Talk of The Villages Florida - View Single Post - Everyone Wants A Piece Of The Action --Get Mad!
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Old 10-20-2008, 11:05 AM
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Default Yes, But...

...as an ex-banker, I can assure you that the additional capital reserves resulting from the Fed's purchase of preferred stock of the banks will be used only to make loans to the most creditworthy customers.

I don't think you have to be a registered financial analyst to figure out that none of the auto companies would fall in the category of "most creditworthy". I'm pretty sure that you won't find any of the banks making loans for "relationship", "for the good of the community", or for "the good of the country" reasons for a long, long time, if ever again.

Our auto companies do not have competitive products when compared with foreign competitors. (I hate to say that because one of my sons and three grandsons rely on the success of Ford.) Personally, i don't think it's the responsibility of private companies--banks--to save them if the teeter on failure. If the companies are so large that it is felt that they should be propped up financially, then I think it's the government's role to do so.

Having said that, and returning to the original subject of this thread, the government may again be faced with a decision with some bad elements. If the decsion is made to inject money to permit GM to buy Chrysler, then the outcome will be survival of both companies--but some already rich LBO/investment bankers will become incredibly richer with "our" money.

It really raises a more important question--should we simply let capitalism and the free market work, probably resulting in the failure of our auto industry and hundreds of thousands of people out of work? Or should the government get involved to nationalize the industry like they did to the banks, investment banks and AIG?

Free markets or socialism?--it becomes a more difficult choice when real companies, real people and our very real national economic future is involved.