If cars don’t sell, dealerships are in trouble. If dealerships get into trouble, they won’t buy more cars coming off the assembly line. Hence manufacturers will stop making cars and there will be even more layoffs. And the layoffs will ripple through the value chain. The suppliers to the auto makers will cut back and layoff employees so more houses will then go into default because mortgages can’t be paid. Cars will be repossessed as car payments will be missed and these cars will come onto the market at a deep discount furthering the car sale issues and the cycle will continue to spiral down. We have been grinding to a halt: No credit and liquidity in the market; no consumer purchases; no more credits cards being issued; no more retail sales; and on and on.
In regards to tonight’s debate, the scary thing is that the only candidate with any true small business management experience is Sarah Palin. She ran a fishing-based company with her husband and she drove a budget for a state. If it is all about the economy now, I always worry about electing politicians that have never really worked in industry or started a company or made a payroll. Let us hope each candidate has smart people surrounding them in these matters. I almost wish that each candidate was forced to introduce the teams that would support them post election so we could meet who would really be running the country and the economy on the go forward.
These problems are deep, systemic and complex. They aren’t handled via sound bite, quip or political showboating. My bet is that most of the politicians voting on these mega bills don’t know the difference between an income statement and a balance sheet; about synthetics and derivatives; short selling; mark to market; and all of the arcane financial instruments that got us into the mess we face today.
When we have real issues with autos; credit cards; mortgages; gas prices and availability; and healthcare costs, how can we ever say our issues are about Wall Street and not Main Street?
Careful, Ted. You almost gave an opinion on politics there.
If you want to know what I think…..
http://sapper.blogtownhall.com/
This exactly why Mitt Romney would have been the better choice.
Are you kidding me? Running Alaska is like running Saudi Arabia. They run a surplus every year because of oil exports. Running Alaska is not like running say California or even Kansas where they have to make tough decisions based on limited resources. Palin spouted a bunch of talking point and attacks and directly avoided many of the questions. Even though they haven’t run a fishing business I will take my chances with Obama and Biden thanks.
ted, sarah ran a fishing business in alaska, so somehow she has the type of executive experience to solve this country’s problems? by that logic, since i have managed my son’t pee wee hockey team, i am qualified to run the caps! do you want to tell george he’s out of a job or should i!
GO CAPS. See you next saturday to raise the banner.
Ted for President!
1) How many of the House and Senate have actually read the 700 pages of the potentially $800 billion bill the Senate passed and the House will likely consider tomorrow? Why do we trust them to vote on things they haven’t read?
2) We have three of four major candidates for President and Vice President coming out of an institution that has proven itself unwilling or unable to pass a budget on time since 1998. Why do we trust any of them to run the country?
Ted Leonsis for President. If you could do for the country what you’ve done (so far) for the Caps, we’d be far ahead of the game.
Help me understand, Ted. I have a car payment I can make. I have a mortgage I can afford. I feel safe in my job. I have no credit card debt. I enjoy a few luxuries once in a while, including an occasional professional hockey game at Verizon Center. I haven’t been irresponsible. I haven’t lived beyond my means. I even have a little savings. So why do I need to bail out all the over spending, instant gratification addicts, greedy opportunists, corrupt hustlers who are crying in their overpriced beer? Seriously. AOL went through hard times, maybe made some bad moves. Did the government bail out AOL? You had to lay off people. Did you insist the sky was falling? Or did you do what you had to do to bring your business into line with reality? I don’t like to see people suffer, but I don’t like to see bad behavior rewarded. Are we rewarding bad behavior and poor judgement? Thanks.
Paul
So this argues that the way out of this mess is not merely to bail out the banks, but to stimulate the market by moving to the next boom to REVERSE the cycle. Since everyone agrees that this will be green tech (excepting oil-money-hungry republicans) here’s a better use of the final 350 billion than giving it to conceited New York bankers who will still make the rest of us squirm to get a loan while they dine at Le Cirque on our money.
Let’s buy 10 million plug-in electric hybrids and 5 million home solar and wind systems and give them away to taxpayers by lottery. (About $300 Billion) That will not only create about 5 million new jobs which will ease the banks’ fears about repayment of credit cards and – hello – make it more likely that the folks in Flint and Saginaw and Ohio can PAY their mortgages. But if you happen be lucky enough to get a free solar electricity system and a free plug-in hybrid that runs 40-50 mles without gas, it’s conceivable that you could cut your gasoline bill by 85%. That’s the equivalent of a $6500-7500 tax cut for a million families or more, which Congress can’t repeal. (Think that money will be hoarded as it currently is at the banks?) Before anyone rails about socialism and free markets, go read that great ‘socialist’ James Woolsey, former CIA director or strategic intelligence site, Stratfor about Abqaiq. Mr Bin Laden and Mr. Al Rawaziri are likely to strike the Abqaiq oil node again. (Even Sarah Palin noted this possibility in her acceptance speech.) If we can reduce our demand between 15 and 20% in the next year we would be a long way toward making that strike meaningless because we could survive without Saudi oil (our only top 5 provider in the Middle East.) So this is an urgent matter of National Security with more direct consequence on our lives than whether the Shia and Sunnis can work things out in Diyala province.
As to experience with a balance sheet, aren’t the guys who examine balance sheets for a living responsible for this mess?! ? Einstein said, “you cant solve a problem with the same thinking that created it.” We live in a moment where two guys in a cave halfway around the world can bring us all down without firing a shot in our country. Don’t believe it? Google the risk factor and oil prices and then look at the estimates of $200 a barrel oil or even higher if Abqaiq is offline. There is a distinct possibility that there won’t be just high gas prices but even NO GAS at the pumps. How would the American economy function then? We won’t solve that problem with bombs. It’s time to defend ourselves by taking the oil weapon out of the enemy’s hands. That means drastically and rapidly cutting demand with the urgency of a National Emergency. If we happen to be helping our neighbors further down Main street who are in a jam and building the world’s first 21st Century economy at the same time, that sounds pretty good to me. Or we can do what we are doing now and sit on our sanctimonious, self-satisfied behinds and watch China build it and pay through the nose for it as they overcharge our banks that they will own:-)!