Where is the US economy headed?

That sure sounds like congress, in fact it describes most politicians in general.
So, if the people giving the bailouts dont understand it, how do you ever expect it to change?

And I am including the current admin in my statement, because they are just as guilty.

mm, The problem with "you people" is the simple fact that you said nothing when the Bush administration gave Halliburton nonbid contracts that spent billions in Iraq with no accountability.

You guys should just piss off.

You, me and Krugman must have had a mind meld today, we are all in complete agreement.
http://www.nytimes.com/2009/04/27/opinion/27krugman.html

Banking has a very basic job; earn interest on loans, and pay interest on savings at a lower rate to have "net income." Anything else beyond that is creating wealth where none exists. That's the fundamental rule of banking.

We should let the banks go bankrupt, and let the government take over all the banks. They will never learn responsibility nor equity, because they think they "create" wealth from nothing.

I also hope the stock market reflects the banker's ignorance by selling their stock to lower levels than before the bailouts. They deserve to go bankrupt.

A quick summary of the latest round of GM proposals:
They issue stock like candy...stock to bondholders in exchange for $29B in debt; stock to the government in exchange for the loans extended thus far (giving the govt a 50% share in GM); stock to the UAW in lieu of the $10B in debt to the healthcare trust fund.
They shed 21,000 more jobs, cutting their head count to 40,000.
They cut their number of dealers in the U.S. 42% from 6,246 to 3,605. The "Motor Mile" on the outskirts of many a town will become the "Motor Half-Mile."

rjb, I still don't think they will survive. Our government is giving them bailout money that is essentially wasted.

I know next to nothing about the auto industry, ci, but my expectations of GM surviving are, like yours, low. They will end up producing 4 brands: Chevrolet, Buick, Cadillac and GMC. Not exactly a strong base on which to rebuild the company.
By the way, if GM issues all of the shares it is talking about, current shareholders will own 1% of the company! That is some serious dilution. But if the company is losing money, it makes little difference.

That's the bottom line; they continue to lose money. No amount of reorganization in this economic environment is going to help them survive.

GM accelerates cost cuts
By David Bailey and Poornima Gupta David Bailey And Poornima Gupta 1 hr 7 mins ago

DETROIT (Reuters) " General Motors Corp on Monday launched a last-ditch bond exchange offer to avoid bankruptcy and planned to cut 21,000 U.S. hourly jobs in a new restructuring that would see the automaker nationalized under majority control by the U.S. government.

GM Chief Executive Fritz Henderson said the automaker would file for bankruptcy protection if an offer to exchange bonds for company equity failed to cut $27 billion in bond debt by about 90 percent or other changes faltered.

But analysts doubted the debt exchange offer would succeed, setting up GM to restructure under bankruptcy protection.

Which means that this will get done under bankruptcy, as I have always claimed that it must. "THIS" is the shrinking of the company so that its break even point is doable, for which massive forgiveness of debt and delayed compensation are required.

The "right sizing" of the company will come to naught if the company continues to be saddled with incompetent management and continues to make the wrong vehicles. I am not as pessimistic as you are CI that good management will not be found. GM can import the brains that they have lacked for so long.

We can only hope you are right, because that'll mean buku jobs at risk if they go belly up completely.

I think the bondholders could balk on going along and I am not at all sure the Obama admin will either. Common stock, if the company goes bankrupt, will be worthless. Public opinion (if you believe in polls-let's not go there here, please. We do that debate on the Obama thread) is against doing anything more. I suspect President Obama, at this point, would not be adverse to having the bondholders, rather than the govt, pull the plug on GM and send it into a "soft" bankruptcy.

They may balk at agreeing to a pre-packaged bankruptcy. If so the bankruptcy Judge will dictate what they do and do not get, they can moan and groan about it all they want, the bond holders have only the power to argue their case.

Obama has said that it is critical to avoid the drawn out court battle, but I don't see why. The critical problem with a fight was that the suppliers would have to wait many months to see any money, and they can't survive any more delay in getting paid. Obama has already said that the government will keep the suppliers afloat, and as well said that the government will guaranty warranties, the problems caused by a contested bankruptcy have already been mitigated. I say **** the bondholders, if they don't agree to terms then put GM into a full scale bankruptcy. The bondholders claim that they have first dibs on assets, thus they will want GM shut down and sold off. The problem with their argument is that the scrap value for GM is so low that no Judge is ever going to agree to do that.

We may or may not be on the same page, Hawk. What I meant to suggest was that the bondholders with some $27B or $29B in IOU's may be unwilling to accept common stock in its stead, as might be the govt in return for the loans.
You make mention of a full blown, dragged out bankruptcy thingee. I talk about a soft bankruptcy, but I must admit that I don't recall what that was about. I think it goes back a few months to when GM had some assets that could be salvaged. GM is skin and bones now. Roadkill. What do they have that anyone would want?

Not much; their factories are probably worse off than most things they may actually own. Survival for them seem nebulous.

What makes you think that the government believes you cannot create wealth from nothing? Thats what they do, which is nothing. They create no wealth, and they think that wealth is evil. Any prosperous company that actually creates something, produces something, example oil companies, without which our society would be zilch to nothing, they criticize for being greedy.

okie, Go away; you don't know what in hell you're talking about.

So your solution is to turn over the banking industry to a government that can't balance its own checkbook? I've heard dumb proposals, but yours takes the cake.

Sure, we bail out the banks with taxpayer money, and they go back to paying their employees half million dollar salaries - with taxpayer money.

I'd rather see them go bankrupt to stop this corruption in the banking industry.
They have no brains.