The bailouts appear to be a failure, there is little confidence in the stimulus package and — most importantly — the public is still scared. It is very hard to see the rainbow through the economic clouds still hanging over America.
General Motors and Chrysler returned to Congress this week seeking some $14 billion more in bailout aid, carrying promises of job cuts and company turnarounds. This after both companies had already received billions in bailout funds just months ago. Chrysler says it is looking to trim 3,000 jobs to ease the money crunch while GM is promising some 20,000 U.S. job losses. We certainly see the need to even out the books and cut expenses for these two former giants, but adding nearly 25,000 people to the unemployment rolls is not a good start to rebounding the economy.
We also don’t see much help coming from President Obama’s stimulus package. In fact, there aren’t many economic experts jumping on the stimulus bandwagon, either. What we needed was a confidence-building plan and what we got was political drivel.
Confidence is the key. And, right now, the public has none. Zero. An economic crash is fueled by fear. When we think money is tight, we squeeze it a little harder. When we think the economy has crashed, we bury our cash deep, deep underground. And right now our money is near the Earth’s center.
GM and Chrysler are most certainly in trouble. It’s no mirage. Both companies have unfriendly labor contracts and even unfriendlier pension responsibilities. They also have money-losing automobile lines. But the biggest problem is that people aren’t buying cars because we are hoarding our money. And with unemployment rising daily, we don’t see many opening the checkbook too wide anytime soon.
We need people to spend money for this economic crisis to end. But the public must have confidence that their cash won’t dry up for that to happen. What comes first, the chicken or the egg?
Perhaps the President’s stimulus package will work, unemployment trends will reverse and confidence will be restored. Right now, it is our best shot. And that is scary.
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