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Everyday we hear something new on the news about what is happening to the housing market across the entire United States. We see our neighborhoods flooded

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Why are we bailing out Detroit?

I ask myself this question often….Why is the government getting involved with private sector bailouts?

It seems that the economy of this country is turning into a big mockery…

We are bailing out corporations, from banks to car manufacturers, have no oversight of the money, and deal with CEO that refuse to give up their pay/bonuses to save their own companies?

That makes no sense…

For years, banks, private organizations and car manufacturers had record profit years, at which point they gave nothing back to the country. I cannot imagine why bailing them is an option and even worst actually going through with it.

Lets look at Detroit in brief

Chrysler, GM and Ford make mediocre products, have mediocre service and have no desire to improve upon it, they have operated that one for years and despite losses continued in the same direction. WHY????

Why should your money be going to waste helping pay bonuses for CEO that just dont care? Your tax money is helping these people continue their ridiculous business models and only support themselves till March 2009, which is right around the corner.

Lets look at what they could do instead to help you…

The bailout would make sense if the following was to happen.
- CEO pay was cut by 75% for 2009 with no bonus
- Increase quality of current models and create better efficiency.
- Decrease prices of current existing models and reprice new ones
- Create a service atmosphere comparable to Japanese competition
- create a better organizational structure
- Devote more people to R&D and hire more employees
- Decrease costs by using local manufacturers of raw materials.

This is just to name a few…but they are not doing anything…and yet we are still bailing them out at your cost.

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Everyone, no matter how savvy…knows we are in a recession.

But not everyone, knows what a recession is.

So what is a recession?

According to the real definition of a recession, it is simply two quarter of negative GDP…In other words its 6 months of negative growth for the economy. The reality however remains that the real definition of a recession is not a negative one, it is simply when the market needs an equilibrium.

A recession is a market adjustment that is caused by the boom of an over inflated market which in this case was real estate…Read “what is happening to your home and why” to understand.

In Simple terms, the real estate market had too much player and they were winning to fast,which was causing other markets to grow…the only negative was that it wasnt real growth, but rather inflated growth based on money people didnt have. As an example, someone’s home was worth 200k more than they bought it in less than 6 months, they refi or take out a home equity and re spend the money in lets say “cars”, if you multiply that by 50000 people that did the same thing, then you get an over inflated car market, because car dealers sell more than ever BUT this trend cannot keep going forever and so therefore a recession readjust the market that started causing this. Real Estate needed this adjustment and it got it…
But then why does it last so long…

Recessions are known to last about 9-10 months but this one seems to be taking much longer. WHY?

Well, its quite simple…it seems that our economy is in a recession, but the housing market is facing a depression and therefore a depression combined with the recession that the other markets are in takes a bit longer to get out of but in due time will occur, so ride the wave.

The global recession we are facing is causing commodities (gas, crude oil, goods) to be traded at all time lows and therefore making life affordable. Lets keep in mind however that even commodities go up and down and therefore you should be prepared for rising prices before the rest of the market

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He has been in office only a few days and has already made some great moves...Most noticeably around the famous torture prison and the salary freeze for those

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We have all witnessed congress approve the 700 Billion dollar bank bailout a few months ago, it was literally in the news every moment. The news was reporting

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First they pulled the plug on the Viper, now all the high performance Vseries line is on the brinks of extinction. GM needs to refocus their plans as they are truly struggling. They have made some terrible choices in the past build some terrible quality cars…now its all about to change according to them…They are ready for a change and want to survive and so they are changing their priorities quickly…Good move or another disaster?

GM disbands unit that creates high-performance vehicles.
General Motors, focusing on mainstream products in a battle to survive, has scrapped a unit that produced high-performance vehicles.

GM on Wednesday disbanded High Performance Vehicle Operations, which is based at the company’s suburban Detroit technical center, and redeployed its engineers, spokesman Vince Muniga said.
“All high-performance projects are on indefinite hold,” Muniga said. “The engineers are moving into different areas of the organization, and they will work on Cadillacs, Buicks, Chevrolets and Pontiacs.”

The unit created low-volume vehicles for GM’s divisions designed to appeal to enthusiasts and bolster the company’s image. Products included V-series Cadillacs and the Chevrolet Cobalt SS, HHR SS and a V-8 version of the Colorado.

Muniga said there are no plans for high-performance versions of upcoming cars.

The move is in the spirit of GM’s viability plan delivered to the U.S. Treasury Department on Tuesday. In the plan, GM said its future-product focus is on fuel- efficient cars and crossovers. It also pledged to increase its current offering of six hybrids to 14 by 2012 and to 26 by 2014. GM also boosted its request for federal aid by as much as $16.6 billion.

The High Performance Vehicle Operations unit could be reinstated once GM regains its financial health, GM’s Muniga said.

“These guys are pretty good at what they do,” Muniga said, “They are moving into different areas to work on core products.”

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Even though Chrystler owns Mercedes, it still seems that mercedes is doing much better than their sister company and still helping its workers keep job, they are doing so this time by expanding and continuing the famous G class wagon.

Contracts have been renewed for the continued production of Mercedes-Benz’s G-Class at Magna Steyr’s facilities in Graz, Austria, until 2015. Currently producing the G-Class in three, five-door, convertible and all custom versions, the Magna International division in Graz has output some 200,000 vehicles in its 30 years - satisfying consumers and government contracts alike.
The renewal reinforces Daimler AG’s committment to and confidence in Magna, who developed Mercedes-Benz’s 4MATIC technology and consequently assemble 4MATIC-equipped E-Class vehicles. G-Class orders in the amount of 1,200 units from the Australian Army help Magna project itself as a long-term, reliable partner to its clients. Stability is however conveyed more clearly by a balance sheet totalling a net cash position of $1.5bn.

Thanking Daimler AG, Siegfried Wolf, Co-CEO of Magna International, stresses the importance of the news for the local automotive industry in the region of Styria, South Austria, at a time of job losses in the sector and congratulates his staff on their achievements. Further notable achievements include the design and build of BMW’s X3 at Magna, Jeep Grand Cherokees and the upcoming BMW X1 and MINI Crossover

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If you havent heard why yet, let me explain…the market saw a 9% jump this week alone, which is phenomenal. This came shortly after the three major events that occurred this week. The first being GM saying they will not need another injection by the government…The second being 4 banks giving back bailout money…The third is our ponzi scheme criminal behind bars…

GM not needing money comes as a surprise as they had earlier in the month declared they would be facing challenging times. Car sales have been cut from 18M to 9M and have been beating the industry down to near dead. Earlier in the year GM did lay off large numbers of employees who were still under the old union contract which was a great move. Union workers took major profit sharing pay during the times GM was doing good but kept getting paid despite hard times for the car giant.These cuts along with a reallocation of assets and resources seem to have helped GM stay the course in 2010.

4 banks giving back money. and more to follow? That’s right Citi bank, the worlds largest bank gave back bailout money, along with 3 other banks, who said they are capable of sustaining their own and will not need further injections…Many banks are following their examples and will return money shortly…WHY? Well, its simple banks need capital investors from the private sector to remain afloat and so for those investors to gain confidence, they must be able to demonstrate they can survive and need to move away from the idea of nationalization which seems more and more mass media and was causing fear amongst most investors.

And last but not least, our friend Madoff is finally behind bars for the rest of his life and most of his assets were seized, his assets were worth about 823M, most of which will be used to repay his debt once the investigation is entirely over. This comes at a necessary time to help rebuild confidence in the justice system and its ability to deal with those that cheated the economy and the people.

So what does it all mean…Increased consumer spending for

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That’s right AIG insurance just paid out some major bonuses to their executives, and yet continues to struggle as an organization…So what are the bonuses for? Well according to the dictionary, a bonus is a merit awarded for an achievement. In banking, bonuses are usually awarded due to the financial contribution one makes vs their growth goals.
In other words, you only get a bonus when you meet your sales numbers and are profitable.

In the past few months AIG insurance has been known as one of the major financial organizations that borrowed money under the financial bailout program. AIG insurance borrowed money under this program to keep itself alive through 2009. The financial bailout was meant to help the struggling financial sector with temporary funds to keep themselves afloat. AIG Insurance however used 1% of their bailout funds to award some significant bonuses to their executives, which raises a question of ethical standards. Is it ethical for AIG to actually pay 1% of that money in bonuses to individuals that actually put them in this mess to begin with? It is clearly wrong in my book.

AIG insurance has no business spending bailout money on bonuses, and definitely has no business attempting to justify their mistakes. It is simply wrong and should not be taken lightly by the Obama administration. As taxpayers, we have paid major money for this bailout and yet hold no say over the path the insurance company should take. This is an outrage and a great example of why this economy is not getting fixed any earlier.

As a country we need to start paying attention to these things and need to make sure we start taking action by making sure our congressman and senators know the disappointment we share in regards to folks cheating us of all of our money…

Please leave us a comment and let us know how you feel about AIG insurance.

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Fritz Henderson, the new CEO of GM speaks up…He has plans for GM and is doing his best to reinvent the company…He says changes will be made and he will not wait around for Obama to dictate what those changes are. He wants to make the right budget cuts, reorganize the company’s priority and and make people work harder to prevent further cuts down the road.The company was given a June 1st deadline to change its high debt balance sheet to a profitable company.

Gm had originally planned to cut 47,000 or so jobs by the end of 2009 and has now announced that they might be doing so earlier than expected in order to cut debt and increase profits. It is a fact that GM houses over 244,000 employees and that bankruptcy would impact our economy drastically but GM must remain conscious that keeping its Union Workers on payroll will probably mean it will fall.

GM has to somehow find a way to negotiate with union workers and their respective unions a plan to help the company remain afloat without having to pay those awfully large wages simply due to people’s seniority. Henderson also made a note that GM must get rid of its 49 billion in bond debt and secured loans, this money also covers almost 400,000 GM employee’s health care that are now retired and collect retirement benefits.

Henderson finally concluded by saying that GM would most likely have to close 5 of its factories by the end of the year and might claim a small bankruptcy to wipe its debt and try to start fresh…Obama’s administration did said it would help out GM with loans and warranty commitments but changes need to be made quickly to ensure GM survives on the long run…

Once again another large company that is willing to claim bankrupcy and dump its debt on tax payers simply due to its poor business model and garbage product…Big surprise.

Do you think its fair? Leave a comment…

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