Friday, December 12, 2008

Bailout, rescue plan or lifeline?

The term given to the Auto Industry debacle is not bailout nor is it rescue plan, but a lifeline. I guess this is more palatable. The hard cold fact and truth is that for every $1 billion in government aid, it burdens each American Family $10. That $10's is your family’s share of the burden. This burden of course will not be paid this year or next year, but even worse is that you and your family will pay forever the yearly interest cost. It may not be much, 50 cents per year, but over time compounded, those 50 cents add up. After 20 years, your family will now be paying $26.53 a year in interest for the $10 congress borrowed this year and that will not include paying anything towards the principle.

Our elected representatives have had this same method since 1958 to the tune of $9.3 Trillion. Borrow money, pass the cost on to the next year and let someone else figure out how to pay it. As a result, the U.S. Dollar fell in value, resulting in record oil prices shoving us into the worst recession in decades if not worse.

Borrow, borrow and borrow more. A borrowing we shall go is the tune our representatives have been singing. The problem is borrowing is what got us into this mess to begin with.

  • Loans to people who could not afford them
  • Credit loans so people can buy now instead of saving to pay for it when they could truly afford the item.
  • Washington borrowing $9.3 Trillion over 51 years to satisfy special interests, everything from tax credits/exemptions for mortgage, charity, children, elderly, medical, taxes, IRA, 401K, Roth IRA, ethanol to spending projects such as bridges to no where, methane gas from cows, to buildings to house private collections such as the Kruse museum.

We wanted it now, did not want to pay for it, did not hold our representatives accountable for their actions and now we are basically broke. Now these same representatives want to borrow trillions in the hopes it will fix the economy, when it is this very borrowing that put us into the worse recession in decades.

The UAW who knows the company they work for cannot afford their wage and benefits, yet will not renegotiate new contracts that fit within a business plan that can produce cars that people can afford and want to buy. If there is no demand for a product, then that product dies out. That is why there are very few companies making the slide rule. That is why there are few people plowing fields with horses. It is why roman gallies have disappeared. If there is no demand for the product, it ceases to exist except in collections. The auto industry is no different. If you fail to change and adapt, then you will be left behind.

A failure on your part to change, adapt and help yourself does not constitute a need for me to give the UAW a handout.

Thanks to the U.S. Senate, the taxpayers have a reprieve.

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