Obama’s Economic Recovery Program Is Failing – New Wave of Mortgage Foreclosures, Unemployment Continues To Rise, Automakers Prepare to Shut Plants – Layoff 10’s Of Thousands

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. [Remember, the Obama Administration predicted a maximum unemployment rate of 8.9 in its projections of economic recovery- McAuley's World]

That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher.

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income than the consumers of exotically lenient mortgages that formerly typified the crisis. [Now that we have wasted 100's of Billions in tax payer dollars helping the reckless and those not qualified to be homeowners, where is the assistance for those who played by the rules? Mc Auley's World].

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.

Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.

Under a program announced in February by the Obama administration, the government is to spend $75 billion on incentives for mortgage servicing companies that reduce payments for troubled homeowners. [The Obama Administration claimed the program would help 4 million home owners]. But three months after the program was announced, a Treasury spokeswoman, Jenni Engebretsen, estimated the number of loans that have been modified at “more than 10,000 but fewer than 55,000.” [Why can't the Government be more exact than this - a 45,000 mortgage gap between 10,000 and 55,000. Where is the $75 Billion in Taxpayer money going? If the "true number" of modified mortagges is 10,000,  the Obama program cost taxpayers $7.5 million per mortgage. Who is kidding who? Someone is robbing the US Taxpayer blind] 

In the first two months of the year alone, another 313,000 mortgages landed in foreclosure or became delinquent at least 90 days, according to First American CoreLogic.

“I don’t think there’s any chance of government measures making more than a small dent,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital.

Last year, foreclosures expanded sharply as the economy shed an average of 256,000 jobs each month. Since then, the job market has deteriorated further, with an average of 665,000 jobs vanishing each month.


GM announces an additional 47,000 job cuts amid palns to shut 5 US auto plants.   (February 2009). http://www.wilx.com/home/headlines/39750882.html

U.S. to steer GM toward bankruptcy … The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and re-emerge as a global competitor, sources familiar with the discussions told the Washington Post. http://scoop.chrysler.com/2009/05/22/us-to-steer-gm-toward-bankruptcy/

Chrysler confirms 6 additional plant closings – May 2009. http://scoop.chrysler.com/2009/05/06/chrysler-issues-plant-closing-statement/ 

GM plans to shut 14 more auto plants, reduce employees by 20,000.  (April 2009) Gm announces planned cuts did not go far enopugh, additional cuts planned. http://money.cnn.com/2009/04/17/news/companies/gm_jobs/?postversion=2009041712

From the WSJ: Mortgage Defaults, Delinquencies Rise

… A spokesman for the FHA said 7.5% of FHA loans were “seriously delinquent” at the end of February, up from 6.2% a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy.

The FHA’s share of the U.S. mortgage market soared to nearly a third of loans originated in last year’s fourth quarter from about 2% in 2006 as a whole, according to Inside Mortgage Finance, a trade publication. That is increasing the risk to taxpayers if the FHA’s reserves prove inadequate to cover default losses. http://www.calculatedriskblog.com/2009/03/fha-mortgage-defaults-increase.html



Hedge Funds – What They Are, The Economic Collapse & How The Funds Are Getting Our Bailout Dollars

While the Polticians distract the American public with the Political theatre in Washington over the $165 Million in AIG bonuses, an even greater travesty, the theft of Billions of Taxpayer dollars, through the bailout program is going unnoticed.

Taxpayer money is being channelled through the AIG Bailout and into the pockets of the Millionaire Hedge Fund Managers that helped create the fraudlent “Real Estate Bubble” that has brought down the US economy. Yes, Hedge Fund Managers like Bernie Madoff and Allen Stanford. Billions.   

Imagine the outrage – if the Public is upset over $165 Million in bonuses – what might happen if Washington had to answer for the Billions being taken out the AIG back door and paid to the Millionaire Hedge Fund operators.

Is this being made possible by simple incompetence? The Government’s continued failure to properly supervise the expenditure of Billions of Taxpayer dollars or is this incomepetence by design – a design that allows the Washington Bureaucrats  ready cover and plenty of opportunity to claim ignorance and shift blame.


We all know that the Congress and White House have entered into 4 separate agreements to “bailout” AIG and “recapitalize” the company or replace the money it lost on worthless subprime mortgages and, in addition to the mortgages, money lost on “other products” designed to “repay” AIG’s Client’s or “Trading Partners” for losses they may have sustained on their “bad bets” in the “mortgage marketplace”. Some of these “Client’s” may not have lost any money at all, they may have simppoly “bet” on the collapse of the “housing industry”. That is right …. read on.  

The Congress promised the American people complete transparency in these transactions – even to the extent of placing everything on line, “like a checkbook”, so the entire country could see who was being paid, the what and when.  As we now know this promise was a hollow one. The current Administration’s staffers (Staffers in both the Federal Reserve and the Treasury Department) have appeared before Congress and refused to provide information identifying the who, what or where. AIG was equally uncooperative. News organizations, most notable FOX News, had to go to Federal Court and obtain a Court order to obtain what should of been “Public Information”. While the information disclosed so far is alarming, the investigating is far from complete. http://money.cnn.com/2009/03/04/news/aig.transparency.fortune/index.htm

Let me offer a quick primer on the language used in the articles below:

Hedge Fund: A hedge fund is an investment fund open to a limited range of investors that is permitted by regulators to undertake a wider range of activities than other investment funds. Hedge funds are typically open only to a limited range of professional or wealthy investors. This provides them with an exemption in many jurisdictions from regulations governing short selling, derivative contracts, leverage, fee structures and the liquidity of interests in the fund. The net asset value of a hedge fund can run into many billions of dollars, and this will usually be multiplied by leverage. Leverage – in addition to money invested into the fund by investors, a hedge fund will typically borrow money, with certain funds borrowing sums many times greater than the initial investment. If a hedge fund has borrowed $9 for every $1 received from investors, a loss of only 10% of the value of the investments of the hedge fund will wipe out 100% of the value of the investor’s stake in the fund, once the creditors have called in their loans. In September 1998, shortly before its collapse, Long Term Capital Management had $125 billion of assets on a base of $4 billion of investors’ money, a leverage of over 30 times. It also had off-balance sheet positions with a notional value of approximately $1 trillion. Hedge funds are exempt from regulation in the United States. Hedge Funds, first established in 1949. have never been subject to regulation in the US.   http://en.wikipedia.org/wiki/Hedge_fund  .

The most nortorious Hedge Fund Managers in the news today are Bernie Madoff http://www.telegraph.co.uk/finance/financetopics/bernard-madoff/3834483/Bernard-Madoff-fraud-Hedge-funds-need-closer-supervision-ex-SEC-boss-says.html 

and Allen Stanford, both of whom are currently under federal indictment. Stanford operated his own set of Hedge Funds and he also was the exclusive sales manager for a Hedge fund operated by the family of Vice President Biden. http://www.reuters.com/article/newsOne/idUSBNG36866620090224


AIG Cash May Reach Hedge Fund’s Coffer – Update

Wednesday, in a new twist to the ongoing saga of beleaguered American International Group, Inc. the Wall Street Journal said that a portion of the billions of dollars paid by the U.S. Government that provided a lifeline to AIG might, in fact, reach the hedge funds that ironically stand to gain by speculating on a fall in the housing market.

The report indicated that back in 2005, hedge funds identified trouble that would brew in the U.S. housing market in the long run. [TROUBLE? As is the fact that providing loans to people who could not repay them was not a sustainable business strategy]  In a bid to encash [make money] the same by going short against securities backed by mortgages to unworthy borrowers, the hedge funds signed up transactions with investment banks. [placed bets that the subprime market would collapse]

For their turn, investment banks such as Goldman Sachs Group Inc. and Deutsche Bank created and sold complex financial instruments to hedge funds that allowed hedge funds to bet that mortgage defaults would rise. The financial instruments were basically credit default swaps, similar to insurance that pays in the likelihood of a debt default.

Investment banks that sold those credit default swaps to the hedge funds wanted to remain unscathed in the eventuality of a down turn in housing markets. With a laser sharp accuracy, the investment banks were methodical in creating a perfectly legal way to stay in safe heaven.

The German banking major Deutsche’s securities division created a bouquet of offshore investment vehicles known as collateralized debt obligations or CDOs. The word “START” marked the names of those investment mediums, which stood for STAtic ResidenTial CDO. Deutsche neutralized its exposure to the speculation of hedge funds’ by purchasing swaps from START on the same securities its clients were betting against.

As per the Journal’s report, which claims to have reviewed the documents, START held assets from a series of failed lenders namely Bear Stearns, Countrywide Financial and New Century Financial who were part and parcel of the subprime crisis.

New York-based AIG, in 2005, became the scapegoat by offering to take a pie of the mortgage risks held by START. AIG’s derivatives arm consented to pay up to $1 billion under two of the START vehicles, if value of underlying assets deteriorated or the insurer’s own credit rating fell below a certain mark.  [So the Hedge Funds "bet" with the Investment Banks that subprime mortgages would collapse, the Banks "insured" their end of the bet with AIG - AIG lost the bet and now the American taxpayer "pays" AIG, AIG "pays" the Investment Banks and the Investment Banks Pay the Hedge Funds - so that is how the subprime mortgage scam worked - I want to know which Hedge Funds are being rewarded and who owns a piece of the action. Which members of Congress and the Adminstration are cashing in here - at Taxpayer Expense] 

In doing so, AIG was set to gain less than a penny each year for every dollar of protection it sold, or less than $10 million annually on the $1 billion in insurance. [Isn't this an indication that the "real money" wsa being made in some other fashion?]

A close look at the transaction reveals that AIG was gambling on a strong housing market. When the housing market went downhill, Hedge Funds rang the cash counters of bank who in turn called on AIG for compensation.                             http://www.rttnews.com/Content/BreakingNews.aspx?Node=B1&Id=886860%20&Category=Breaking%20News

As per the reports, AIG paid about $800 million to START after its credit rating was cut. The funds are held in the escrow and will be used to pay off Deutsche’s swap contracts if mortgage defaults if the portfolio rises above a certain level. Deutsche may pass on some of the bucks to the hedge fund clients.

AIG, in case of a recovery in the housing market, is set to receive back the cash it transferred to START. With the assets of START to which AIG provided cover being downgraded to “junk” status from triple-A by Standard & Poor’s, the outcome cannot be predicted. [See the articles below - the possibility of the American Taxpayer being completely repayed by AIG is just about "zero"] 

The report, citing people familiar with the matter, revealed that the mortgage pool “Abacus”, insured by AIG Financial Products, created by Goldman, have common features with START CDOs. [The Hedge Funds placed their bet with Goldman - Goldman "insured the bet, we, the American Taxpayers, lost and we didn't even get to cut the cards]   

These mortgage pools were also made up of credit-default swaps tied to individual mortgage securities. When the assets value deteriorated, AIG had to post collateral with Goldman. The report anticipates some of this money to reach hedge-fund clients of Goldman.

AIG and the government had paid $5.4 billion to Deutsche and $8.1 billion to Goldman under credit default swap contracts written by the insurer.

AIG had insured many of the assets linked to subprime mortgages. Following the collapse of high-risk mortgages, AIG had to place billions of dollars in collateral, mostly to the banks.

Thus, AIG had to sell its protection on securities backed by physical assets. The company also sold positions almost entirely backed by other financial bets.

The report, quoting a senior investment banker whose firm bought credit protection from the insurer, showed AIG as the single largest ultimate taker of risk in the subprime mortgage CDO space until 2006.

The irony is that the bail out money intended to limit foreclosures and fuel housing market may end up in the hands of those investors who had taken contra positions with respect to the housing prices and mortgage holders. [Individuals who bet on the collapse of the mortgage market or in some cases, individuals who actively undertook activities to promote a collapse in the mortgage market will not only be made whole but will also profit from their reprehensible behavior, all at the expense of the US Taxpayer]  

The report says that it is unclear as to how much government money might eventually flow to hedge-fund investors. The government has committed up to $173.3 billion to bail out AIG. Of that amount, AIG’s housing-related bets have cost U.S. taxpayers some $52 billion, the report suggested. [That number now excceees $125 Billion, with the Treasury and Congress having pledged an additional $75 Billion for a current total of $200 Billion committed to AIG's bailout]

The hefty losses were the result of AIG moving out of its primary business which is selling standard insurance policies to businesses and individuals. Martin Weiss of Weiss Research, an investment consultant in Jupiter, Florida said, “AIG’s financial-products division went heavily into the business of speculation and its gambling debts are what taxpayers are paying off right now.”


So the money trail looks like this – As yet unidentified Hedge Fund Managers approach what the Government and AIG describe as “AIG Trading partners” – These trading partners, a group composed of other financial firms like Goldman Sachs, Deutsch  Bank, Societe Generale of France and Barclay’s Bank. The Hedge Funds “purchased” certain contracts related to the Hedge Funds Mortgage Business, those contracts were later “sold to” or “insured” by AIG. Specifically, the bailout dollars are traveling from the US taxpayer to the US Government, from the Government to AIG’s trading partners and through those trading partners to the Hedge Fund Managers.

Additional Articles:  Where is the transparency? http://money.cnn.com/2009/03/04/news/aig.transparency.fortune/index.htm , 

 http://www.msnbc.msn.com/id/29728732    “AIG likely won’t be able to pay taxpayers back. Ties to foreign partners siphoning off some of the $170 billion lent to it.  Pressure is mounting on the government to revise its bailout of AIG to ensure that taxpayers are repaid as much as possible of the $170 billion lent to the troubled insurer. Experts warn we shouldn’t expect to get much back. Mark Williams, a former Fed examiner and finance professor at Boston University, said the AIG wind-down inevitably will cost taxpayers money. And he thinks it will take much more money — perhaps an additional $200 billion [$400 Billion Total] — to finish winding down AIG’s financial dealings so its core businesses can be sold off.”No longer can we call it an investment,” he said. “We just have to call it what it is — and that’s sinking money in a hole.” http://www.msnbc.msn.com/id/29728732/page/2/

NEW YORK, March 15 (Reuters) – American International Group Inc disclosed on Sunday that U.S. and European banks have been among the biggest beneficiaries of the up to $180 billion U.S. taxpayer bailout of the insurer. [Who have, in turn, passed the money on to Hedge Funds]  http://www.reuters.com/article/fundsFundsNews/idUSN1546365820090315

Time to Unravel the Knot of Credit-Default Swaps :  Credit-default swaps are insurancelike contracts that Wall Street created in the early 1990s.  In recent years, these contracts became a haven for speculators who were doing nothing more than betting on whether a debt issuer would survive.  The $150 billion rescue of the American International Group, for example, came about because of swaps the insurer had written on mortgage securities. And the $100 billion taxpayer backstop handed to Bank of America on Jan. 16 had a good bit to do with soured credit-default swaps that the bank inherited when it acquired Merrill Lynch.               http://www.nytimes.com/2009/01/25/business/25gret.html?scp=1&sq=gretchen%20morgenson%20c.d.s.&st=cse                                                                                                     

I don’t support the payment of $165 Million in Bonus or Retention payments, however, I don’t want to dwell on that topic while the Congress shovels money in the front door of AIG to have Hedge Fund Managers sneak it out the back. For every dime of “bonus” paid by AIG the Hedge Funds are getting away with a $100 Bill. I want AIG to drop the dimes – but I also want Congress to ID the guys running of with the hundreds so we can get that money back too and while they are at it – I want Congress to shut that back door and lock it. It’s time to escort AIG to the Bankruptcy Court door steps.    

Contact your Senator and Congress Person and demand that the “true recipients” of the bailout cash be identified. Not one penny more for these Hedge Fund Managers.  http://www.usa.gov/Contact/Elected.shtml

The relationship of  $1 Billion Dollars to $1 Million Dollars is the same as a $100 bill to a dime.  Lets not only focus on the dimes while they make off with the hundreds by the fist full.  

By the way – when the Government talks Trillions instead of Billions, it’s the same.  A Billion is a dime to the Trillion being a $100 bill.  The Government acts like it’s spending dimes, but they’ll be collecting our $100 bills.

FUTURE POST: Government “overpays” AIG Trading Partners

AIG was a hedge fund attached to a stable insurer, says Bernanke

Federal Reserve chairman Ben Bernanke was widely quoted as criticising AIG in a Senate hearing yesterday. “I think if there’s a single episode in this entire 18 months that has made me more angry, I can’t think of one, than AIG,” he said, according to various press reports. He added that was angry about the way AIG had strayed from its core insurance business and took unmonitored and unnecessary risks through its financial products unit, describing AIG Financial Products as a hedge fund attached to a large and stable insurance company.         http://www.creditflux.com/Structured/2009-03-04/AIG-washedge-fund-attached-tostable-insurer-says-Bernanke

Fedreral Reserve Announces New $1.2 Trillion Bailout Of Fannie & Freddie – Additional $1 Trillion Bailout In Planning Stages

Mar 18, 2009 6:15 pm US/Central

Fed Launches New $1.2T Effort To Revive Economy

WASHINGTON (AP) ― With the country sinking deeper into recession, the Federal Reserve launched a bold $1.2 trillion effort Wednesday to lower rates on mortgages and other consumer debt, spur spending and revive the economy. [READ: To buy bad credit card debt, bad auto loan debt, bad student loan debt, and sub-prime mortgage debt and place those debts squarely on the backs of the American taxpayer - the additional $1.2 Trillion will increase the spending of the New Democratic Administration to just over $10 Trillon in just under 3 months - the average American family share now exceeds $100,000 per family]

The Fed’s plan to buy government bonds and the sheer amount — $1.2 trillion — of the extra money to be pumped into the U.S. economy was a surprise. [ The surprise - there is no end to the Government spending - if reckless excess spending cretaed our problems - just as the President claimed when he called for fiscal discipline - just what will this unbelievable excess lead to? Exactly how does quadrupling - increasing by 400% - the total Natoinal debt help the Country's future?]

The Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. [The original plan to "modify mortgages, released less than two weeks ago - started as a $75  Billion program - in two weeks that amount has increased to $750 Billion - a 1000% increase. As this writer has noted in prior posts - there  is $7 Trillion Dollars in "toxic mortage exposure" in the global economy - the Government shows no sign that their is any end to Government spending in sight]   

“The Fed is clearly ready, willing and able to be the ATM for the credit markets,” said Terry Connelly, dean of Golden Gate University’s Ageno School of Business in San Francisco. [An ATM filled with taxpayer money - the Fed may print the money but the taxpayers create the wealth that backs those dollars up]

The dollar fell against other major currencies. In part, that signaled concern that the Fed’s intervention will spur inflation over the long run. [The additional spending also mandates additional taxation which in turn reduces the disposable income and savings of the working class and the profits and dividends received or paid by the business class - the spending will create a short term stimulus and will, unquestionably, create a significant long term detriment to future economic growth - over $10 Trillion in National Debt]

The Fed chief and his colleagues again pledged to use all available tools to make that happen, and economists expect further steps in the months ahead. [A classic CYA - there is no certainty that this will help acheive the desired results - in fact these steps may exacerbate the problem by spurring additional lending to the "same bad credit risks" that got us here in the first place - thus the need to keep the door open to yet additional spending despite the unprecedented spending of the last 3 months] 

Since the Fed last met in late January, “the economy continues to contract,” Fed policymakers observed in a statement they issued Wednesday. [READ: What we have done so far has not worked - rather than wait to see if a positive or negative result occurs lets just rush ahead with more of the same - even if that means "pouring gasoline on the fire"]

“Job losses, declining equity and housing wealth and tight credit conditions have weighed on consumer sentiment and spending,” they said.
The Fed’s announcement that it will spend up to $300 billion over the next six months to buy long-term government bonds was something that in January it had hinted it would do. But some officials had seemed to back off from the idea in recent weeks.
The goal behind all the Fed’s moves is to spur lending. More lending would boost spending by consumers and businesses, which would revive the economy. [Lending to "good" or "bad" credit risks is the question]

The Fed also said it would consider expanding another $1 trillion program that’s being rolled out this week. That program aims to boost the availability of consumer loans for autos, education and credit cards, as well as for small businesses. [Another Trillion - before the last has even been spent - to make loansds to whom - those just coming out of foreclosure or bankruptcy? Loans made whith whose tax money? Does the Treasury think this is "Monopoly Money"?]

Where does the Fed get all the money? It prints it.
The Fed’s series of radical programs to lend or buy debt has swollen its balance sheet to nearly $2 trillion — from just under $900 billion in September. The Fed’s balance sheet could grow to $5 trillion over the next two years.
The Fed has said it’s mindful of the risks of pumping more money into the economy, bailing out financial institutions and leaving a key rate near zero for too long. There’s the potential to plant the seeds for higher inflation, put ever-more taxpayer money at risk and encourage “moral hazard.” That’s when companies make high-stakes gambles knowing the government stands ready to rescue them.
But even in this best-case scenario, the nation’s unemployment rate — now at quarter-century peak of 8.1 percent — will keep climbing. Some economists think it will hit 10 percent by the end of this year.
The recession, which began in December 2007, already has snatched a net total of 4.4 million jobs and has left 12.5 million searching for work.

Paulson To Oversee Auto Bailout – What The Hell Are They Thinking?

Paulson has Proved A Failure At Banking Bailout – Why Put Him In Chanrge Of A Second Bailout –

Are Powers Gratnted To Paulson Unconstitutional – Is Auto Bailout Circumventing A Proper Bankruptcy – Where Are Creditor Protections?

Where Are Taxpayor Protections? Where is the “NEW BUSINESS MODEL” for the “DETROIT 3″?

Bailout Watchdog: Where’s the Spending Plan?

Harvard professor Elizabeth Warren, the chairwoman of a congressional oversight panel, traveled to Washington Thursday to get answers on how Treasury is managing the unprecedented bailout.


The top congressional watchdog overseeing the nation’s financial bailout said Thursday she’s frustrated by the Treasury Department’s refusal to explain how it is doling out billions in taxpayer money.

Harvard law professor Elizabeth Warren, the chairwoman of a congressional oversight panel, traveled to Washington to get answers on how Treasury is managing the unprecedented bailout.

In an interview with The Associated Press, the Democratic appointee said she doesn’t understand why it’s taken so long for the Bush administration to explain its plan. Warren said she doesn’t want to believe it’s because there never was a plan for spending $700 billion in taxpayer money to rescue banks.

“I don’t buy a winter coat without a plan,” she said. “I can’t imagine how someone could think they were going to repair a failing economy and undertake spending billions of dollars in taxpayer money without a plan.”

Treasury Secretary Henry Paulson originally intended to use the money to buy risky loans from banks, freeing them to make new, safer loans. Shortly after the funds were approved, however, Paulson announced that $250 billion would instead be used to buy stock in U.S. banks.

“We’ve reversed directions more than once here, without any description of an overall strategy,” Warren said. “It’s not to say there’s not one, but I don’t think it should be such a well-hidden secret.”

Treasury spokeswoman Brookly Mclaughlin had no comment on Warren’s remarks. Treasury officials have said they are working toward several objectives, including stabilizing the financial markets, supporting the housing market and protecting taxpayers.

Nevertheless, the bailout has drawn criticisms from Republicans who oppose the huge new government program and from Democrats who want some of the money to be used to rework mortgages so homeowners can keep their houses.

The congressional oversight panel criticized Treasury last week for not saying exactly what problems they’re trying to fix or how the investments will fix them.

While Warren placed the blame squarely on Treasury for not laying out a clearer plan, she tempered any criticism of Congress, which placed few restrictions on the money as it hurriedly passed a law giving Treasury historic power to make multibillion-dollar decisions. Such requirements were omitted, she said, because the Bush administration pressured Congress to approve the bill quickly.

Paulson “was telling the Congress of the United States, ‘Do this right now,”‘ she said.

The five-member oversight panel is made up of three Democratic appointees and two Republicans. Senate Republican leader Mitch McConnell of Kentucky named outgoing Sen. John Sununu of New Hampshire to the panel Tuesday. Sununu has echoed Warren’s comments that taxpayers deserve to know how the money is being spent.

The panel is one of several entities monitoring the bailout, in addition to a special inspector general and the Government Accountability Office, a congressional auditor.

The GAO said in a critical report earlier this month that Treasury should toughen its monitoring of the bailout fund to ensure that banking institutions limit their top executives’ pay and comply with other restrictions.




Stop The Auto Industry Bailout – Pay Offs To The “Detroit 3″ At Expense of Taxpayers

They are calling this bailout the “Auto Industry Bailout” to mislead you. The “bailout” is targeting the “Detroit 3″ and won’t help any of the other “American” Auto Companies. The Wall Street Journal refers to the “Detroit 3″ as the “Old Auto Industry”.                                                                                                            http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The “Old Auto Industry”, GM, Ford & Chrysler currently have a “market value” of about $9.2 Billion Dollars. They have already been given 25 Billion Dollars in “bailouts” to “re-tool” to make more “Green Agenda Friendly” vehilces. The $25 Billion is currently tied up in the Energy Committee in Congress. That “bailout” alone is worth 2 1/2 times the current market value of the combined companies. The “New American Auto” industry is operating at a profit, pays its employees as much as or more than the “Detroit 3″ and needs no “bailout” to produce autos that obtain top gas mileage and fit the “green agenda” without Government subsidy. By the year 2010, the “New American Auto Industry” will employee more individuals than the “Old Detroit 3″ even if the “3” are given additional  bailouts ……. The “Detroit 3′ produces 1/2 of 1% of our Gross National Product, so does the “New Auto Industry” – combined they account for just over 1% of the GNP. Gone are the days of the 1950’s when the “Auto Industry” accounted for 15% of the US economy. ………….  

The Government may want to consider buying the ‘Detroit 3″ for $10 Billion and then giving the Companies (minus existing UAW, Executives or Suppliers contracts) to Toyota with an extra $10 Billion in cash and have Toyota take over the management of the “Detroit 3″. By doing so the Government would put in place a Management Team that has a demonstrable track record, a proven knoweldge of the 21st century Auto Industry, has increased its marketshare for 25 years and has increased its annual profit growth for an over a decade, and has the respect of consumers the world over. While doing all this the Government would also save $5 Billion off the original “Bailout” money (authorized just last month). I’m only half kidding with this suggestion ….. READ ON  

Millions In Auto Bonuses While Singin The Bailout Blues

Secondly, to imply that GM, Ford & Chrysler LLC, are the “American” Auto Industry is disingenous. With global investing GM, Ford & Chrysler are no more American than Honda, Toyota or Hundai. Any American can invest in the ”New American Auto” Industry as the Wall Street Journal calls it – but Americans cannot invest in Chrysler LLC – it is a privately owned company and no one knows who actually “owns” Chrysler LLC because Cerebus Capital Management’s ownership is a closely guarded secret. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The largest investors in GM and Ford are Capital Management firms, hedge funds and Mutual Funds. There is no way to determine whether the individuals who have invested in those firms are “American” or from “Communist China”. Communist China controls a significant interests in many of the remaining “American” banks and investment firms.                                                             http://www.marketwatch.com/news/story/china-invests-3-bln-blackstone/story.aspx?guid={C8B110EC-2538-4461-97C8-0FD7F1CAEF15}&dist=hplatest            http://english.pravda.ru/business/103399-Citigroup-0                                            http://forbes.ccbn.com/conferencedetail.asp?client=forbes&event=1988907

Why do writers insist on calling these companies “American”. We don’t know who owns the stock or who the investors are. As for GM and Ford, either could be bought by a foreign corporation tomorrow the same way Chrysler was purchased, first by Daimler then by Cerebus. 

CHRYSLER LLC – CEREBUS Capital Management

Chrysler is owned by a private equity company – CEREBUS CAPITAL MANAGEMENT – Cerebus is named after the mythical three headed dog that guards the gates of hell  http://www.hoovers.com/cerberus-capital-management/–ID__112328–/free-co-factsheet.xhtml?cm_ven=PAID&cm_cat=INK&cm_pla=CO1&cm_ite=cerberus-capital-management )

Cerebus is a private capital investment firm that owns shares in companies all over the world. Cerebus was formed in 1992. It has its own bank, a Japanese Bank not an “American” bank, named Aozora.

Cerebus’ Chairman is none other than former Vice-President Dan Quayle. http://www.vicepresidentdanquayle.com/biography.html

But who owns Cerebus – no one knows – it is a “private” and “unregulated” company. “It has come to this. A firm that made its name, and its fortune, feeding off companies in their death throes is demanding a government bailout.” http://www.cbc.ca/money/story/2008/11/07/f-pittis-economy.html 

No one knows if Cerebus is anymore of an American Company than Daimler was or the China Investmant bank is.          http://www.associatedcontent.com/article/244378/cerberus_buys_chrysler.html                 http://en.wikipedia.org/wiki/China_Investment_Bank                                             http://en.wikipedia.org/wiki/China_Construction_Bank                                             http://swfinstitute.org/fund/cic.php                                                      http://www.skadden.com/index.cfm?contentID=47&practiceID=33

The US government can’t own shares in Chrysler LLC and the Cerebus Investors have extremely limited liability for any bailout money we put in their pockets, “Chrysler is 81% owned by Cerebus Capital Management and 19% by Daimler AG. It is not a public company and you cannot buy or sell its stock. (It was a public company until last year when Daimler sold most of Chrysler to Cerebus.) An LLC is a corporate structure that limits the liability of its stockholders, similarly to a corporation.” http://smallbusiness.yahoo.com/r-answers-a-20080114050334AA9ZyJk-k-stock+trade

Cerberus is headquartered in New York City with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Tokyo, Beijing, Osaka and Taipei. http://www.cerberuscapital.com/about_comp_prof.html

Cerebus was described this way, “Cerberus Capital Management is the very real private equity firm — one of the bidders in play for the Chrysler Group — that guards the privacy of its dealings almost as jealously. USA Today takes a look at the firm and reveals a company with a “fierce reputation” and “a combative, take-no-prisoners style.”The list of companies that are either owned by Cerebus or which the company has majority stakes include: Alamo and National rental car, Fila, Blue Bird yellow buses, Rafaella clothing, GMAC, Aegis Mortgage, auto suppliers CTA Acoustics and GDX Automotive, Remington Arms, Bell Canada, Tower Automotive, banks, mortgage companies, and property managers.” When it bought Chrylser, Cerberus instantly doubled its annual revenue, but revenue isn’t the prime concern for private equity firms — return on investment is. The issue is that no one knows how Cerberus would go about increasing return from Chrysler.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/                                                                                            http://www.washingtonpost.com/wp-dyn/content/article/2007/08/14/AR2007081401913.html     http://www.bcwf.bc.ca/documents/s=393/bcw1176303661611/  http://www.forbes.com/business/feeds/afx/2007/05/17/afx3731793.html           http://en.wikipedia.org/wiki/Cerberus_Capital_Management   http://iht.com/articles/ap/2007/03/29/business/NA-FIN-COM-US-Tower-Automotive-Bankruptcy.php                                                                                      http://www.cerberuscapital.com/

Now we know how they plan on increasing the return – a taxpayer subsidized bailout. “The UAW and the Canadian Auto Workers have publicly opposed the sale of Chrysler “to Cerebus or any other private equity group.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/
In 1984 Chrysler employed approximately 80,000 workers. (1984-09-01, Chrysler Corp. completed its 4-year employee stock ownership plan by distributing 1,661,691 shares of common stock to more than 80,000 employees, including 63,000 members of the United Auto Workers union.) http://resources.bnet.com/topic/chrysler+llc+and+stock.html
In October 2008 it was estimated that Chrysler/Dodge/Jeep combined employed 49,000.        http://search.yahoo.com/search;_ylt=Ak0_ss1oGMILRC6Sai7xc3KmN3wV?p=Chrysler+LLC+Employees+2008&fr=att-portal&toggle=1&cop=&ei=UTF-8
http://www.sullcrom.com/offices/detail.aspx?office=3                                     http://www.chinadaily.com.cn/bizchina/2008-07/17/content_6854442.htm                         http://www.ml.com/index.asp?id=7695_7696_8149_8688_8558_6274
Chrysler is only a very small piece of the Cerebus pie. Why should the American taxpayers “bailout” a huge, private, mulitnational firm with hundreds of Billions of dollars in assests and dozens of companies under its control?
Cerebus would like to sell Chrysler, but Chrysler is so dysfunctional Cerebus cannot find a buyer.  If Chrysler is a bad bet for Daimler and Cerebus, it is a bad bet for the US taxpayer.
General Motors Corporation
For those who argue GM is the victim of a sudden economic downturn, let me remind you that GM’s largest individual shareholder at the time. Kirk Kerkorian, was reported to have said this in January 2006. “General Motors Corp must cut its dividend, executive salaries and brand structure if it hopes to return to profitability”. Jerry York, an adviser to investor Kirk Kerkorian’s Tracinda Corp, said GM is currently burning through 24 mln usd per day, Agence France-Presse reported. He said the automaker must change its mindset to operate in ‘crisis mode’ and recognize the challenges it faces in the coming months. But unlike a number of analysts who have warned that GM is at risk of bankruptcy, York expressed confidence in the automaker’s ability to create shareholder value even after its shares fell more than 50 pct in the past year.
Lets see; near bankruptcy, lost 50% of stock value in the last year, “must act in crisis mode”, and this situation wasn’t new in January 2006, GM had been facing the same issues for at least 8 years running. In November 2006 Kerkorian sold his GM stock, see below.  
As to General Motors, which is in business with Cerebus as joint owners of GMAC – what are they doing to improve their economic performance – stripping out their valuable subsidiaries and setting them up as private companies, “GMAC, the money-losing finance company, sold a reinsurance business to Maiden Holdings Ltd and plans to sell two insurance units to the Bermuda-based company, to bolster capital and add liquidity. Private equity firm Cerberus Capital Management LP owns 51 percent of Detroit-based GMAC, while General Motors Corp owns 49 percent.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who is running “Maiden Holdings” – former GMAC executives. The same Executives who led to these types of problems, “GMAC is shedding profitable assets after suffering $7.2 billion of losses in the seven quarters ended June 30. The lender has been hurt by soaring credit losses at its Residential Capital LLC mortgage unit and by write-down of leases on sport-utility vehicles that drivers no longer want. GMAC’s credit ratings have fallen deep into junk status.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who owns GM? Just two years ago Renault & Nissan offerred to buy a “significant minority interest in the carmaker. http://www.msnbc.msn.com/id/13630565/ Kurt Kerkorian, the Billionare American Investor, who owned 9.9% of GM through his Tracinda Corporation publicly favored the partnership. GM would not consumate the deal. In November 2006 Kerkorian announced he would sell 14 Million shares in GM, in a “private transaction”, at $33 per share. Later that month, Kerkorian “dumped” his remaining GM shares at $28.75 per share.
It was reported that Bank of America purchased the stock. It was unknown if Bank of America retained the shares (9.9% of GM) or re-sold them. Morgan Stanley owned 5% of GM in 2006. Morgan Stanley and Bank of America were, in turn, partially owned by the China Investment bank.  http://www.thestreet.com/stocks/automakers/10268781.html 
Three months prior to Kerkorian dumping his GM stock in November 2006, two other “Investment Firms” dumped GM stock in August 2006. The news reports stated, ”Two Major Investors Sell Blocks of GM Shares”, “California-based investment firms that rank as the second-and third-largest institutional investors in General Motors Corp. have sold big blocks of the automaker’s stock, according to regulatory filings. Capital Research & Management Co. of Los Angeles, GM’s second-largest investor, sold 19.2 million shares, or 24% of its holdings in the company, according to second-quarter reports filed this week with the Securities and Exchange Commission. The company’s third-largest investor, Brandes Investment  Partners of San Diego, sold 2.4 million shares, or 4% of its holdings. Neither company would comment, saying they do not discuss their investments.” http://articles.latimes.com/2006/aug/17/business/fi-gmstake17
These firms also guard the identity of those who control the money they are investing. This article went on to note that, ”Credit Suisse bought 11.5 million shares to become the sixth-largest investor in GM” at that time.  Credit Suisse is a Swiss Bank/Holding Company.    http://articles.latimes.com/2006/aug/17/business/fi-gmstake17   
The point is, there is no way to tell who “owns” GM. Many of the shares are “held” by Banks, Investment Firms, Hedge Funds and Capital Management firms, but “who” owns the money invested by those firms is unknown. Investors from all over the globe are free to deposit their money with these firms.
If GM is a bad bet for Kirk Kerkorian and the International Investment Community, it is a bad bet for the American taxpayer. 
GM, the largest of the “Detroit 3″ may employ as many as 123,000 or as few as 74,000 at present.  Analyst state GM needs to downsize by half. (Retaining 40,000 to 60,000 workers). Optomistic analysts report GM has already reduced its headcount to 74,000 after announcing 4 more plant closing and the elimination of an additional 10,000 workers in June 2008.
These cuts follow 30,000 job cuts in 2005, http://money.cnn.com/2005/11/21/news/fortune500/gm_cuts/
34,000 jobs in 2006,
and 30,000 more in 2007. In February 2008, after posting a $38 Billion Loss, Business Net noted the 2007 job cuts and stated, “After cutting more than 30,000 employees in the last round of restructuring, GM is now offering buy-outs to all 74,000 staff.”
During this same time period, “foreign automakers have built or announced plans to build five U.S. assembly plants, he said. In 2007, foreign auto companies employed 113,000 people in the U.S., a number McAlinden projects will rise to 152,000 by 2011.”   http://www.msnbc.msn.com/id/24947044
International Financial analysts have stated that GM’s future, even given a “bailout” looks bleak,  ”An analyst forecast their price would fall to zero, saying that even if there is a government bailout of the auto giant, shareholders would not benefit. “We are lowering our target on GM equity to zero dollars,” the Deutsche Bank report said. “Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” it said.” http://news.yahoo.com/s/afp/20081110/bs_afp/stocksusautocompanygm
Ford Motor Company
“Financier Kirk Kerkorian is pulling out of the stake he took in Ford Motor Co. just six months ago, selling 7.3 million shares at a fraction of his purchase price.” “Kerkorian announced in April that he had bought 100 million shares for an average price of $6.91. He then announced a tender offer under which he paid $8.50 a share for an additional 20 million shares. In addition he bought another 22.3 million shares between late April and mid-June at an average price of $6.54 a share, giving his total investment an average price of just over $7 a share.” “I don’t know if Ford’s North American operations are even going to profitable by 2010,” said Kevin Tynan, auto analyst with Argus Research.

Kerkorian sold his shares for a little more than $2 a piece, losing almost $5 a share and taking a Billion Dollar plus loss. If Kerkorian was willing to take a Billion Dollar loss to get rid of his Ford shares, why is Ford a good bet for American taxpayers?

Art Hogan, chief investment strategist at Jefferies & Co., said that Kerkorian signalling that he wants out of the auto industry is yet another nail in the industry’s prospects in the eyes of investors.”Do you need a good excuse to pull out of Ford? What you need is an excuse for getting in in the first place,” said Hogan. “It’s been in demise for a decade.” http://money.cnn.com/2008/10/21/news/companies/ford_kerkorian/index.htm?eref=rss_topstories

“GM, Ford stock sell-off contributes to Dow’s drop”, GM lost half of its value — or $2.7 billion — and Ford has lost 60 percent, or $7 billion. [The combined value of the Detroit 3 is estimated at 9.2 Billion, $2.7 Billion for GM, $4.7 Billion for Ford, 1.8 Billion for Chrysler]              http://www.detnews.com/apps/pbcs.dll/article?AID=/20081010/AUTO01/810100386&imw=Y

“Ford to sell $500m in new stock”, In an effort to secure more capital and reduce debt, Ford plans to sell $500m in new stock. Ford will use the cash infusion to buy bonds from Ford Motor Credit, which has been strugling with the slow economy and nation-wide credit crunch. Goldman Sachs is handling the stock sale, and Ford has given no timetable for when the stocks will enter the market. Ford has already exchanged debt for equity to the tune of $927m in the past year. With shares of Ford stock at under $5 per share right now, anybody can own a share of the Blue Oval for the price of a value meal.” http://www.autoblog.com/2008/08/15/ford-to-sell-500m-in-new-stock/  

Unfortunately, there were no takers, the International Investment Community is just not interested.  

In September Ford announced plans to close nine plants by 2008 and another seven plants after that, more than half of its U.S. hourly employees recently agreed to take one of the various packages to leave the company in the coming months.


The New York Times reported, “Highly Rated Auto Plants Set to Close”, Some of the most productive automobile factories, as rated by an influential study released Thursday, are closing down or losing large numbers of jobs in the motor industry’s upheaval. “Among the factories scheduled to close are a General Motors minivan plant in Doraville, Ga., and the Ford Motor Company’s midsize pickup truck plant in St. Paul, both of which ranked first in their segments in this year’s Harbour Report on automotive productivity. The top-rated full-size pickup plant, a Ford factory in Norfolk, Va., closed a year ago, showing that even the best-run plants are not immune to cuts. Two of the top three large S.U.V. plants are closing, as is the second-ranked midsize S.U.V. plant. The plant that ranked fourth over all, where Chrysler builds compact cars and crossovers in Belvidere, Ill., recently lost one of its three shifts. G.M.’s plant in Orion Township, Mich., ranked last in the midsize-car segment, taking 65 percent longer to build each vehicle than the top performer, while its plant in Moraine, Ohio, ranked second in midsize S.U.V.’s. But this week G.M. said it would add a third shift in Orion and close the Moraine factory.” http://www.nytimes.com/2008/06/06/business/06auto.html

Plant closings are negotiated with the UAW.


Ford Motor Company Happy With Profit                                                                Australian News.Net
Friday 25th April, 2008                                                                                      
The Ford Motor Company in the US has posted a US$100 million profit for the period from January to April. Most companies reported losses for the first quarter of 2008 due to the economic slump and the subprime mortgage crisis, but Ford has attributed its success to its job reduction scheme in North America and triple earnings in Europe. http://www.australiannews.net/story/352149


Chrysler leaders get millions                                                                  Automaker defends payouts amid looming bailout talks                                      As Detroit’s crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.



DEARBORN, Mich., May 4 – Philip Caldwell, the chairman of the Ford Motor Company, today defended the large bonuses paid to auto executives last year …..


To some people, the decision of General Motors and Ford, the two largest automobile makers, to pay record bonuses to their executives while enjoying protection


More UAW workers bankrupt                                                                                                     Autoworkers who used to thrive on overtime now find it tough to keep up their lifestyles. Oscar Gray achieved the good life during 28 years of hard work at Delphi Corporation — a six-figure income, a nice home in Holly and two vehicles. But as Michigan’s auto industry tanked in recent years, the forklift operator lost huge amounts of overtime pay and gradually sank into financial ruin. Saddled with $469,000 in debt, he declared bankruptcy last month. Gray didn’t lose his job. His health isn’t failing, and he is not going through a divorce — the typical reasons many declare bankruptcy. Gray has been losing overtime. His gross pay was cut $16,000 one year, sliding to $87,000, and may dip again …. Despite the loss of time-and-a-half pay, some Michigan autoworkers continue to live large. Many bankrupt autoworkers own two homes — one is usually up north — which means multiple mortgages. Most have two or more cars and sometimes a boat or snowmobile payment, according to information culled from cases filed by autoworkers in U.S. Bankruptcy Court in the Eastern District of Michigan. http://www.detnews.com/2005/autosinsider/0509/18/A01-318432.htm

At the time this article was written, the median annual income (half above/half below) in Michigan was just under $40,000. The article doesn’t address the increases in Michigan’s personal and property tax rates that now make ownership of two homes extremely difficult ….. not only overtime been cut, but taxes on both income, sales and property taxes on homes have gone up. Michigan’s tax rates are not “consumer” or “business” friendly – rather than address those issues the proposed solution from the Michigan Politicans is for the rest of the Country to come up with a “Public Bailout” ………..   

Ford workers get $733M in profit-sharing checks. http://www.usatoday.com/money/autos/2001-03-07-ford-profit-sharing.htm

DETROIT, Jan 25 (Reuters) – Ford Motor Co., is considering paying bonuses to managers for 2006, despite record losses and massive job cuts. Ford reported a record loss of $12.7 billion for 2006, during which its U.S. sales fell 8 percent and it announced plans to close 16 plants and cut over 40,000 jobs in a bid to restore profitability to its North American operations by 2009. http://www.reuters.com/article/idUSN2528789420070125

Apparently, absenteeism at GM’s North American plants is such a huge issue that the automaker has to offer more than just a paycheck to get workers to show up. The new labor contract the General signed with the UAW includes an incentive for workers that go a full year without missing a day. Their reward is to be entered into a drawing that gives five lucky employees $15,000 to put towards a new GM car or truck. While the idea of offering an incentive for employees to do their job might be a surprise to the rest of us working stiffs, the auto industry’s hourly workforce has one of the highest annual absenteeism rates in the U.S. A 2004 study showed that about 10-percent of workers aren’t manning their positions during any one point in the year – three-times higher than other industries. Naturally, this has a massive effect on labor costs and quality control. http://www.autoblog.com/2007/11/12/do-your-job-at-gm-win-cash-for-a-car

“New” Auto Industry Plants Pay More Than “Detroit 3″ -

UAW Losing Pay Edge: Foreign Automakers’ Bonuses Boost Wages in U.S. Plants as Detroit Car Companies Struggle – February 1, 2007 – The UAW is losing its edge in pay compared with non-unionized U.S. assembly plant workers for foreign companies, even as Detroit automakers aim for deeper benefit cuts to trim their losses. Workers for a foreign automaker for the first time averaged more in base pay and bonuses than UAW members working for domestic automakers, according to an economist for the Center for Automotive Research and figures supplied to the Free Press by auto companies. Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000. Honda Motor Co. and Nissan Motor Co. are not far behind Toyota and UAW pay levels. Comparable wages have long been one way foreign companies fight off UAW organizing efforts. http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_ bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx


You may have read this headline, “Citigroup to cut another 53,000 jobs”, “The company said total headcount is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels. The total workforce reductions include thousands of jobs that will be lost when Citigroup completes the sale of Citi Global Services and its German retail banking business.” http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/citigroup_jobs;_ylt=AvI.vrNuJO1e5AeczxKJB2Ks0NUE

Even after making these horrendous cuts, Citi will still employ 1 1/2 times the number of employees currently under contract to all of the “Detroit 3″ combined. After the cuts Citi will employ approximately 325,000 to approximately 200,000 employees at the “Detroit 3″.

The Detroit 3 are not the only companies dealing with the economic slowdown, all business and all employers are forced to deal with this economy.

Throwing good money after bad at the Detroit 3 is no solution. The “Detroit 3″ only accounts for 1/2 of 1 percent of the Gross National Product, slightly less than that produced by the “New Auto Industry Plants”.  The current combined “value” of the entire “Detroit 3″ is something under $10 Billion Dolllars. Prior to the election Congress passed a $25 Billion bailout targeted at “retooling” at the ‘Detroit 3″ and the production of “green agenda autos”. That money is currently tied up in the Energy Committee in Congress. Detroit is now asking for an additional $50 Billion Dollars for a  total of a $75 Billion handout. $75 Billion is 7 1/2 times the current value of three companies combined and is equal to a payment of $375,000 for every employee under contract to the “Detroit 3″.

From a business point of view this proposal makes no sense. If the proposal is passed, it will be the biggest political payoff in the history of the Country


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