GM and Chysler Bankruptcies

[kandrathe]

Just pass along the costs to the consumer. If the society is addicted to fossil fuels (and it is), then just crank up the prices. People will use less, but a market-clearing price will still exist. Poor people might be priced out of the market, but rebates and progressive taxation can compensate. Energy consumption goes down, efficiency goes up, greenhouse gases go down... sounds like a win to me.

Ah, but energy prices are multiplicative in the supply chain. Part of what has destabilized this latest economy has also been the summer 2008 period when oil peaked over $145/barrel. What hurts an economy is not necessarily raising the price, but the shock of raising it so quickly. This is also what I'm forecasting with GM and the supply of vehicles. Also, it's not just drivers that suffer, it is also travel, and destinations. If people drive less, or fly less, then hotels, resorts, rental car companies, restaurants, and etc. will also suffer from a lack of business. This kind of a change has ripple effects in causing unemployment, and depresses the entire world economy. Then, we can talk about the price of fertilizer, and therefore food. Then, there is the cost of plastics, and other petroleum based products that are not used for fuel.

Maybe it has to happen to satisfy the "greens", but it still is going to *really* hurt, and trust me, when Joe average American is hurting, Africa and parts of Asia will be bleeding.

Afterthought: Why would you rescue a dying company, only to kill it? Is GM's 'dignity' really worth billions of dollars? To anyone?

The problem is... politics. You already have many grumpy congressmen who face dealership and plant closings in their districts. Spending a few hundred billions in borrowed money is better than a full fledged uprising. You need to promise the Unions that they might get some of those high paying manufacturing jobs back some day. You know, because its about *HOPE*.