Big Three this week

Well We had a brief pause in the action. I have not blogged since theday before the election because well what could I say. The guy who was up in the polls won and now we are in a wait and see pattern. For sure a lot of waiting since Obama will not take over officially until January 20 but at the same time the current sitting President, George Bush, really can;t move much due to his position and the change in Congress as well.

The funny thing is Congress is feverishly trying to get something through to get Detroit some money specifcally the Big Three Auto companies. Right now, GM is claiming they may run out of money and have to consider filing for Chapter 11 Bankruptcy. The US touts itself as an open free economy but there have been several instances that has proven this not to be the case. The most recent one is the $700 Billion package recently passed by Congress and signed by President Bush. Another fairly recent example was the stimulus package passed back int the winter. Neither of those events take place in a true open economy.

The $700B package is very frustrating since they passed it and it seemed there was no well thought out plan for it. The money they have doled out proved to do nothing since the banks have yet to lower interest rates in order to open financing in this country. The average fixed rate mortgage percentage has not changed since the bill went through as we are still looking at 30-year fixed mortgages being held at a little above 6%. This has some people asking - what are the banks doing with that money? Why did the money go to the banks and not the people of this country?

Back to the Big Three - they will be lobbying to get some of the $700B to the tune of $25B. This will prevent General Motors and to a smaller extent Ford from going bankrupt before the end of 2008. Some economists argue the Big Three should not be helped and allow them go into Chapter 11. This would force these companies to completely restructure their companies. At the same time, the impact would vibrate through out Detroit and Michigan and the US as well as the world. People would be let go from those companies, unemployment would be sky rocket anf suppliers would be hit hard as well as numerous other businesses. Proponents of giving the Big Three money say the economy, specifically MIchigan, cannot endure any of the US auto companies filing for bankruptcy and the effects of it would be rampant through out the system.

It is a time in this country that most people my age have simply never seen and still trying to figure out how we got here. It will be something to look back when it finally starts changing and even more as you look back and the analysts have their opportunity to offer their ten cents on what took place.

The scary thing is this is all in the hands of our politicians. The fate of the Big Three - very much like the government where they are secluded from the "real" world - will be determined by people who only know how to solve a problem by throwing money at it. Money will not solve most of these issues as it will be making tough decisions. Remember when you were younger and your parents told you could have one item but not all of them. The Big Three are going to have to go through that same process. They will have to start making choices and understand those choices will impact their survival.

There will be some drama that gets played out this week in Washington as well as here in Detroit. One thing is for sure - if the Big Three get the money, they will have to play by a new set of rules put forward by the loaner of that money. Those new rules will lead the Big Three into a whole new world.