Saving the Auto Industry could save your 401K

As hard as it is for us to stomach it has been proven by econimist and financial experts alike that we cannot let the American Auto Industry fail. I wonder if the Auto Industry had been the first to the trough as the banks were if we would have been so hard on them. I dare say that I don't think they would have received the flack they have received to date had this been the scenario. Back in November an article in the Finacial Times by Nicolas Van Praet, was pretty much ignored but it summed it up quite well.

If all three Detroit manufacturers were to cease operations, the U.S. economy would lose 2.95 million direct and indirect jobs in the first year. Governments would lose at least US$156.4-billion in taxes over the first three years.
If Detroit cut output and employment by 50% to meet ever-shrinking market share, which would mean contraction by two of the automakers, 2.46 million jobs would be lost initially. Governments would lose US$108-billion in revenue over three years, according to the analysis.
"The circumstances are such that either of these scenarios is possible, and indeed one or the other is probable, within the next 12 months," the non-profit think-tank said. Read more HERE

Then Today one of my favorite columnist, Pat Buchanan @HumanEvents.com wrote a great article.

"GOP to Detroit: Drop Dead!"

So may have read the headline Friday, had not President Bush stepped in to save GM, Ford and Chrysler, which Senate Republicans had just voted to send to the knacker's yard.

What are Republicans thinking of, pulling the plug, at Christmas, on GM, risking swift death for the greatest manufacturing company in American history, a strategic asset and pillar of the U.S. economy.

The $14 billion loan to the Big Three that Republican senators filibustered to death is just 2 percent of the $700 billion the Senate voted to bail out Wall Street. Having gone along with bailouts of Bear Stearns, AIG, Fannie, Freddie and CitiGroup, why refuse a reprieve to an industry upon which millions of the best blue-collar jobs in America depend?

Read the rest HUMAN EVENTS

Even Cramer says we can't let the Auto Industry fail;

Tom Brennan @ CNBC.com writes

If the auto industry fails, millions of people will miss mortgage payments and watch banks foreclose on their homes. Credit-card defaults en masse will follow. Consumer spending will come to a virtual stop. And Wal-Mart and Family Dollar will continue to be the retailers of choice.

And all those losses in your 401(k) over the past couple of months? You won’t make that money back if GM and company go under. So if Hank Paulson and the Treasury, and Ben Bernanke and the Federal Reserve, so vigorously propped up the banks, then Cramer sees no reason why they shouldn’t do the same for the Detroit. It’s a sector as integrally important to the fate of the U.S. as any lender or insurer.