If there’s any justice in this world, then Rick Wagoner will end up like Billy Durant.
Well, better than the apology we all got from the nebulous The Banking Industry.
No shit ZipperJJ. I still don’t understand the bail out. So they made bad loans and I guess they get a do over. If I lose my job and can’t pay my mortgage, do I get a do over as well?
I still don’t get why banks and insurance companies easily got a promise of $700 billion – which has had no impact that I can see, on the stock market or the unemployment rate or anywhere else – and the car companies had to kiss ass for $15 billion.
Like Jon Stewart said, at least the Big Three produce something that we can see. What are the banks doing with their money? Last I heard, nobody knew how it was being spent.
I think the discrepancy is because lawmakers do have a basic understanding of what the car makers are doing wrong, but they’re lost when it comes to ripping into the problems of the financial system. Sure, they railed at Big Three CEO’s about using private jets and producing too many SUV’s, but any of us could have done that. The financial mess is too hard for them to understand, so they just throw money at it.
I wish they had asked the banks just a few questions.
BANKER: We need more money.
CONGRESS: What do you mean? You have it all.
BANKER: No we don’t.
CONGRESS: It all goes to you. Did you burn it or something? Where is it?
BANKER: What am I, an accountant? That’s a whole different industry, dummy.
I wonder how big a part the election played in the easiness of the $700 billion bailout. The banking industry said “we need money - NOW!” and they scared the living shit out of congress, enough for McCain to be all “Yes, I come help NOW!” and Obama said “Uh, yeah wait up…me too?” and before we all knew it, the government had $700 billion less.
Now that the election is over there’s zero urgency. And congress feels like maybe it was taken a bit by the banks. So this time they’re going to show their hairy chests by trying to belittle the car manufacturers, make them grovel and make them wait.
And kiss ass for $15 billion…as a LOAN!!!
It’s a loan people! It will most likely be repaid, too.
If there were no bail out everyone would lose their job and not be able to pay their mortgage. The consequences would be truly horible.
Could you explain more. Why do I pay for mortgage insurance? I can still lose my house because of shitty loans by my mortgage company? What the fuck am I paying over a hundred dollars a month for.
Because many of the banks issued commercial paper which was held by money market funds. When the Reserve fund broke the buck (paid less than dollar for dollar) that was a very bad thing. Most of the commercial paper that money market funds hold was issued by firms which were bailed out. Sure, it sucked. It really sucked. But, not doing it would have caused Great Depression part two.
I heard that someone referred to not bailing out the auto-makers as “losing a foot” (perhaps Jon Stewart mentioned it?). The quote was held up for ridicule, and without a comparison. Let me remedy that: the comparison for not bailing out the banks would be “losing the entire circulatory system”. Not just the heart, but the veins, arteries, blood, etc., leaving just a corpse.
Your mortgage, at least as a single item, is like “losing a toenail”. (Of course, a large number of bad mortgages led to the current situation, so I’m not making light of anything.)
Not to mention that, unless you’re talking about something completely different, mortgage insurance protects the bank, not you.
Ummm. Unless things are radically different on your side of the pond, mortgage insurance covers you if you are unable to make payments for some reason - it means you get to keep your house for a while longer.
If your mortgage lender goes bust it makes absolutely no difference to you whatever - someone buys the loan book when your loan provider is liquidated, and takes over the onerous task of cashing the checks you write every month.
And just a handy statistic for all of you bemoaning the different treatment of the banking and car industries - apparently over the last few decades the average banking crisis has resulted in an output drop of 20% of GDP over the first four years. For the US that would be about $2.76 trillion, and if some of the more extreme outcomes were reached (60%-100% of GDP) you might be looking at $8-$13 trillion going up in smoke by 2012- compared to that kind of damage, the car industry is a cottage industry. Gripping economic disaster numbers available in PDF here
- Bankrupt companies generally don’t pay back loans.
- A lot of talk is that the we end up with an ownership share (stocks) instead. That’s even worse than a loan. Stockholders are always last in line in bankruptcy.
- The money just slightly delays things. The companies will not change anything in a short enough time to matter.
In short, these are horribly managed companies that must go thru bankruptcy in order to survive. Giving them money (and it would be a gift) is a seriously bad idea.
Too many people believe that bankruptcy always means the company disappears. But look at the airlines, Kmart, etc. GM will still be around in 10 years.
The John Stewart rant on this was the exact opposite of what should have been said. (And you don’t bail out the actual banks, you help out the investors who got suckered in by the banks.)
It depends upon how those loans are structured. If you’ve got Federally backed student loans and file bankruptcy, those loans don’t go away. The same could be done with the auto loans.
Not true. Employees are often behind stockholders, and in some cases, a large stockholder can wind up with some of the assets of the company.
This is quite possibly true.
So is boosting the unemployment numbers.
That’s a bit of an oversimplification of things. An airline that’s on shaky footing will keep quiet about it, and then suddenly shutdown when they run out of cash. They keep quiet about it because they know that if they admit that they’re having problems, people will be unwilling to buy tickets, for fear that they’re going to wind up getting stranded some place when the airline goes under (as has happened). Domestic car dealers are saying that people have told them they’re afraid to buy cars because they’re uncertain that GM, Ford, or Chrysler will be around in a couple of years. Without some kind of commitment to shore up the car companies, they’re going to have trouble selling enough vehicles to remain in operation.
You do know that the head of Merrill Lynch was wanting a $10 million bonus, and that Congress is less than happy with how the bailout has been handled?
I’m no expert but I think there are two kinds of mortgage insurance. One kind protects the lender if the homeowner defaults. The other kind is sorta like life insurance for your loan – if you die, the loan is paid off.