The Detroit 3 Bailout – Tell Your Politician To Vote NO Now

Well the Detroit 3 is back and Nancy Pelosi and the Democratic Congress is going to throw more of your money down a bottomless rat hole.

Why the bailout of the Detroit 3 still a rotten idea:

1) Empty Promises – The “survival plans” presented to Congress are empty promises. How can you tell that they are empty promises? Because the Detroit 3 have not implemented any of them.

Let me ask you this, if you went to a bank and asked for a loan and the bank said, you need to demonstrate that you can pay the money back (what a unique idea – don’t lend money to people who can’t pay it back) wouldn’t you need to demostrate that you could pay the money back. The Detroit 3 is simplying making emplty promises to cut their costs – TELL YOUR CONGRESSPERSON TO INSIST THAT THE DETROIT 3 ACTUALLY IMPLEMENT THEIR PLANS FIRST.

The Detroit 3 should be required to demonstrate actual UAW concessions, announce plant closure dates, place business units up for sale and identify what dealerships will be closed and when. STOP TALKING ABOUT WHAT YOU MIGHT DO AND DO IT.  

TELL CONGRESS NOT TO HAND OUT ANOTHER CHECKBOOK WITHOUT HAVING THE CONTROLS IN PLACE BEFORE HAND.

Remember the “Financial Institution” bailout or “TARP” (Troubled Assest Relief Program) that was intended to buy “Toxic Mortgage Debt” and save our economy. Remember the promises, they would actually buy “toxic mortagages, thatTARP would be competely transparent. The American public would be able to “track” how our money was spent, on-line, there would be ongoing public hearings ……..  Well, they stopped buying “toxic mortgage debt” immediately and started using the money for other purposes. “Transparency” – you have to be kidding – now they won’t even give us the specifics on how the money is being spent. 

SEE: https://mcauleysworld.wordpress.com/2008/11/13/stop-the-bailout-fiascos-the-plan-has-changed-the-promises-ignored/

https://mcauleysworld.wordpress.com/2008/11/13/broken-bailout-promises-the-bailout-oversight-committee-the-positions-havent-been-filled/

2). The Detroit 3 isn’t worthy of a bailout of this size. 

Based on the current market value of the Companies, the Detroit 3 could not obtain loans of this size in the financial “market place”.

The current market values of the Detroit 3:

Current General Motors Market Value – $2.7 Billion    IMMEDIATE GM CASH BAILOUT REQUEST – $4 Billion

Current Chrysler Market Value – $1.8 Billion    IMMEDIATE CHRYSLER CASH BAILOUT REQUEST $7 Billion 

Current Ford Motor Company Market Value  $4.7 Billion IMMEDIATE FORD CASH BAILOUT REQUEST $9 Billion 

TELL YOUR CONGRESS PERSON TO HAVE THE DETROIT 3 IMPLEMENT THEIR COST CUTTING PLANS FIRST AND THEN SHOW US THE SPECIFICS ON HOW THEY WILL PAY BACK OUR TAX MONEY IF THEY RECEIVE ANY LOANS.   

http://news.bbc.co.uk/2/hi/business/7761015.stm       http://news.yahoo.com/s/nm/20081202/bs_nm/us_autos_bailout_chrysler_1             http://news.bbc.co.uk/2/hi/business/7761015.stm

 

The Detroit 3 is seeking a total of $34 Billion Dollars in immediate and long term bailout moneys. http://news.yahoo.com/s/nm/20081202/bs_nm/us_autos_bailout_18 .

$34 Billion in bailout money for companies with a combined market value of 9.2 Billion. You don’t need an MBA (Masters in Business Administration) to know this is simply a “bad bet”. Want an apples to apples comaprison – Toyota has a market value of $168 Billion Dollars. http://www.bloggingstocks.com/2008/06/27/the-next-toyota-is-ford/ 

Toyota is worth 18 times the value of the combined Detroit 3. Toyota would have difficulty getting a loan for $34 Billion Dollars. 

GENERAL MOTORS IS ALREADY $60 Billion in Debt (Negative Equity) WHILE FORD IS ALREADY $160 BILLION IN DEBT. http://blog.hsh.com/?tag=gm , http://finance.yahoo.com/q/bs?s=GM&annual , http://www.powerlineblog.com/archives/2008/11/022087.php?format=print , http://www.marketwatch.com/news/story/fitch-downgrades-ford–ford/story.aspx?guid={76B7D716-9E74-4105-9883-A8F07645BBA5}&dist=hppr , http://seekingalpha.com/article/105806-gm-bailout-or-bankruptcy

3). The Detroit 3 can’t pay this money back.  At this time last year the unemployment rate was at    4.7 %, the stock market was at 14,000, gas was just over $2 a gallon and house values had not plunged 20%.

How did GM do under those ecomomic conditions? GM lost $38 Billion dollars in the 3 month period ending on September 30 2007. $38 Billion Dollars in a 3 month time period. (Remember the UAW calling strikes at 6 GM plants, costing the Company $100 of millions of dollars).

The Detroit 3 guarantee they will “pay the money back”, while their sales are falling through the floor: “GM sales fell 41 percent in November, and the automaker said publicity about its request for a federal bailout had hurt showroom sales.” http://news.yahoo.com/s/nm/20081202/bs_nm/us_gm_2 , Now it appears that GM could fail in a matter of weeks without immediate aid. http://www.latimes.com/business/la-fi-autos3-2008dec03,0,7543383.story , GM executives have said the company has been unable to borrow money in the last six months. http://www.latimes.com/business/la-fi-autos3-2008dec03,0,7543383.story?page=2

Chrysler LLC’s November sales fell a staggering 47.1 percent http://www.detnews.com/apps/pbcs.dll/article?AID=/20081203/AUTO01/812030350&imw=Y , Ford Motor Co.’s were down 30.5 percent, according to Autodata Corp. Ford and GM announced Tuesday they would slash by one-third their first-quarter production in 2009.  http://www.detnews.com/apps/pbcs.dll/article?AID=/20081203/AUTO01/812030350&imw=Y 

All eight of GM’s brands have seen significant sales drops in 2008.Chrysler offered few highlights for its November sales other than that it cut its fleet sales by 63 percent when compared with last November. Most vehicles saw dramatic losses when compared with last November: The Dodge Caliber and Avenger were down 56.4 percent and 76.9 percent, respectively. Only the low-volume Dodge Viper and Chrysler Aspen showed improved sales. Jim Farley, Ford Motor Co.’s group vice president of marketing, said he expects the industry to post continued year-over-year declines in auto sales until at least the second half of 2009. “We could see some strengthening in the second half of next year, or at least some stabilization, albeit at a much lower level,” Farley said in a conference call. http://www.detnews.com/apps/pbcs.dll/article?AID=/20081203/AUTO01/812030350&imw=Y

This is why Deutsche Bank noted that GM’s future, even with a bailout, would be “bankruptcy like”. http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead

SO LET ME GET THIS STRAIGHT, THEY ARE LOSING MONEY HAND OVER FIST FOR 5 YEARS, THE ECONOMY IS GETTING WORSE, THE DETROIT 3 WILL CUT PRODUCTION BY 30%, BUT THEY WILL BE ABLE TO PAY BACK AN ADDITIONAL $34 BILLION DOLLARS IN DEBT.

Tell your Congressperson you won’t be fooled again. Remember the AIG bailout that started at $85 Billion just 2 months ago (that is right, just 2 months). http://www.fool.com/investing/general/2008/11/10/aigs-bailout-take-two.aspx , Well the AIG bailout has “ballooned” to $152 Billion in just 60 days. http://news.yahoo.com/s/nm/20081202/bs_nm/us_aig_cds_1

4). Tell Congress and the Detroit 3 to stop the lies and “campaign of fear” in their quest to get your tax money. The Detroit 3 currently employs about 175,000 US workers. The “New US Auto Industry” or “transplants” as the Detroit 3 calls them, employ about 125,000 US employees. The “New US Auto Industry” is not seeking a bailout. It is projected that the ‘New US Auto Industry will employ more workers than the Detroit 3 at the end of 2009. The “transplants” have anounced plans to build 5 new plants in the US while the Detroit 3 will continue to close plants. One half of all jobs related to “suppliers” of the US Auto Industry are involved with work related to the “New US Auto Industry” and not the Detroit 3.  

“Nonetheless, motor vehicles, bodies, trailers, and parts represented less than 1% of the country’s entire gross domestic production in 2007, according to the U.S. Bureau of Economic Analysis. While jobs in the industry numbered at about 994,000, down from just over 1 million in 2006.” http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead

Half of this production and half of the jobs are related to the “New US Auto Industry” and not the Detroit 3. The Detroit 3 work product maybe related to 1/2 of 1% of the GNP. (Gross National Product) 

Congress and the Auto Executives are telling a hugh lie to the American public. The US Auto Industry, New and Old combined, do not represent 1 job in 10 in the US. The entire US auto Industry, New and Old, are related to less than 1 job in 100. Even with a bailout, the Detroit 3 plan to cut their share of auto related employment by half or 200,000 of the 400,000 jobs related to the Detroit 3 auto production. This number (200,000) represents less than 1/2 of 1% of the jobs in the US not the 10% of jobs used in the scare tactics. THE AUTO EXECS AND THEIR FRIENDS IN CONGRESS ARE JUST LIKE SNAKE OIL SALESMAN, TRYING TO SEPERATE THE GULLIBLE FROM THEIR MONEY. http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead

In 2008 Auto Industry lobbying groups contributed some $36 million to U.S. campaigns, compared to $70 million for all of 2007, its largest amount on record, according to the Center for Responsive Politics. http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead 

 

TELL YOUR CONGRESSPERSON YOU ARE NOT INTERESTED IN FUNDING ANOTHER ROUND OF PAY INCREASES FOR THE UAW.                                                                                                                                                

Contact Your Congressperson & Senators here: http://www.congress.org/congressorg/home

Additional posts on the Auto Bailout:

https://mcauleysworld.wordpress.com/2008/11/11/stop-the-detroit-3-bailout-375000-cost-per-employee-to-taxpayers/

https://mcauleysworld.wordpress.com/2008/11/21/warren-buffett-on-detroit-3-new-business-model-needed/

https://mcauleysworld.wordpress.com/2008/11/19/top-10-reasons-to-say-no-to-auto-bailout/      

https://mcauleysworld.wordpress.com/2008/11/13/bailout-lies-how-americans-were-misled-why-the-bailout-isnt-working/

https://mcauleysworld.wordpress.com/2008/11/11/stop-the-detroit-3-bailout-375000-cost-per-employee-to-taxpayers/

A COMMON SENSE ALTERNATIVE TO THE REQUESTED AUTO BAILOUT:

A). BUY THE DETROIT 3 FOR CURRENT MARKET VALUE – $9.2 BILLION

B). PLACE THE DETROIT 3 IN BANKRUPTCY REORGANIZATION, FIRE THE CURRENT AUTO EXECUTIVES AND VOID UAW AND SUPPLIER CONTRACTS.

C). Give the Detroit 3, lock, stock and barrel, to Toyota Motor Company with $10 Billion Cash and let Toyota run the Detroit 3.

Total cost $19.2 Billion.

Scrap the original $25 Billion Bailout, which was intended to re-tool the Detroit 3 so they could build “green autos”. Immediate savings to US taxpayers $39.8 Billion Dollars (Current $34 Billion bailout request and $5.8 Billion from original retool “bailout” moneys).   

Stop The Bailout Fiascos – The Plan Has Changed – The Promises Ignored

On September 29, 2008 the original “Bailout Bill” was defeated in the House of Representatives. After adding an amazing amount of additional spending the revised “bailout bill” passed four days later.

http://www.thestreet.com/story/10440683/1/sweetened-bailout-bill-sails-through-house.html

The Bailout was passed without “Congressional Hearings” because it was said that a “dire emergency” confronted the Nation and that Congress needed to purchase the “illiquid assets from the financial system” or as they were later called “The Toxic Mortgages” that may destroy the economy.

Now forgotten is the fact that a group of 400 internationally respected Economists warned the “Bailout” wouldn’t work. 

https://mcauleysworld.wordpress.com/2008/09/29/200-world-reknown-economists-speakout-against-bailout/  http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm http://www.npr.org/templates/story/story.php?storyId=95215972 

These economists warned that an entirely different approach was needed to truly free up the credit markets. ‘At this point I cannot identify a single good reason to do the bailout,’ said Dean Baker, co-director of the Centre for Economic and Policy Research. ‘Much of the country’s political and economic leadership has been running around raising the prospect of the Great Depression and a breakdown in the banking system,’ Baker said. ‘These stories are absolutely not true,’ he added. http://ipsnorthamerica.net/news.php?idnews=1729

Current “Bailout” activities maybe having the same affect as “pouring gasoline on a fire”.

What few American’s know, not all Banks supported the Bailout, “Nine of the largest U.S. banks were essentially arm-twisted last week into signing on for the first $125 billion in capital infusions.” http://news.yahoo.com/s/nm/20081024/bs_nm/us_financial_usa_banks 

Note that “Capital Infusions” were forced on these Banks, the Banks did not sell “toxic mortgage debts” to the FED as advertised.

The Bailout has failed. Between October 4, 2008 and November 12, 2008 the Stock market has dropped 2000 of the 5000 points lost since November 2007. Forty percent of the economic dive has occurred in the 5 weeks since the “Bailout” was approved. (From 13,300 on 12/7/07 to 8,300 on 11/12/08)  

http://www.mahalo.com/Dow_Jones_Industrial_Average     http://www.nyse.tv/stocks/archive/2007_11_01_archive.htm                    http://money.cnn.com/data/premarket/  (DJIA 8313 at 7:15 Am  11/13/08)             http://cyberlaw.stanford.edu/node/5882

You might recall a promise by Congress that the ‘Bailout” spending would be posted on-line, providing the Taxpaying Public complete transparency and the ability to track where our tax dollars were being spent. Not only have we not received “complete transparency”, but the American public is being denied even the most basic information on where the money is being spent.

http://www.openthegovernment.org/article/articleview/342/1/115/?TopicID=  

One article noted, “The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.”                                                                        

http://josh-of-arc.newsvine.com/_news/2008/11/12/2104122-fed-loans-2-trillion-but-wont-say-to-who

In other words, the Congress and the Administration are not implementing any of the “protections” they promised the public for their tax dollars.

BLOOMBERG.COM describes it this way, “Fed Defies Transparency Aim in Refusal to Disclose”,  The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.                                                    http://www.bloomberg.com/apps/news?pid=20601087&sid=ahdVHk_Ccoeg&refer=home 

 

In addition, few in the American Public realize the “Bailout” money is being used to pay for items never approved by Congress and vehemently opposed by nearly all of the American public during the pre-vote debate. A recent article titled, “Bail-Outrage: Misuse of Funds, Lack of Transparency a National Disgrace”, noted, “Many Americans are understandably outraged by the bailout fever that has gripped Washington this year. But even those who believe the bailouts are a “necessary evil” would have a hard time defending some of the bailout-related items that have come to light in recent days, including:

  • Financial institutions using TARP bailout money to pay executive bonuses. The firms, of course, say it’s “different” money and bonuses are key to retaining top employees. But if you need to come to the government for a handout, shouldn’t your executives forgo a bonus? Or shouldn’t the government make canceling bonuses a condition of getting aid, as is the case in Europe?
  • The Fed refusing to reveal who received almost $2 trillion in non-TARP loans, or what collateral it has accepted from “emergency” loans made to struggling firms, as Bloomberg reports.
  • The Treasury Department providing a tax break to banks involved in acquisitions that could amount to $140 billion. The Washington Post reveals the change to the tax code was issued on Sept. 30, while Congress was debating the $700 billion TARP bill.

The bailouts are bad enough. But this kind of chicanery and lack of transparency makes me recall a line from another time when fear and deceit dominated Washington: Have they no shame, at long last?

http://finance.yahoo.com/tech-ticker/article/125352/Bail-Outrage-Misuse-of-Funds-Lack-of-Transparency-a-National-Disgrace?tickers=GS,MS,JPM,BAC,C,WFC,XLF             

http://www.dailyherald.com/story/?id=249779

The only relief seen by the American public has come from private efforts made by the Mortgage Companies. An example is the recent announcements made by Citigroup, “Citigroup to Modify Terms for U.S. Mortgages” as reported by the Wall Street Journal. http://online.wsj.com/article/SB122636776229916053.html 

Citigroup’s actions are unrelated to any bailout activity. Why is Citigroup doing this? Because it makes good business sense for Citigroup, that is why. “The push by the New York Company’s Citi-Mortgage unit marks the latest effort by a financial institution to help ailing homeowners, which also can help lenders reduce loan losses.” [In other words, Citigroup doesn’t lose money when homeowners can stay in their homes and make payments]. “The company ultimately expects to reach 500,000 customers whose mortgages it owns. Roughly 130,000 of those borrowers are likely to see a reduction in their monthly loan payments, Citi-Mortgage said.” Citigroup’s efforts have been matched by J.P. Morgan Chase & Bank of America. http://online.wsj.com/article/SB122636776229916053.html

This is being done without the sale of “toxic debt” or “cash infusions”, it is being done by having the bank simply renegotiate its outstanding mortgages – it costs the taxpayer nothing

Contrary to what the public has been told, a very significant portion of Citigroup’s “bad mortgages” involve investment properties and not family residences. “Citi-Mortgage also is halting foreclosures for about 16,000 borrowers who are behind on their loan payments but are working with the company on a loan modification. About 10,000 of those borrowers live in their homes and are likely to get their mortgage terms reworked, while about 6,000 are investors, according to the company.” [Almost 40% of the mortgages in foreclosure are investment properties]. http://online.wsj.com/article/SB122636776229916053.html

Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned …. He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans……. The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was “not the most effective way” to use the $700 billion bailout package, he said. ……. The announcement marked a major shift for the Administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.”  http://news.yahoo.com/s/ap/financial_meltdown

The Author of this article is showing their political bias when the fail to mention the roll of the Democratic Congress in this mess. 

The Democratic Congress is “leading the charge” for making the modifications.

The fact that the original legislation only allowed for, “H. R. 1424 As Amended; A bill to provide authority for the Federal Government to purchase and insure certain types of troubled assets” is not being discussed. The current change in direction was not authorized by the “Bailout Vote”.

The Washington Post was just one of the publications to confirm these facts, “Urgently shifting course …….  abandoning the centerpiece of its massive $700 billion economic rescue plan and exploring new ways to shore up not only banks but credit-card, auto-loan and other huge nonbank businesses. Democrats are pressing hard to include a multibillion-dollar bailout for faltering automakers, too, over Administration objections. Unimpressed by any of the talk on Wednesday, Wall Street dove ever lower.” http://washingtontimes.com/news/2008/nov/12/paulson-says-troubled-assets-will-not-be-purchased/

So now the “Bailout” money will go to pay bonuses not just for Wall Street Executives but for overpaid UAW & Auto Industry Executives too. Whether “credit card”, “auto loans” or “student loans” should be included in the “original bailout” was discussed by Congress and the Senate just 5 weeks ago. After consideration, the Congress and the Senate rejected proposals to include those items, after being added to the Administrations original “Bailout Proposal” by Democrats in Congress, the items were deleted in an attempt to obtain the necessary Republican support in the House.  The items were added back in by the Democratic Senate. They were not authorized in the original legislation.      

The proposed bailouts to what the Wall Street Journal refers to as “The Old American Industry” will cost taxpayers $375,000 per employee. A $75 Billion Dollar “Bailout” of the “Old” American auto industry will not save it. Chrysler LLC is not even a publicly owned company. It is a privately owned company. So how do we know who will really get the money the Government is being asked to give to Chrysler?

https://mcauleysworld.wordpress.com/2008/11/11/stop-the-detroit-3-bailout-375000-cost-per-employee-to-taxpayers/ 

https://mcauleysworld.wordpress.com/2008/11/07/obama-granholm-pelosi-waxman-dingell-the-death-of-american-automobile-manufacturing/

Given all the falsehoods about the first “Bailout” package, how can anyone be sure that the money will get to where they say they will spend it.

As to GM, Duetsche Bank stated a “bailout” would be needed to avert a collapse of GM and that even if GM received “bailout funds” and  “… GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” analyst Rod Lache said in a research note, essentially calling the company’s shares worthless with a price target of $0, reduced from $4.”  

http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5}

As to Chrysler, it has been reported that, “In the Chrysler-like approach, potentially 98% of the  company’s equity would be transferred to the UAW, VEBA, existing GM debt holders and the government,” Barclays’ analysts noted. VEBA is short for Voluntary Employees Beneficiary Association, a trust set up for managing health-care benefits to be overseen by the United Auto Workers of America. That would leave little for shareholders.” http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5}

 

Without private investment, how many more “cash infusions” will taxpayers be asked to make to reward bad business management? 

 

According to the U.S. Bureau of Economic Analysis motor vehicles, bodies, trailers, and parts represented less than 1% of the country’s entire gross domestic production in 2007. One half of that total is attributable to the “New Auto Industry” that isn’t asking for a “Bailout” nor is the “New Auto Industry” part of “Bailout” discussions.

http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5} . 

 

We are talking about Billions in bailouts for the “Old Auto Industry” that is responsible for less than 1/2 a percent of the Country’s Gross National Production. That is simply a bad bet for American consumers and the taxpaying public.

   

How many billions more will Congress throw at a problem they don’t know how to fix. Isn’t it time to stop “throwing good money after bad”. 

Is it time for the American taxpayer to say NO. Contact your Congressperson and Senator and demand that they schedule the hearings we should have had in the first place. CONGRESS IS NOT KEEPING THEIR PROMISES ABOUT THE BAILOUT. WHAT THEY ARE DOING IS NOT WORKING. WHAT THEY ARE DOING IS MAKING THINGS WORSE WHILE RUNNING UP YOUR TAX BILL.

Contact Your Congressperson & Senators here: http://www.congress.org/congressorg/home

One Click Access –you only need your “Zip Code” in the “Find Your Officials Tab”

Why isn’t the bailout working? Because the Government has done nothing to correct what caused the financial collapse. What caused the financial collapse? A change in lending rules that gave money to people who could not pay it back. The loans (car, credit card and home mortgages) were then packaged and sold as securities in America and around the world. Mortgages were written at 140% of the “inflated value” of the homes. Individuals were encouraged to “roll over” credit card debt, auto and student loans into their “mortgages”. Now that the “pyramid scheme” has collapsed the Government has done nothing to prevent it from happening again. NINJA & LIAR Loans are still the “law of the land”. Why won’t banks loan, why won’t investors buy the securities? They don’t want to get stuck with another group of “bad loans” or “bad investments”. The bailouts are simply rewarding the bad actors and preventing the tough but necessary changes we need to get the Country back on the right track.

WHERE WILL THIS ALL END – CONSIDER THIS

AIG’S NEW BAILOUT – November 10, 2008

The U.S. government reached a deal Sunday night to scrap its original $123 billion bailout of American International Group Inc. and replace it with a new $150 billion package, according to people familiar with the matter. Under the terms ironed out late Sunday, the government would give AIG more money, including $40 billion from the U.S. Treasury’s $700 billion Troubled Asset Relief Program. The $150 billion in government aid consists of a $60 billion loan, a $40 billion preferred-stock investment and $50 billion in capital.  

http://online.wsj.com/article/SB122627437470412029.html 

AND THIS

City Council: Detroit needs $10-billion bailout

 

The Detroit City Council passed a resolution today calling for a $10-billion bailout for the city of Detroit. The council passed the resolution today 7-1. Council President Pro Tem JoAnn Watson sponsored the resolution to use the money for public service employment, to fund mass transit plans and to place a moratorium on home foreclosures for two years. The resolution specifically requests the council meet with Mayor Ken Cockrel Jr., Gov. Jennifer Granholm, the state’s congressional delegation, U.S. House Speaker Nancy Pelosi and officials from President George W. Bush’s office and President-Elect Barack Obama’s transition team. “No city needs a bailout more than Detroit,”  http://www.detnews.com/apps/pbcs.dll/article?AID=2008811120455

Mayors want part of auto bailout

The mayors of four large Metro Detroit communities on Monday called for a share of the federal bailout sought by Detroit’s Big Three automakers to help redevelop shuttered facilities and factories.

The mayors of Warren, Sterling Heights, Livonia and Dearborn met at the Sterling Heights Public Library for about an hour to discuss the proposal. The mayors were joined by representatives from Gov. Jennifer Granholm’s office, Michigan’s congressional delegation, the Michigan Economic Development Corp., the Southeast Michigan Council of Governments and the Michigan Municipal League.

http://www.detnews.com/apps/pbcs.dll/article?AID=2008811120455

THE BAILOUT Parts B & C – Congress Wants More Money & They Haven’t Even Voted Yet

Well the Spin is already starting –

The Pundits are admitting that this plan simply won’t work ….. without more cash –

The Pundits are now saying the Bailout Plan will need to be “supplemented” with additional cash (100’s of Billions) to “Recapitalize the Banks” and then funding will be required to provide “mortgage assistance” to that group of troubled homeowners who might get assistance under the “bailout plan” – the Bailout will only assist 1/2 the homeowners in the Country – those who have a mortgage with a bank or institution participating in the bailout (healthy banks and institutions won’t be participating) ……..

This remonds me of an old saying – “In for a penny, in for a pound” (As in the British pound – Guess I should change the saying to “in for a penny, in for a dollar”). The point being, they’ll be back to us in less than a month for more money – telling us “you don’t want to waste your first ‘investment’ of a trillion dollars do you?”.  

There isn’t just one more shoe to drop – there are at least two ….. and we haven’t even been given a preliminary price for these new shoes.

Remember – there is no guarantee that the first portion of the  “Bailout” will work.

Contact your Congressperson and tell them to Vote NO today. 

Contact Your Senators Here:  http://www.emailyoursenator.com/senators.html  Click on your Senators, Select the Contact Folder and then  click on the email address.

Contact Congresspeople: http://www.house.gov/zip/ZIP2Rep.html You’ll need your zip  code

VIDEO: The Bailout & Fannie Mae – FOLLOW THE MONEY

VIDEO: Small Banks Are Still Lending – Credit On Main Street – So Says Banking Association

See The Video Here: Select “Small Banks Still Lending” Video: http://www.foxbusiness.com/video/index.html?playerId=videolandingpage&streamingFormat=FLASH&referralObject=3126969&referralPlaylistId=search|small%20banks

This is a second video on Small Bank lending – This Banker notes his bank is lending – but he supports the Bailout – Then why all the scare tactics.

FDIC Deposit Increase – Just Another Tax Increase, Says Bill Isaac – Former FDIC Chairman

The FDIC’s “Insurance Fund” Myth

By: Vernon Hill   Thursday, September 11, 2008 10:02 AM

When FDIC head Shelia Bair says her agency might have to bolster the FDIC’s insurance fund with Treasury borrowings to pay for the new spate of bank failures, a lot of us, this 40-year banking veteran included, assumed there’s an actual FDIC fund in need of bolstering.We were wrong. As a former FDIC chairman, Bill Isaac, points out here, the FDIC Insurance Fund is an accounting fiction. It takes in premiums from banks, then turns those premiums over to the Treasury, which adds the money to the government’s general coffers for “spending . . . on missiles, school lunches, water projects, and the like.”

The insurance premiums aren’t really premiums at all, therefore. They’re a tax by another name.

Actually, it’s worse than that. The FDIC, persisting in the myth that its fund really is an insurance pool, now proposes to raise the “premiums” it charges banks to make up for the “fund’s” coming shortfall. The financially weakest banks will be hit with the biggest tax hikes.

Which makes absolutely no sense. You don’t need me to tell you the banking industry is on the ropes. The last thing it needs (or the economy needs, for that matter) is an expense hike that will inhibit banks’ ability to rebuild capital, extend new loans, or both. If the FDIC wants to raise its bank tax once the industry has recovered, I suppose that’s fine. But to raise taxes on the industry now is perhaps the dumbest thing the agency can possibly do. At the margin, the FDIC will be helping bring about more of the failures it says it wants to prevent.

But this is the government we’re talking about, so logic goes out the window. First, the FDIC insists its mythical bank insurance fund exists, when it really doesn’t. Then the agency does what it can to run the imaginary fund’s finances straight into the ground. Your tax dollars (sorry, “premiums”) at work. . . .

http://www.istockanalyst.com/article/viewarticle+articleid_2603550.html

The US FDIC Insurance Increase – Ireland Announces Insurance on All Deposits

LA Times

Bailout fever: Ireland guarantees all bank deposits, debts

The biggest surprise: The Irish government guaranteed all deposits and debts of the country’s major banks, one day after the Irish stock market plummeted 13%, nearly twice the decline of the Dow Jones industrials.

“We have to create confidence,” Finance Minister Brian Lenihan said on RTE Radio, according to Bloomberg News. “We can’t bail out a particular bank. That wouldn’t be right. What we have decided to do is give a general guarantee that the banks can lend in security and safety.”

mcauleysworldweblog: Irish Banks have received a rush of American cash in recent weeks as Americans have transferred money to Irish Banks. There are commentators who suggest the move by the Irish Government is aimed at keeping the American funds in Irish Banks. The Irish economy has been booming for 10 years. The Irish Government has a pro-growth, low tax, business environment. Business taxes in Ireland are approximately 11%. 

http://latimesblogs.latimes.com/money_co/2008/09/after-congress.html 

Read About The Myth Of The FDIC Insurance Fund Here: By Bill Isaac, Former FDIC Chairman –  https://mcauleysworld.wordpress.com/2008/10/02/fdic-insurance-an-accounting-myth-not-a-fund-bill-isaac-former-fdic-ch/

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