The American Dream: What's Good For GM

Who would have believed 25 years ago, that GM and Chrysler (well, maybe not them) would see bankruptcy within 60 days of each other.

In 1984, GM was the 7th largest entity on the face of the Earth. With a global reach well before that term - globalization - really had the teeth it does today. Now dragging into court to say, "help me! help me!" But the signs of this failure were long in the making.

From the NYT:

Auto workers took in the news that G.M. would shutter plants in Michigan,
Indiana, Ohio and Delaware, and plants in Tennessee and elsewhere in Michigan
were put on standby.

President Obama, speaking at the White House, emphasized that investing
more billions of taxpayer dollars in G.M. was not something he wanted to do, but
something he felt the government had to do to avert a financial calamity that
would hurt millions of people.
“We are acting as reluctant shareholders,
because that is the only way to help G.M. succeed,” Mr. Obama said, asserting
that the government’s backing, coupled with the painful restructuring that the
once mighty company is undergoing, “will give this iconic American company a
chance to rise again.”

In its
bankruptcy petition, G.M. said it had $82.3 billion in assets and $172.8
billion in debts. Its largest creditors were the Wilmington
Trust Company, representing a group of bondholders holding $22.8 billion in
debts, and affiliates of the United
Auto Workers union, representing nearly $20.6 billion in employee
obligations.

Wow.

At one time the saying went: "What is good for GM is good for America." Well, it certainly took after the US in running up debt.

Economic Woe: I don't like Hurricane IKE or the U.S. Economy

Hurricane IKE path:

If you lived in the Caribbean this year, it has to suck. Haiti, Cuba, Turks and Caicos, all hit by the storms Gustav and now, IKE. Ike is heading into the Gulf, again, bearing down on New Orleans by this recent projection. My agnostic prayers are with you.

Today, my mother is seeing a bankruptcy attorney. Hopefully, he'll take the case. Because, folks, it is pretty grim for her (and myself) if she doesn't get the bleeding stopped. Unlike Fannie Mae and Freddie Mac, who have the U.S. government taking over their affairs, I haven't the power to takeover my mother's or my aunt's yet.

On my other blog, I related that I would address The Perfect Storm, aka, the current financial crisis. I have flaked out only due to a myriad of other concerns. Like getting food, shelter and gas paid for or at least addressed. Assuming I can get the research back on track, I'll complete it. But, if not, here's a few highlights:

• Longstanding energy issue via the politics of the Middle East
• Changes in financial rules, going off the gold standard, and supply-side economics via Milton Friedman, former President Ronald Reagan and former Prime Minister Margaret Thatcher
• Former Senator Phil Gramm's involvement in Enron and changing banking rules to allow Investment banks and Commercial entities to operate essentially under the same roof, sharing the same assets (and same liabilities) while being linked to the subprime mortgage maliase
• The degradation of the U.S. Dollar: Trade deficit, Balance of Payments and the China syndrome
• Engaging in the Iraqi war on dubious, and often, criminally wrong pretenses because it is about oil and Middle East restructuring. Meanwhile Saudi Arabia, Russia and Iran are all legitimately doing far, far worse to the United States. The crisis in Georgia may be a political trick to convince Americans to put McCain in office
• Globalization has made us a nation of consumers - not producers - undermining our status in the world as we are only 5% of the population, but use 20-25% of world's resources

Because of these and various underlying stories, there is a likelihood of a severe recession and possibly, the D-word.

People at the bottom will really feel it.

Good Luck riding out this Perfect Storm.