Bailout Watch 114: GM to Ask Fed for $5b+ Loan
I know I said I’d be starting a Bailout Watch 2 series on Monday, but events have once again overtaken us. And to avoid confusion, I’ve decided to simply continue the orginal Bailout Watch series, as it’s all pretty much of a muchness: your tax money for GM, Ford and/or Chrysler. This morning, Barrons reports the inevitable: The General is looking to hit-up the U.S. Federal Reserve for a little walking around money. “How much the car producer would seek is unknown,” Barrons says. “but it needs $5 billion to meet its goal of completing a $15 billion liquidity program, much of which actually is coming from cost cuts.” So, can they do that? Of course they can! “Under the law, GM would pay a rate of interest that is higher than the top one charged to banks for cash advances. The Fed can lend to GM without demanding collateral if it gets the votes of five of its board members.” Check this from the Fed’s Discount Window Website: “In unusual and exigent circumstances, the Board of Governors may authorize a Reserve Bank to provide emergency credit to individuals, partnerships, and corporations that are not depository institutions.” Strangely, both this story and the GM Chrysler merger non-deal rely on “two persons with first-hand knowledge of the situation.” Same two? Never mind. This one we believe.
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Canucknucklehead: You are not correct on the rich not paying their "fair" share in taxes in the U.S. (the "wealthy" own companies that employ people also). It is a fact the top 5% of earners in the U.S. account for 50% of all tax revenues, and those below $40,000.00 per year income pay a tiny percentage of the federal taxes, yet receive enormously more than that in benefits: schools, transportation, food stamps, housing allowances; medical care. Canada may have a universal health care system, but that will not work in the U.S., we have more than ten times the population and far more diverse. How long would Canada's economy exist if it were absorbing a couple of million of illegal immigrants per year? Canada should be thankful the U.S. is between Mexico and itself. Has our government made bad decisions? Absolutely, the assclowns in D.C. are truly bankrupting this country, along with their friends on Wall Street. The middle class of America however are the ones getting screwed, they are the ones paying a lot of taxes and shouldering an ever increasing financial burden. I don't know if the U.S. survives long term or it goes bankrupt, but revenues to the federal government are well over $2 trillion annually and it's not ever enough for the dumbass poloiticians. Meanwhile back to cars: GM is pretty much finished.
You'd have to be a fool to buy anything Obama or McCain say regarding the economy. Neither has articulated any specifics on how they will lead through this crisis. Sure, both promise tax cuts (lie) and a balanced budget (lie), but neither one gives ANY detail on how they'll do that... just some vagaries on cutting expenses. As Carlin so eloquently put it in his last televised special: "It's bullshit, and it's bad for you."
@pshar: Even the most staunch small government conservatives agree that a federal military is one of the things the government should be doing. Unsurprisingly, they rarely do that well. Adub is correct in pointing out to our left-leaning friends that 40% of Americans pay no taxes, and get the most of the benefit. So you're right, the current tax system isn't fair. The rich (and they keep lowering the bar on that, btw) have to grin and bear it as they see their net worth and purchasing power lessened so the laggards can continue not contributing to society in any measurable way. What gets me is after systematically redistributing the wealth from the job creators and money makers to the people at the bottom, the Democrats will wonder why the economy will be so slow to come back. If you were someone who wanted to grow your business, why would you do it in the next four years when you'll have the most anti-business, overregulated, onerously taxed, borderline protectionist economic policy in America's history?
I am against more taxes. Keep your damn hands out of my pockets! That means you, Obama!