"At the edge of apocalypse"

Speaking to a friend in the auto business last night, it is easy to UNDERESTIMATE the new reality should the Big 3 go bankrupt outside of Washington hand-holding. His suggestion was not outright bankruptcy, but a DC-managed "effective bankruptcy." There are many reasons:

The unions need busted but that takes political will - GM cannot do it, the government must force it. The loaded cost (all-in) for a senior assembly-line worker is near $72 per hour! GM's medical benefits cost per worker, per year are $15,000 - the average company's medical benefits cost is $7,000. This is simply unsustainable - the unions need to be busted and the government, the DEMOCRATIC government, must do it.

The economic realities of Big 3 Bankruptcy are unimaginable. If things stay as they are, 5,000 car dealerships will go out of business. If GM goes bankrupt, that number is at least 10,000. On top of that, GM has 250,000 employees who would have just lost their jobs. Add to this the number of suppliers that would collapse and the inevitable effects on Honda and Toyota and you now have the systemic collapse of the entire auto industry, even bringing the healthy manufacturers down.

All of this would result in 2.5 to 3 million people out of work in a matter of weeks. You now have, within 90 days, 2.5 to 3 million home foreclosures - this is now much bigger than currently imagined.

This friend went on to say:

"We've seen a housing crisis, a credit crisis, a banking crisis, and now a manufacturing crisis in a matter of months. This is unprecedented...there's usually been one factor to point to, but this is EVERYTHING. You being young, at your age, this taste will be with you for the rest of your lives - you will never forget this time.

And you are also witnessing a failure of leadership, of political will. No one is standing up and offering any kind of perspective, with any kind of fervor or direction-setting. Leadership is not reactionary and that is all we have right now."

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