by guestblogger “Beardy”

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I can’t help but wonder whether the US tax payer would have voted for a rescue package for “the largest industrial company (and fourth-largest overall) to seek bankruptcy protection in the history of American business” ?

So the US government (ie: the US tax payer) will own 60% of GM after the deal completes. As for Canadians buying into this, it seems “odd” even factoring in the close economic/industrial ties between the 2 countries.

The rescue of GM in the United States is being led by an unlikely coalition of the U.S. and Canadian governments and the company’s employees and creditors.

So as Chrysler emerges from a major restructuring and sell-off (mostly to Fiat) and GM are entering a major fire sale. Toyota has made the first loss in 70 years… BMW, Mercedes, VW, Ford, Peugeot, Saab, Fiat, Mitsubishi, Nissan and Kia ALL posted losses… Volvo, Lamborghini, Ferrari, Maserati, Jaguar, Rover have all gone the way of the dodo and been absorbed by bigger corporations. The only major standouts are Audi and Hyundai which posted a (reduced) profits in the first quarter of 2009 !??!?

GM’s Australian operations in the Holden division look to survive the blood-letting in their US parent (for now).

The obvious question to ask is, with all the flow-on effects of losses in so many large industrial corporations, how long will the effects of this economic crisis be felt… 10 years, 20 years, more ?   If you think that is extreme, consider the following:

1. US financial sector in chaos (still) despite USD$ billions being pumped into propping them up by the Fed (US govt federal reserve).
2. Major global corporations being bailed out with massive loans of USD$ billions to aid restructuring.
3. Governments from Australia, America, Japan, Britain, Germany, Italy, India, Russia, etc. have all ploughed billions of money into their economies to soften the hit on their local industries and populaces.
4. ALL the above money is being borrowed… from somewhere….

Basic economics says if you borrow money, it always comes with strings and/or interest…. eventually you have to pay the piper. With such large percentages of GDP being leveraged into these “stimulus packages” and bail-outs, how far into our future have we mortgaged ourselves through the decisions of our governments ?  Note that it does not matter whether the current parties in power are left-wing (extreme=Communist) or right-wing (extreme=Fascist), the decisions have been the same. That only goes to prove that no matter what your political persuasion, your pet politicians are mortgaging your future…. So how does it feel to be deeper in debt without having spent any money yourself ?

“Europe jobs at risk as GM files for bankruptcy”
http://edition.cnn.com/2009/BUSINESS/06/01/gm.europe/index.html

“Holden ‘strong’ despite GM bankruptcy”
http://news.brisbanetimes.com.au/breaking-news-national/holden-strong-despite-gm-bankruptcy-20090602-btc3.html

-Beardy

This entry was posted on Tuesday, June 2nd, 2009 at 5:35 pm and is filed under Economic Downturn. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.