Government Bailout Loans

Today, I read that Chrysler will NOT be repaying the $7B in government bailout loans as part of their bankruptcy filing. I am angry that the public was mislead by the Federal Government. We are led to believe that these are loans, not outright grants.  Given this precedent setter, GM would be discriminated against unfairly if they file bankruptcy and their loans are not forgiven. This business of rescuing 'too big to fail' companies or industries reflect the lack of business acumen for the long term on part of our government. Here is the first repercussion resulting from heading in this direction.  I think the government has lost sight on how much $7B is.  When you take it to the level of individuals, like you and I, then 1% is a sizable amount.  This is what happens when our government gets too big.

I have decided not to right to our congress members that I usually do because I haven't heard back from my last input, and I'm feeling that it is a waste of my energy. I'm glad that I have this blog to express what I see. This is my only outlet other than those around me willing to 

listen. :)

I am glad to see the bankruptcy judge overseeing Chrysler's bankruptcy put a halt to the rush to ram it through the court.  I do believe in our justice system and am watching to be reassured that it prevails over the pressure from our government.

Keeping the Historians Busy

The market is trying to hold after the treasury announced a $1.2 trillion investment; $300B in buying long-term U.S. government bonds, and the balance to purchase mortgage-related debt. The dollar fell around 4% against the euro and pound.  I think watching the dollar's value is one good measurement stick to recognize when we are reaching the 'bubble' with our government's debt creation.  The Consumer Price Index was up .4% in February, the largest since 7/08.  Remember one of my biggest concerns is inflation.  It can take time to gain momentum, but once it reaches a certain point, then it moves quickly, devaluing everything.  By the way, England and Japan are following our lead in buying debt.

I am quite vocal about how congress is now trying to back-peddle by going after AIG's bonus distribution.  That $700B bailout and that which has followed was done in a haste with no business forethought.  Congress should accept responsibility for these actions and let business get on with business.  Government is getting too far into the details of our financial system, and we history has shown that it is very inefficient.  It is during our darkest hours that we can lose our freedom, without realizing it.

Some other interesting notes:

*  60% of seniors over 60 are now postponing their retirement because of the losses in their retirement accounts.

*  5.47 million people are receiving unemployment benefits.  I wonder how many have used them up and are no longer being counted.

*  An recent article in BBC stated that in 2030 there will be about 8.3 billion people on the earth.  This will require 50% more food and energy and 30% more fresh water than what is produced today (we hear all the time about starvation and water shortages now).  Just imagine, lot of us will still be here. That is only 19 years from now.  

Transparency

I wrote to Senators Shelby, Feinstein, Boxer, and Herger to oppose bailing out the auto industry.  Here is the summary:  "As I wrote to you regarding the $700B bailout, I am writing to say  I am opposed to bailing out the auto industry.  This country is spending hundreds of billions in the short run and I don't see anyone looking at 'saving' something for future unknowns.  Also, why give money or loans to the automakers who have the same business structure and management that brought them to the financial situation they are in?  This country cannot afford to keep 'rescuing.'  We will get to a point where the U. S. cannot rescue themselves when the foreign investors finally say 'enough is enough' with buying our bonds and treasury bills.  The government needs to start showing its citizens how to 'save' money by setting the example.  We are on the wrong track and moving at lightening speed. To get off this track will be painful for most of us.  But the time is now.  I don't want to see our kids, grandkids, and those to follow bear this burden.  We need to resolve it now.  Thank you for listening."

Since I wrote the last email, looking for threads, I saw a few interesting ones.  First, over the next 18 months, banks are going to cancel lines of credit from credit cards to the tune of $2 trillion.  Second, money for mortgages are shrinking and the forecast is that it will push the price of homes down another 20%.  Contrast this with what our government is doing; flooding hundreds of billions into the banking system for the purpose of providing stability so money will be loaned to consumers.  As you can see this is a paradox, yet it is prudent on part of the banks to be conservative.  With the job losses mounting, it will be very important not to loan money to those who do not have the ability to repay.  I see our top leaders having no affect to the bottom line, regardless of how much money they print and distribute.  It is time to rein in our debt all the way through the system, from top to bottom.  This is already happening, yet isn't apparent because of the government's behavior with its ability to create money and how they are using it.  Now I think this market will drop well below 8000 and stay there until we as a world, not just a country, move in the direction of 'saving' along with spending.  This is a unique time in history and we happen to be alive to experience it.  This is an opportunity for great soul growth if you look at what is going to unfold as a needed correction for the benefit of the whole.

Here is  a quote from Thomas Jefferson in 1802:  "I believe that banking institutions are more dangerous to our liberties than standing armies.  If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."  

I look at this as prophecy that can be changed.  It is you and I, the individual, collectively working together to make sure that our government acts in a manner that serves all of us, regardless of how painful it may be for each of us individually.

One final thought to those who are invested or investing currently.  What seems like a good deal based on the past may not be a good deal based on the future.