The real estate crisis, the crisis of the automotive industry – Tarp Fund and the new stimulus package
I know the temptation in the details, but the details are the labyrinth, in which the animal involved hiding. E 'be wiser to stay with the automotive industry at the highest level, because this animal is very big.
The first problem is that the automotive industry is adopting a more environmentally 17m/yr paragraph, the base is, if demand suddenly dropped 40% lower, and both the energy and political reasons both the demand in this area stay at these levels is great. E 'energy independence and betterEnvironmental policy that could have happened.
If the volume stays at these levels (which unfortunately is not), resulting in a 40% reduction in oil dependency and a 40% reduction in pollution worse now, and a reduction of 40% in the long term, needs bridges and roads. (See, also, not the weight of the new push for exactly the reason mentioned above, but the focus should be on investments in clean technologies and incentives forEnergy sector and other sectors, the need for technological improvements, such as info-technology for medical records, encryption technology for national security and infrastructure for schools, particularly urban schools, and some, but not strong as Obama on the roads and bridges part of speech. To move forward we need improvements in technology, including hardware (in the broadest sense of the term, not just hardware) technology, production and therefore represents a real highPayment of permanent jobs and jobs should go to these areas, not old same old.) Stimulus package should focus on strategic areas that Obama said in the campaign, (clean energy, education, production work and cost reductions focused health care, while the rest of the $ 100B TARP fund should be in real estate), so that all the stimulus should be "two-fors." The benchmark for the adequacy of specific incentive programs should not so much the immediate effectsJobs (which should also be a factor), but not the most important factor, but if) the need for future government spending (at least 15% annually in the fields so that Year 3 and 4 years (reducing the deficit, both federal and trading) and a significant reduction in public spending.) If you develop a strategic plan that was worth at least a little 'more than the stimulus package would be crap no more than about 5% of investments in the years 3-4 had 1-2 years for bothconstitute a stimulus for 1-2 years and reduce spending on investment structurally necessary and provided for 3-4 years, to about 1% from current levels.
The answer to the first task of the automotive market is so simple and straightforward. It includes a 30% reduction in the value of the principle of commitment and all holders of warrants and putting them in second place behind the government, by decree of the CSAR, and that the law passed by Congress, a 20% cut in workforce industry, 30%pay and benefits of the new Auto Workers, a turnover of 30% of liabilities, current and retired workers in equity, a 20% cut in salaries and bonuses of all employees, to cut (and may one day of rest per week), until the companies are profitable and a 20% increase in the deductible part of all medical and dental expenses, a conversion of 30% of debts to suppliers of capital (in all cases, the capital at low levels current), 20% reduction in the number ofDealer, a 20% reduction in the number of products they sell each case, a 10% tax on cars and SUVs that are less less than 25 meters go / gallon, a limitation of total executive compensation to a maximum of 2m/yr, which prohibits the use of corporate jets, a cut of 50% of advertising budget, which is a 30% increase in advertising for vehicles that increase efficiency and reduce by 70% of the current common and dividend preferred stock performance was. (And, incidentally, a mandate for the energy companythat at least 30% of their alternative fuel pumping stations will have until 2011, and raise an immediate cut in tariffs on ethanol from sugar cane, and a commitment by both manufacturers and suppliers for 30% of their domestic content).
As this is the best opportunity for industry to increase energy efficiency in a roll of 30% of the timetable for transition to the new higher efficiency (hybrids, plug-in hybrid, natural gas, flex-fuel, electric car hydrogen and should) Truckaccompanied by investment of the government that are convertible into preferred shares of the company is 30% and 5% dividend yield. The investment must be ca. $ 75b ($ 25b already earmarked for energy efficiency; Tarp of $ 35B from $ 15 b, a rescue operation and these should be for business financing through the Fed's commercial paper program.) Investments include all hold preferred shares in both parents and funding for businesses by 30% should be except for Chrysler70% of the capital, because it is a private company whose owners have the money yet refused to put money into the rescue and she would take every advantage which means that the head, looking ahead to convert their debt to equity and to keep losing the 30% stake in a successful company. The government should also put a limit on itself that sells all its shares in these companies over the next 10 years.
Only within the dictates of the above, the Bottoms UpPlan of the sector and its individual companies can be useful. I know that Congress can not be coherent enough to produce the warrant to a simple and coherent CSAR perhaps the appointment of them. These are simple to understand and fairly on board with the various interest groups less than 30% "cut", not lose, in order to move a lot more (and perhaps all) and the possibility for future summits of the participating companies. (With a slight distortion in the direction of work and traders that the trendDirection is not too many jobs, not to be missed especially at this stage.) If the above dates are, and not dictated by a trade exhibition and the group search in detail, it was almost kind of time frame and process failure , which is too long and then force bankruptcy.
This plan will be reduced to an immediate reduction of 30% dependence on oil and 30% reduction in emissions from road transport and 30% need to come with another 30% a year after that, in severalYears, as a rule, would have at least a decade, will not be able to blow.
It 'also very profitable because the demand is very likely would be only 10% -20% lower from the higher level 17m/yr in 2010 (indeed, perhaps as 17m/yr), so in fact the companies are profitable and in 2010 a very profitable, because after the Americans to get loans to buy them like crazy, especially when the producers take their advanced energy and cost efficiency, in fact,Vehicles.
In a few months after the negotiations on tariff reductions for democracies, at least a 20% tax on imports of OPEC oil, and imports from China (or yuan / $ retrofit) are all components of domestic help and all essential areas and it is necessary to avoid deeper and deeper in the hole, because it happens all the de-leveraging of the individual and the industry by the dramatic increase in financial leverage of the government, both federal and state and local, in which these needsTo avoid taxes and reducing trade deficits that the next and biggest bubble that burst. As I mentioned in a previous article, the underlying liquidity of the credit crisis is a huge casino monetary policy, with interest rates still too high and could be quickly, without the government on how to solve a lot of pressure.
Since we have found solutions as a way with the first problem, namely the question of the collapse of the housing crisis, with the values of housing and housing demandLate. It is, as usual, three times the solution using a) monetary policy, achieve long-term (30 years) mortgage interest rate to below 5% for good credit, fast by the Fed (buying Fannie May paper is financed by far less short-term T-Bill auctions and auction most renowned 30yrs), for the general demand for the building, and the decline in the discount rate to 5% b) a loan mod "duty of program for all banks, prior to any foreclosure, with 90 days for all participants,Compromise allows banks to take warrants of home ownership and therefore on its reputation, whether the loan over 60 days delinquent, it is possible (for those who want and still stay in their house if the payments of less than 20% or so here) (This was also the FDIC has proposed and implemented the plan) and a partitioning program with TARP funds of $ 100 b, where the government acquires 20% stake in the house by the banks to go through the process of modneed to go to foreclosure though, because the owner is too upside down or has lost too much of their income. The government buys 20% stake by the banks to 80% of mortgage value, banks will automatically lose 20%, unless the government in, and the government of the banks that own the foreclosed properties that lenders have a conversion – Management Corporation, that the prices of these properties. (The federal government has, in this case would be the allocation of funds forMunicipalities and cities to implement this program.) Therefore, the three components of the problem addressed directly and the rate for all needs, "mod" for those with less payments may still remain the property under his head, and those which is to foreclose, at least one unit of rental, the rental market that is larger and therefore more accessible.
These measures will allow the resumption of the housing market from Q2 09
Plans for the automotive industryCrisis and the construction industry are beginning to avoid destruction, but so. That is, is because they are stationary, which plans to enter into force until the industry wants to bring (both in cars and homes and so well the financial sector could be invited to join them), from the bottom up to Congress that the relative consensus among all parties that believe are fair and best for all, before 1 March 2009, knowing that if I disagree a little 'better than what remains. (Of course,Congress at that time, these plans can work to improve the details for the better with them or independently of each other to know.) (What if I disagree, this work now they are all at least 90% losing is what lawyers and judges could do to keep after having their own celebration in bankruptcy, with only the winners, and in this case, the liquidation of many large and medium-sized and small companies and a very severe recession , which lasts until 2009 and maybe more.)
Please stop cookingFall and do things, concentrated as above, because so far the Congress and its leadership is proving to be seriously inadequate, and all others so far is only in the way it dealt with the BS.
