Wednesday, September 10, 2008

Auto's on Deck

Well, now that we have a nationalized government mortgage company lending 75% of the mortgages in this country, we can now move on to step two which is autos.

It appears the government is deciding on how much to provide auto manufacturers to bail them out of their current troubles. The numbers being heard most are $25-$50 billion. This will just be a first direct investment, as they will need more indirectly to help deal with all the auto loans that have been securitized over the past few years that Americans cannot afford to pay. The losses will pour onto balance sheets just as the home loans are now.

But why are those losses not coming in right now? Great question. It's because Americans are paying their bills with their shiny new credit cards. There has been a surge in credit card use over the past few months, and the media has gushed over the "profits" that credit card companies will be receiving from this new "business."

Americans cannot afford to pay back this new credit card debt they are running up, and this is the last gasp that is the American consumer, which also happens to be 70% of GDP.

There is no limit to what the government will do now that they have been allowed to take over Fannie and Freddie. Perhaps by next year we will have a government mortgage business, auto business, and credit card service. These will run along side the post office.

Of course there is no money to pay for these new government programs, and the new money will be printed and taxed to the American public in the form of inflation, the hidden tax that they do not yet understand but will before it's all over.

http://www.baltimoresun.com/business/bal-bz.cars10sep10,0,4565657.story
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