13 December 2008
Cascade of Bailouts?
Posted by Joy Bischoff under: World Economy .
I do not agree with everything Mitt Romney says, but I do have to admit that when it comes to the economy, I listen. After reading and thinking about the situation regarding the bailout of the automakers, I have decided that I agree with Romney; they should file for bankruptcies. Their cries of collapse sound a little insincere when we look at what would happen with a chapter eleven restructuring. Fifteen billion will not begin to solve their problems and a bankruptcy will give them breathing room and force them to use wisdom and restraint.
What the government can do for the automakers is exactly what Romney was so criticized for suggesting last winter. Easing their tax burden and putting money into research and development like other countries are doing would level the international playing field enough to grease the skids for a come back.
If the government does bail them out, when will it stop? Will the newspapers be next? Also, the bailout would bring more nationalization and make no mistake about it, this is fascism.
GM, Chrysler Bankruptcies Would Cause Turmoil for U.S. Economy
By Michael McKee
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 also deliver another psychological blow to consumers and a major shock to Main Street following the crises on Wall Street.
“The auto industry is a key element in the economy,” said Bob Schnorbus, chief economist at J.D. Power & Associates in Troy, Michigan. “Anything that disrupts it is going to slow the economy down more than we have already seen.”
Economists say it’s difficult to estimate the full impact, given the large number of possible scenarios. The outcome hinges on which companies filed for bankruptcy and when, and whether they would be able to continue building cars and trucks while in reorganization — assuming they don’t go into liquidation.
“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.”
‘Cascade of Failures’
http://www.bloomberg.com/apps/news?pid=20601087&sid=aq2JHRpdTeW8&refer=worldwide
Mail this post
Leave a Reply
You must be logged in to post a comment.
