Obama Gets Tough With American Automakers

By giving them more money. What, is this a joke? He's going to cover their warranty costs for them by making sure everyone knows Uncle Sam has the warranty covered.

If the news wasn't so adamant about telling me that this was "tough love" and that "frustrated Americans" (and just how many Americans were surveyed for that article??) were happy he was getting tough, I might just think Obama just caved in.

And this startled me: "Fiat is prepared to transfer its cutting-edge technology to Chrysler," he said. Fiat? Maybe things have changed since my mom's Fiat X1/9 was built....one would hope.

Depression, Here We Come.....

There's only denial left now, at least, that's how I see it. In the last year, the DJIA has lost 46% of it's value (!) . Citibank has lost 95% of it's value. Bank of America has lost 90%. GE has lost 80%. Ford has lost 70%.

Here are my predictions for the year ahead:

Inflation (thanks to the nearly $3 trillion spending spree) is not far away and will be rampant. The low prices and great 'deals' that are to be had right now are going to end fast as competition diminishes due to manufactures leaving the market (bankruptcy, mainly), and production cutbacks by the ones who survive.

When inflation comes (likely within the next year), the housing market will lock up due to high mortgage rates (remember the 16% rates of the early 1980's? I think we'll be at least that high). The 1% of buyers who can make it through the lending requirements maze with their 20% cash down-payment will find that at a 15+% interest rate, even the 'cheapest' of homes is unaffordable. Many lenders will leave the market all together, as the uncertainty of inflation and judicial modifications of mortgage contracts makes the business just too risky. Homeowners are going to have to get used to staying in their homes for the next 25-30 years. They won't be happy.

Production cutbacks will lead to high unemployment rates. Foreclosures will dominate the real estate market (much more so than today). Pension funds and 401(k)s will be virtually zeroed out. States and local governments will struggle to make ends meet as property values nosedive.

A rise in crime and economic frustration will lead to civil strife. There will likely be riots worldwide as citizens vent their frustrations against the perceived 'elite' who got everyone into this mess (and who's tab we'll all be picking up).

In short, I predict a real depression is in our future. Right now, the economic pundits on CNBC and elsewhere are looking for a bottom to the market. 6 months ago they chortled at the thought of a severe recession. In the next 6 months, they will be using the 'd' word with regularity.