The original $700 Billion bailout package was designed to act in the following way: buy out toxic assets, first and foremost.

Fact: the original bailout package was not used to buy out toxic assets at all. It was used to buy bank equity.

The bailout package lacks oversight. Where is Congress when there is no transparency? And yet, Detroit is asked to provide detailed plan. Perhaps Detroit will add certain points to its "draft" or its "proposal" where they can not be investigated independently for where the $25 billion goes, or how it's used. Or they can just black out certain portions of the proposal.

The bailout package was designed to do a whole lot of things, under the guise of unfreezing the credit markets.

Yes, I understand these two are very different industries. Yet, there is a lot to think about. With the shutdown of Detroit, some 3 million jobs are projected to be at risk.

http://www.guardian.co.uk/business/2...e-us-joblosses

That is a lot of jobs. You can just imagine what this will do to the economy in the US and consumer confidence. There will be no point in making credit available when people are in no position to acquire and use such credit. The effect on global economy also follows. Any thinking body, whether an individual or congress, will recognize the threat posed to the economy when Detroit files chapter 11, and will make steps to alleviate such a course, if we are led to believe that the bailout package was designed in the best interests of the people to keep the economy from crashing.

This is a classic double standard, no ifs or buts.

And face it: $25 billion is nothing compared to $7.5 TRILLION. That's right, that's trillion.
http://abcnews.go.com/Business/Econo...6332892&page=1

Of course, this is a game, and the congress knows it, and Detroit knows it. I will be surprised at the end if they are not rescued. But the game must go on as it has been in the history of the bailouts in the US.

 

Well sorry if I misunderstood but these were your words (below) while I try to restate what I think you mean...

How can you guarantee a free market outcome when you state the bailout figure required is largely unknown? What's to stop the bank from coming back and asking for more $$$? In other words, there is no free market at play, period - the government essentially funds a portion of the banks' activities (whatever they may be)!

Did Citigroup not just get $25B of taxpayer's money followed by another $20B injection shortly after? Where's the free market you refer to?

http://www.theglobeandmail.com/servl...Story/Business

 

Look at the sentence before the one you highlighted. It is no secret that noone can put a hard figure on the value of the toxic assets. It's impossible to know. It all depends on what those assets sell for. Who's to say what John Q. Public is willing to pay these homes? Ultimately, the market (that's us American citizens) will decide that.

 

So nobody could possibly say (with any certainty) when the credit freeze will return to 'normal' despite the govt bailouts. Therefore, the whole show is a total farce.

Is it any wonder the CEOs from Detroit thought they could just walk in and ask for money, no questions asked...

 

Credit has already started to flow again, but it's going to take time, just like it took time for the whole thing to happen. (per my first post) Nobody ever said that there was going to be an instant flow of credit again. To expect something like the size of the US economy (let alone the global economy) to react instantly to a bill passed by the US Congress (nevermind that the credit was being moved to all sorts of banks in different countries) is foolish. It doesn't make it "a farce." It's called reality.

 

here is something for thought. say if only 2.2 million people needed to claim unemployment within a year. I am not sure what the unemployment rate for pay is everywhere, I do know it is 3/4 of standard pay where I am. So. I figure if 2.2 million people all apply during a 1 year time and only draw ONE Month of payment. this is the math... since it is approxamate there is room for error

So... I figure an avg of $30 an hour. We will cut that by 1/4 so we have 3/4 left That would equal out to $22.50 or in abouts.. average work week of 40 hours would be 900 a week or 3600 a month. that's for one month of unemployment. Now remember, I am going off by what I have seen where I am so it may vary from state to state.

Now if you take 2.2 million people and multiple that by 3600 you end up with $7,920,000,000. that would go out in a MONTH.even if they were only paid HALF that it would not take long to get to the 20 billion the automakers are asking for. And with so many jobs going as is, another 2.2 million or more would not be pleasant on the tax payer any more than just giving the 20 billion. probably less so depending on how long the workers claimed unemployment. The number gets alot bigger at the 3 million mark. So all in all, if it was letting a bank fail vs the big 3.. I would have let the bank fail. At the most the american public would end up at 0. with this reguardless of what happens, the american public is going to be in the negatives, the only question is just exactly how far.

 

The banks, especially the ones the size of CITI, are exceedingly more crucial to the economy as a whole (and the global economy) and the credit crisis, than the auto makers. Those credit lines that companies (huge companies like GE, UPS, etc) live off of are from banks like CITI. It may be a faceless industry to you, but they are what make the world go around.

 

the issue with that is simply, then the banks can bring the world down if they do not get what they want... so who is reaaaallly running things then hmmm. One thing you failed to mention however, if one bank goes under, there are plenty more to take it's place. Or to be bought by. It's not really faceless, and if you thought thats what I meant than i am sorry. the point of that was stating that the $$ amount requested is going to end up being a whole lot less than what them going out of business can potentially cost. Not only that. but AIG is NOT a bank... it was an Insurance company... so why were they bailed out? And bailed out by the tune of 150 billion? Banks do no good at all if no one has a job. In my opinion the country relies to much on credit... it's a never ending spend fest with money that people do not actually have. Maybe a little less credit would be good. get people to actually live within thier means for a time. I would like to see some of the other country's numbers on the credit leverage used by thier companies. I know there are a whole LOT of countries where a majority of americans who have cards could never have gotten them in the first place. I am sure it used to be that companies got the money first, Then shipped the product. Maybe they should start doing that again.. then we would not be in such a hurt if the banks flopped around. What should have happened was to help the businesses that needed credit or the cash, instead of the banks. To get them out from under the banks influence, so they did not have to rely on that credit. All the money is doing now is going to pay off investors. MOST of which are not even in the US I am sure. The government is not fixing the problem one bit by giving the money to banks... It's a band aide, which will fall off down the road because it puts everything back to where it started to begin with. The banks will get greedy, make risky choices, and go belly up again.. may not happen in our life time, but I bet it does happen again. To much reliance on any one entity is a sure fire way to get screwed in the end.
Helping people get out from under that entity is the best choice.

 

So, since it would be accurate to say that nobody can possibly say with any certainty when the Big 3 will return to profitability despite the last decade of restructuring - does this mean that the whole possibility of automaker bailouts is a farce? Because that's what we have to believe if we use SSbaby "logic".

 

There was a post on here a few weeks back explaining why AIG is a part of this the whole thing. Not only are they an insurance company, but they are the largest insurance company in the world. Among some of the things they insured where those inter-bank loans, known as CDS contracts. When a whole slew of those loans failed, the banks came calling and they didn't have the money.

Here's a snippet from an AP article:

Q: Why is it important to keep AIG afloat?

A: AIG is a global colossus, with operations in more than 130 countries. It is so interconnected with other financial firms that its problems have a jolting ripple effect both in the United States and abroad.

AIG was pushed to the brink of bankruptcy in September when its credit rating was downgraded and it could not post the collateral for which it was obligated under the "credit default swap" contracts it had issued. Credit default swaps are a type of corporate debt insurance.

The Fed raced to the rescue at that time to prevent AIG's failure, which could have triggered billions of dollars in losses at other banks and financial firms that bought these swaps from AIG — sending them into failure as well.

 

Hyperinflation in 2009 anyone? I don't know how that effect the big 3. It would kill US sales but also make US cars sold overseas cheaper.

 

And what US-built cars are sold overseas in any significant quantities?

Oh, and I think your chart is out-of-date, as the bailout grand total doesn't seem to include this past week's trillion dollars in activity. Yikes - we're in a world of sh*t.

 

Wow...first time I have every seen a pie chart with no slices..we should at least go back to the moon while we are at it for entertainment.

 

There is a double standard, here Eric, as we saw in Congress. Congress has no qualms about having Citigroup double-dip into the government coffers but the auto industry isn't getting any favors. It seems there is 'no logic' to how the bailout is being issued nor does there appear to be any in-depth assessment of the funds required.

Back to the point. It's up to the banks to lend money to consumers ... if they want to purchase a car. There is nothing to stop the banks from returning to their previous generous levels. I'm sure the automakers will experience an upsurge in sales as a result. But the bailout doesn't seemed to have freed up the financial crisis at all. Imagine how much freer GM would operate if issued with $45B in loans.

Therefore, the bank bailout is a total farce.

 

It's just a new kind of bank robbery, without guns! It's an inside job, and we're the suckers.....The bank execs have people in congress in their pockets. They hate the auto industry, and love the banks! It's complete BS.....people need to wise up!! They're greasin' up the politicians, who then fork over the funds, pretty simple really.