Let them eat their credit cards…
Mohamed El-Erian, PIMPco co-CEO spoke on CNBC today stating Washington’s latest response to the financial crisis is both necessary and sufficient.
Which, for us, raises the question posed by Mish’s Blog: Since this crisis began in the consumer credit market with rising defaults, resulting from the decades long accumulation of consumer debt to replace stagnant wages and income, how can it be resolved by further impoverishing these same consumers with greater public debt and inflation, in order to drive them even deeper into debt, by advancing them more consumer credit using the money just taken from them?
“The financial system is the heart of the economy,” El-Erian asserted (we loosely paraphrase).
To which replied a co-host, (again, paraphrasing) “Well, that implies the auto industry is a simply limb, which can be amputated.”
Thus pointing out we can live without a limb, but we can’t live without a heart.
“That is a political decision.” Was Mr. El-Arian’s reply.
Meanwhile, GM has announced it will be closing a number of plants, including a stamping plant in Michigan, which, alone, will result in the lay off 1340 employees:
General Motors Corp. plans to close its Grand Rapids stamping plant by the end 2009, GM told workers today.
The 73-year-old plant that stamps parts for SUVs is just the latest to fall under the axe as GM works to cut $10 billion in costs as part of a plan to have enough cash to sustain itself through the current economic downturn.
Earlier in the day, GM said it would accelerate the closure of its Janesville, Wis., plant to Dec. 23, more than a year earlier than originally planned.
Earlier this month, the company said it would accelerate to Dec. 23 the closure of its Moraine, Ohio, SUV plant.
We suppose the now unemployed employees of GM will be able to drive their credit cards to their new jobs at the local 7-11.