrants” of Mexican and other Central/S. American origin living in the US? Why…the borders “don’t really mean anything anymore…why don’t we dissolve them entirely…problem solved!!”…(that’s how they are going to sell you pushover Americans on this.
RE. the Fed? They are a criminal organization. As auto enthusiasts, we complain about the “monopoly” which goes by the name OPEC…yet we have a monopoly on our monetary system owned and run as a private company. There is nothing “Federal” about the Fed. It is a private, for-profit corporation…and it’s best interest are at direct odds with yours as a citizen.
Only one candidate out there wishes to eliminate the monopoly of the Fed, yet the American public are too dumbfounded by this new Palin woman from the woods of Alaska, or whether or not a “black” man will be the next president to even care.
It’s called the Stockholm syndrome…an individual wants to give you Freedom (by eliminating the Fed and their partner-in-crime, the IRS)…and nobody wants it!!!
Enjoy your circus called an “Election”. You don’t get what you deserve in this life…you get what you demand…or, likewise, don’t.
Considering 40% of the US pays no income taxes, I think the rich are paying more than their fair share. Maybe we should jack the earned income tax rate up on everybody to their 39% level.
I don’t support welfare for anybody, and that includes corporations.
both Houses of Congress are controlled by Democrats that really think socialism is the way to go.
This is NOT a Democrat problem. I’m against bailing out GM with the same management in place, but this economic collapse-in-progress as well as the every day a new plan with chicken-with-their-heads-cut-off running around is pure Republican. No regulation, or even transparency, of hedge funds, CDS, etc. will do it every time; it just takes a few years. I’d MUCH rather see money pissed away on welfare queens; at least their kids might get a few crumbs. As it is, CEOs float away with tens of millions. Meanwhile McCain supporters seem genuinely scared shitless that Obama might move things to the left. He’s a liberal. Great job Fox.
I don’t support welfare for anybody, and that includes corporations.
How do you define welfare? Short of living as a lone woodsman/hermit, any kind of human society relies on collectivism to some degree.
…both Houses of Congress are controlled by Democrats that really think socialism is the way to go.
Maybe you know some different socialists than I do, but redistributing income from the poor to the rich, or from individuals and to corporations, is about as far from socialist as I can fathom.
I just heard on the radio that the Canadian financial system is still in fine shape, because they never allowed subprime mortgages; never allowed zero-down home loans.
Canada has four big banks who are both a) heavily regulated and b) protected from foriegn competition. They work very much lockstep with government.
The US has a pathological fear of government-led anything, except the military (which blows my mind: it’s evil for the government to supply health care, but perfectly ok for it to keep thousands of people under arms). The Canadian banks simply don’t have to try as hard, and as a result, don’t take nearly the risks. They’re also allowed to grow much larger, and operate in more ways, than bank-terrified Americans would ever allow.
That said, you can get zero-down mortgages in Canada. Not as easily, and certainly not sub-prime, but you could do it.
Canucknucklehead: You are not correct on the rich not paying their “fair” share in taxes in the U.S. (the “wealthy” own companies that employ people also). It is a fact the top 5% of earners in the U.S. account for 50% of all tax revenues, and those below $40,000.00 per year income pay a tiny percentage of the federal taxes, yet receive enormously more than that in benefits: schools, transportation, food stamps, housing allowances; medical care. Canada may have a universal health care system, but that will not work in the U.S., we have more than ten times the population and far more diverse. How long would Canada’s economy exist if it were absorbing a couple of million of illegal immigrants per year? Canada should be thankful the U.S. is between Mexico and itself. Has our government made bad decisions? Absolutely, the assclowns in D.C. are truly bankrupting this country, along with their friends on Wall Street. The middle class of America however are the ones getting screwed, they are the ones paying a lot of taxes and shouldering an ever increasing financial burden. I don’t know if the U.S. survives long term or it goes bankrupt, but revenues to the federal government are well over $2 trillion annually and it’s not ever enough for the dumbass poloiticians. Meanwhile back to cars:
GM is pretty much finished.
You’d have to be a fool to buy anything Obama or McCain say regarding the economy. Neither has articulated any specifics on how they will lead through this crisis. Sure, both promise tax cuts (lie) and a balanced budget (lie), but neither one gives ANY detail on how they’ll do that… just some vagaries on cutting expenses.
As Carlin so eloquently put it in his last televised special: “It’s bullshit, and it’s bad for you.”
@pshar:
Even the most staunch small government conservatives agree that a federal military is one of the things the government should be doing. Unsurprisingly, they rarely do that well.
Adub is correct in pointing out to our left-leaning friends that 40% of Americans pay no taxes, and get the most of the benefit. So you’re right, the current tax system isn’t fair. The rich (and they keep lowering the bar on that, btw) have to grin and bear it as they see their net worth and purchasing power lessened so the laggards can continue not contributing to society in any measurable way.
What gets me is after systematically redistributing the wealth from the job creators and money makers to the people at the bottom, the Democrats will wonder why the economy will be so slow to come back. If you were someone who wanted to grow your business, why would you do it in the next four years when you’ll have the most anti-business, overregulated, onerously taxed, borderline protectionist economic policy in America’s history?
I am against more taxes. Keep your damn hands out of my pockets! That means you, Obama!