Friday open forum: Auto bailout, Blagojevich, Minnesota Senate race, etc.

UPDATE: Blagojevich schedules a news conference for today at 2pm (CST). Gives me time to get some popcorn.
Just saw George Bush announce the 17.4 billion dollar loan program for the auto makers. They have three months to get their sorry act together or he says bankruptcy is coming. Problem is he won’t be there…
Coleman is only +2 on Franken. Gives me the creeps just typing it.
And Blago slows his demise.
Blago’s news conference.

14 thoughts on “Friday open forum: Auto bailout, Blagojevich, Minnesota Senate race, etc.”

  1. Warren (or anyone interested)
    Brilliant Peter Schiff commentary from the Wall Street Journal
    There’s No Pain-Free Cure for Recession
    My favorite paragraph

    Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn’t have a surplus, then it must come from taxes. If taxes don’t go up, then it must come from increased borrowing. If lenders won’t lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.

  2. Most of our economy seems based on people spending more than what they have. I’ve always been perplexed by messages saying ‘you must save for the future’ that are immediately followed by ‘spend like there’s no tomorrow’. Savings as we know them today are more akin to gambling than to actual saving. We put our money on ‘a few good horses’ (stocks) and bank on a payoff. If we get the big payoff, all is right with the world but, if we lose (as many have) we’ve simply lost…there’s no guaranteed recovery.
    It’s been easy to forget those poor unfortunates who have lost. But now that the losing has increased exponentially…now that it’s threatening the wherewithal of major corporations and our national economy, now the concern has hit home.

    1. Eddy

      I’ve always been perplexed by messages saying ‘you must save for the future’ that are immediately followed by ’spend like there’s no tomorrow’.

      The government punishes savers in 2 ways.
      1) The Fed keeps interest rates artificially low. Borrowers love low interest rates, but they are a scourge for savers. The lower interest rates are, the lower the interest rate savers get for putting money in banks.
      2) Government taxes savings when they should encourage it. Whatever meager interest people earn gets chopped even further by income tax.
      Once you account for inflation savers actually lose money. The Government knows this is bad for the country but in the short term they’d rather have us spend our money down at the mall.
      Whelp… the borrow/spend economy finally melted down. Despite their best inflationary efforts I doubt they can revive it.

  3. Jim Rogers: ‘Getting out of U.S. dollars’ (2:49) (12.15.08)
    (the dollar) “…it’s terribly flawed, maybe even a doomed currency.”
    This is the nightmare scenario. If the government prints trillions to save jobs but instead destroys the Dollar through inflation our economy will melt.

  4. Jayhuck

    the Republican congress and president aren’t and weren’t responsible people

    Believe me, the Democrats aren’t even 1% better. Since the late 1980s the USA has been on a collision course with this meltdown. We borrow and spend way too much and our economy finally blew up. It is going to take years, maybe even a decade to dig ourselves out of this mess. If we inadvertantly destroy the Dollar we are pretty much finished.

  5. Drowssap –
    I think you had one thing right – the Republican congress and president aren’t and weren’t responsible people 😉

  6. Drowssap –
    One CRITICAL thin you’ve left out is the MASSIVE amount of debt that the BUSH administration has left us with – Thanks to a nearly unjustified war in Iraq and other bad decisions on the part of the Republicans. OY

  7. Warren
    You are correct, I’m simplifying our situation. But economics is not rocket science. In fact when you get rocket scientists involved (physicists to be exact) they tend to screw things up as they did with trillions of dollars worth of Credit Default Swaps.
    Ok, let me over-simplify the problem with the Bush/Obama stimulus concept. 😎
    If the trillions of dollars worth of stimulus we are throwing at the recession triggers significant inflation we are in big trouble. In the past the Federal Reserve could raise interest rates to kill inflation as they did in the early 80s. Unfortunately we don’t finance our debt the same way today. A couple of decades ago most of our debt was held in longterm bonds. In order to lower the deficit in the nearterm congress refinanced most of our debt in short term (I think 2 year) notes. Put simply the USA is now on an adjustable rate mortgage. Way to go Congress! 😎
    So if inflation kicks in and the Fed raises interest rates to get things back under control our budget deficit will mushroom. If the Fed doesn’t raise interest rates the dollar could inflate to nothingness like so many other currencies before it.
    On the flip side if inflation doesn’t kick in we will have charged up trillions of dollars and still be in the same spot… except we’re in much more debt.
    What the Government and the Fed are doing is dangerous stuff. And the sad truth is these aren’t responsible people. If they were we wouldn’t be in this mess.

  8. @Drowssap: An economist would probably say you’re being simplistic. But I think essentially you are correct about the need to live on less. Paying off debt instead of making more however, will hurt those who sell things and lead to falling prices, falling wages and higher unemployment. Hence, the govt will attempt to soften this natural cycle with artificial “stimulus packages.” Makes me somewhat nervous.

  9. The auto bailout is misguided. American’s aren’t buying cars and no amount of “bailout” money is going to change that.
    The problem that America faces is so simple that anyone can understand it.
    Tax payers, companies and the government borrowed and spent too much money. Put simply a family that made $50,000 per year spent like they made $60,000 per year. This can only go on so long as is now evident.
    The nation has 2 choices.
    A) Everyone (businesses and government included) can UNDERconsume for a few years and pay back our debts. Families that make $50,000 need to live like they make $40,000 per year until their debt is paid back. This is by far the best choice for our economy and our culture.
    B) The government can spend (waste) trillions of dollars in an effort to create massive inflation and devalue the dollar. When the dollar drops in half so does the value of our debts. Inflation screws savers, pensioners and people on fixed incomes. If inflation gets out of control it eventually screws everyone.
    Guess which one the government wants to do? If you guessed B devalue the dollar and screw the savers and retired people you’re right.

  10. I never buy new. I haven’t bought a brand new car since 1984. Don’t see the point.
    Gives me time to get some popcorn.
    I have the feeling people are going to be watching fewer movies because most of the entertainment will be on our televisions. The good popcorn is what you make in a pot, not pre-packaged.

  11. I think I saw a 190 day inventory figure somewhere. I never buy new. I haven’t bought a brand new car since 1984. Don’t see the point.

  12. Is it just me, or are there not enough cars out there already? If a new car was not sold in this country for the next 2 years, would anyone suffer for transportation? Isn’t the entire industry built around our consumerist gluttony? Surely such a scheme cannot last forever…

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