Auto Bailout Pits General Motors (GM) vs. Alan Greenspan
December 2nd, 2008 by 
James Cullen
Oh, where to begin? This priceless excerpt is from page 7 of the “Restructuring Plan for Long-Term Viability” sent to the Senate by General Motors (GM).
Indeed, GM’s “Keep America Rolling” sales campaign, following the September 11 attacks, is credited by many as having prevented an extended recession in 2001.
Right, and the Federal Reserve sending interest rates down to 1% - in the process creating the largest credit bubble ever - had nothing to do with it. The transparent grasping for patriotism is sickening.
How this document could possibly result in GM being entitled to $18 billion in government financing (especially without wiping out the stockholders and seriously dent the existing union contracts) is beyond me. I’ve turned in case study analysis papers for my Financial Policy class that are better. But by all means, read their proposal and judge for yourself.
Position: None - although I believe that GM common should be a zero, even if Congress is not yet inclined to allow that to happen.
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December 5th, 2008 at 10:13 am
For several months I have been advocating a massive DEBT restructuring that would include the entire world. I simplified how to do this in three steps. First just make a list to include the debtor, debt-holder and a bank to administer it. The second step would be to just create enough FIAT money to pay all the debt and third authorizing the Central Banks of the entire world to make an accounting adjustment crediting the debtor and paying the debt-holder.
Review it here: http://allencharlesreport.blogspot.com/2008/11/worldwide-debt-is-problem_28.html
If done worldwide the currency values among the various currencies would adjust too different
values for inflation, I suspect America has the largest total debt of any country in the world so the dollar might weaken in value the most. If the US Dollar does devalue then we would be much more able to compete with the rest of the world.
Our economy has had most opportunities to actual produce (manufacture) something removed from it because we just cannot compete with the low wages paid elsewhere. Ths debt REBOOT would do two things, first it would take the pressure off our economy (the rest of the world as well) to allow the economy to restart because of all the NEW Capital coming back into the system. Because our debt (the USA) will cause a much larger adjustment in the US dollar’s value, the Reboot would allow time for American production of items we use every day to return and our dependence on other countries could be reduced. It would happen because we could not afford the more costly imported products and not because of tariffs which the trade agreements will not allow us to do.
NOW I have a Question ?
I was on a forum site reading comments by a bunch of PHDs and read on one post that when we buy goods from China it is always done in US dollars, but when the Central bank of China pays the manufactures that it is in the Chinese currency and the Central Bank of China just creates the payment making a credit to the manufacturers bank account. Then the Chinese government or Central Bank takes the US Dollars that they just got for their newly created fiat Chinese money and buys American debt sending the dollars back to the USA. So we buy with our fiat dollars, they create new fiat money and send our money (and the new debt we owe them) back to us to spend again over and over. Does anyone know if this is TRUE?
Allen Charles
December 8th, 2008 at 2:17 am
Allen Charles,
That is completely true we are essentially paying China twice for our goods.
December 22nd, 2008 at 6:42 pm
There are many reasons why the bailout of Wall street and the auto industry is wrong but most importantly because the federal government is far more powerful than it was ever meant to be. Now the government can be a stockholder? Sounds too much like socialism.
http://www.theartdeptchronicles.blogspot.com