De Graaf

The Truth About Bailouts

In response to commenter Ramses II;

He states that just before the crisis, GM was turning the tides by developing green cars basically. Well I can assure you, that the oil and automotive lobby in America is one of the strongest around and have never favoured to pursue a true green car.
How are you in your sane mind (I hope) to state that GM has been on the right path. They have a history of 20 years of mismanagement. Union contracts liabilities reaching into space and Medicare obligations every other Wal-Mart worker would be crying for to have.

Now when the shit has hit the Van (instead of an F), they must restructure and in the wake of an unavoidable crisis, they beg on their knees for 'the green to back' them up for restructuring, survival and sooner or later they ask for Medicare bailouts.... Come on! Wake up.

When Toyata and BMW came to the US manufacturing market, the GM's of America gave up instantly. They were not capable or patriotically enough to put their shoulders to work and become competitive. All to blame on their management. The workes just follow orders. Respect to all American workers though.

The backbone that Ramses II talkes about, is a crippled one. One that has lost the competitive advantages long time ago. It's unable to walk up straight. We actually have a safety-net for that issue. Chapter 11 or bankruptcy. Restructuring some bones with surgery.

Wake up son. And loose that credit card of yours.

Why Bailouts Are Not the Answer

Hi Peter,

Again, I totally agree with your perspective. But tell me, why don't the so called 'puppets with strings' don't see this and act accordingly?

Is it because they are not willing to encounter the political face loss. Or do they just love the remedy of debasing the currency patriotically and let the foreign lenders pay the (inflationary taxed) dollar bill.

My point is, that with this insane spending packages they come up with every week nowadays, there comes a moment in 2009 when the foreign willingness to back up Treasury is halted.
With inflationary practices the US Treasury tries to debase their currency with the smart tool of expanding the money supply. And you and I know that the inflation of our (world) currency is not measurable with tools. You can only see the effect of it.

The large indebtedness of the US consumer, and the state, its actually coming to the point of no return from what they are doing. Because this type of inflation the Treasury pursuits, faces another integrity problem and correspondingly; National security.

All this debt that fueled the American economy, is now being filled with an inflationary torrent, like you pointed out nicely. But add the fact that the same dollar is being funded by mostly foreign lenders, who are not yet feeling the effect of inflation in their hands. This is like a cigar from their own box!!

Only because the effect of inflation (higher prices with the same or smaller amount of goods) is not yet visible, and will not be visible for years! That is because of the debt position America is in. They now use 'their own' money (printing press money) to fill the debt bases gaps in the economy. Thereby NOT showing inflation. And in the meantime the lenders keep on propping up cash in Treasury bonds, now starting to show lower rates due to the Helicopter Bernanke.

Its insane! In 2009 or 2010 and far beyond their comes a Tsunami (T of Trillions) of inflated dollars on the markets, that instantly crashes the dollar currency. Thereby fueling havoc among the US foreign lenders.
I suspect it follows with great turmoil and political instability as governments fell into the trap of propping up a failed dollar. Just as the failed US economy right now.

There comes a time, this behaviour will be punished. And I don't like this development at all Peter.

Good article,

brgds