Word: bailouts
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Treasury Secretary Henry Paulson's latest plan for the $700 billion bailout fund has many economists responding like Seinfeld's Soup Nazi, "Next!" They say the idea of using funds approved by Congress in early October to stimulate credit card and auto lending is ill advised and unnecessary...
...from under the subprime mortgage meltdown and already analysts are speculating about the next industry crisis, related to the little plastic cards in your wallet. With American Express becoming a bank-holding company this week in order to get low-cost funds and share in the $700 billion bailout pool, it's clear that even traditionally resilient industries like credit cards are feeling pressured. "Credit cards are in line to fall," says Adam Levitin, associate law professor at Georgetown University. "The question is whether they will beat out the auto industry - they're racing for the honors...
...question and source of debate among Obama's advisers. Publicly, they insist that he can do it all, and there is plenty of talk about putting these issues on parallel tracks. But it is hard to see how he can afford such expensive undertakings alongside a $700 billion federal bailout of the financial system (which Obama now wants to extend to the collapsing auto industry) and a new economic-stimulus package...
Except for the soft hydraulic whir of expectations being raised, the first week of the Obama transition was a quiet one. Indeed, the big news came from neither Chicago nor Washington but from Detroit and Beijing. In Detroit, General Motors - the stupendously clueless automaker - begged for a bailout lest it go bankrupt, thereby raising the question: If our resources are limited, why should we invest in the failed corporate past rather than in the technologies of the future? The obvious answer was to protect jobs. But how long would those jobs last without a significant overhaul of the company...
...package - which could easily be doubled to $100 billion - would have five components: • A green bailout for the automakers, with a quid pro quo: they would have to increase fuel-efficiency standards in their cars at least 4% per year and make major investments in new battery technology for plug-in hybrids. • A green-infrastructure fund to make existing public buildings more energy-efficient and provide homeowners with tax breaks to do the same. "This could help revive the construction industry," Hendricks says...