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Can someone tell me why this bailout wouldn't work?

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Fire_Medic_Dave Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 05:56 PM
Original message
Can someone tell me why this bailout wouldn't work?
Instead of giving the car companies billions of dollars why not give taxpayers a big tax rebate for buying a vehicle from the big three. Like $10,000 dollars or so. It seems to me it would help everyone the consumer, the dealers, local governments, state governments and the automakers themselves and their employees. Is their something I'm missing here? Thanks in advance.

David
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Tace Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 05:59 PM
Response to Original message
1. The Governments And Central Banks Of The World Are Insolvent
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Fire_Medic_Dave Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:02 PM
Response to Reply #1
3. Sorry I'm not that bright you'll have to do a little better.
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Tace Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:11 PM
Response to Reply #3
5. Hey, I'm Not That Bright, Either...
...but there's a systemic failure of the world financial system occurring. It looks like it will overwhelm any bailout effort, in any form.

That said, I like your idea more than giving trillions of dollars to bankers.

One of the arguments I've heard against your suggestion is that it will spark hyper-inflation. Thing is, theoretically, so will what the government's done so far.
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Fire_Medic_Dave Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:12 PM
Response to Reply #5
6. Okay, thanks.
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:01 PM
Response to Original message
2. There is a provision in the bailout for something like that

But it won't work because in order to qualify for a tax rebate, a customer would first have to come up with the cash or a loan to buy the car.

Who these days has the cash? Banks aren't willing to loan.

So the program would sit unused.
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Fire_Medic_Dave Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:04 PM
Response to Reply #2
4. Credit Unions are still loaning money, I'm sure GMAC will loan some.
I'm sure those little details could be worked out since the dealers and automakers are so desperate to move their current stock.

David
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:15 PM
Response to Reply #4
7. But the major flaw

is who is going to be buying the cars? The auto industry needs high volume of sales but the American public is either laid off; scared of being laid off or is paid so poorly they are holding on to their old cars.

And yes a few places will give credit (but don't count on GMAC they seem to be going bust), but there is really not enough places willing to give credit nor are many people willing to take on more debt.
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Fire_Medic_Dave Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 07:21 PM
Response to Reply #7
9. The economy in my state is still okay, so I may have a skewed view.
I think people would take advantage of getting a $16,000 dollar car for $6,000. I could be wrong though.

David
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4 t 4 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 06:17 PM
Response to Reply #4
8. I can't figure it
out for the life of me anymore. I thought I had a really good grasp on it before with the unimaginable amount of money they owed on Credit Default Swaps but now I just don't get it. The only thing I can begin to figure is "stealing" or the swaps are larger that anyone could ever have imagined in a billion years.
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