My thought was that this bailout was a given and would be passed - with some wringing of hands and clamoring of distaste but passed all the same. I assumed this would but one of many more such events to come over the next months or years in an effort to fight off the inevitable.
Of course these things are not "over" until they are over - there are more than one way to skin any cat. If the results of Big 3 bankruptcy gets to bad this could get another look, or perhaps the current or the new administration will find a way to move funds around to accomplish the same goal as the original bailout - time will tell.
What dies this all mean?
SEOUL (Reuters) - The collapse of a proposed bailout for U.S. automakers has raised fears of a deeper economic slowdown and further financial shocks that may jeopardize worldwide efforts to ease a global recession.
Any failure or bankruptcy of General Motors Corp, Ford Motor Co or Chrysler LLC could cost tens of thousands of jobs, hit credit markets and disrupt the auto industry's global supply chain, economists said on Friday...
Some economists warned that any failure of U.S. automakers could cause a fall in the dollar and U.S. Treasuries, further hitting the country's battered financial system and economy. "A jump in U.S. corporate bankruptcy may prompt investors to flee the dollar and U.S. Treasuries amid concerns over a bubble in Treasuries," said Park Sang-hyun, chief economist at HI Investment & Securities.
That is certainly one perspective, perhaps absolutely correct. For how long and how deep could this recession reach? Depression levels? Further opinion -
Dec. 12 (Bloomberg) -- A bankruptcy filing by General Motors Corp. or Chrysler LLC might send the U.S. economy into chaos within weeks if it led to a shutdown at the companies.
Industry experts and economists say the automakers would close plants, fire tens of thousands of workers and cut production. That would cause many of their suppliers to collapse, triggering more job losses, straining the cities and states where the car and parts companies operate, as well as federal safety-net programs...“It would be unprecedented,” says Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. “So it’s hard to say exactly what would happen.”
Still, a GM or Chrysler bankruptcy “would be the start of a cascade of failures,” says Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. “The economy will be in chaos within weeks.”
The "trickle down" theory in reverse.
I find it hard to believe the Federal government will not do something un-Constitutional before things reached such a level. From the same article we find...
The Bush administration said today it will consider using money from the $700 billion bank-bailout fund to prevent GM and Chrysler from “collapsing.”
Of course if Bush is unwilling to violate the Constitution one more time before leaving office I suspect that Obama will do the job pretty quickly.
I believe that we should take one thing away from this - the Federal Government still can and will head this off. Moving debt and failure from one place to another is still an option. As ugly as the prospects of this collapse are it will happen someday. The more we stall it, the more the delay the bigger the eventual fall. Just pause to think what it would mean to you right now today if the chaos and turmoil predicted by a collapse of these three companies would mean to you and your family.
This will be our reality, later if not now, and when it comes it will be bad. This is why I am determined to write on the issues surrounding surviving a SHTF scenario...
More for your consideration (and to spur your desire to prepare)
Car Vote May Tip US Into Depression
U.S. weekly jobless claims jump to 26-year high
Homelessness rising as economy slides
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