The Guru College
Credit Markets and the Auto Industry
http://www.newsobserver.com/business/story/1290985.html
So, the Fed gets a loan from the taxpayers for $700 billion to bail out the banks and the sub-prime housing debacle, and now they want to use it for something else – which isn’t what the taxpayers were promised. Now that the election is over, it doesn’t matter – people aren’t going to notice, as they are so burned out by the 18 months of ElectionTV and are more worried about losing their jobs than anything else. To make things worse, the Democrats are pushing to have the US Government take a significant stake in the the Big Three car makers in the US, which is about the stupidest idea I’ve heard this month. The automakers have spent the last 5 years with their head in the sand, building massive, crummy cars that people don’t want to buy, and now they need to be bailed out.
The only solution I’ve heard that makes any sense for the taxpayers in regards to the auto industry is to have the government purchase a new fleet of hybrid or low emission vehicles over the next 2-4 years, and pay a significant portion of the tender up front. This will get the auto makers up to speed with the tech the consumers want (and Japan is providing, happily) and the government will actually get something out of the deal, rather than just giving money away for stock that is essentially worthless – until the US car makers start building cars people want to buy. Something tells me that’s not likely – GM is down to 8 months of operating capitol, and with management that bad, I don’t think a loan will help them out.