Gold and silver didn’t do a lot in early Far East trading on Tuesday. The price for both metals bottomed very early in London…and from there a solid rally in both metals ensued…which ended shortly after the Comex opened for business…and that was it for the day.
Dollar firms vs euro ahead of expected ECB rate cut… Traders eye U.S. data, central bank rate cuts for impetus… U.S. November car sales tumble 37 pct
Big media has been beating the drum that if Detroit built more fuel-efficient vehicles, buyers would flock back to their showrooms. But there is an inherent lie in this line of thinking. And if investors buy into this lie, they could end up on the wrong side of the trade when it comes to considering the major American auto makers any time in the future.
Perhaps I am being too optimistic, but I think the government bailout of the Detroit 3 is a foregone conclusion. In the interest of the entire country and the national economy, the government simply can’t let the automakers fail. There is no denying the business model is broken, but hopefully steps will be taken to change that.
The UAW holds the key to the success of the U.S. auto industry. The recent Senate hearing with the CEOs of the big three car manufacturers was better than most sitcoms. The CEOs were unable to answer questions about how they plan to pay back the loans, or just avoided the question, or how long the loans would keep them afloat, or how they would change their business models to avoid asking the taxpayers to bail them out again. It went on and on.
Eric Roseman says none of the “big three” automakers deserves a bailout. Even if they get one, it will only delay their inevitable bankruptcy. Letting Detroit go under will be painful. But Eric says that is better than wasting more taxpayers’ money. And it could help restore some confidence among investors.
The U.S. Constitution has a Bankruptcy Clause (Article I, Section 8, Clause 4). It doesn’t have a Bailout Clause. So why are so many U.S. politicians determined to avoid companies going bankrupt? According to former bankruptcy lawyer Bryron King, not only should failed companies go into bankruptcy, as provided for in the constitution, but also Chapter 11 proceedings should be used to sort out companies that hold unstable derivatives on their books.
The S&P 500 Index (.INX) opened today at 795. That’s the first time the index has been below 800 since April 1997. Eleven years of stock gains have vanished.
This week is shaping up to be another active one on the bailout-and-financing front. First and foremost, Congress returns to work this week to consider a once-unthinkable proposal: Put up billions in taxpayer-backed loans so that Detroit’s “Big Three” can be saved. Expect a fight, however, as the bailout debate finally moves past banks to focus on General Motors Corp. (GM), Ford Motor Co. (F), and Chrysler Corp.
Forget about the office Christmas party this year, says Bill Bonner. That’s if you are lucky enough to still have a job. Throughout the country, businesses and households are cutting costs. And this is only the beginning. Bill says the Obama government will try to take up the slack in the economy. But that will just create more debt problems in the long term.