With discussions continuing on a bailout of the automakers, and a possible announcement today, it might be good to post an an email from Jeff Norman of Alpha Centauri Capital Management, via Calculated Risk:
Here’s my prediction as to what will happen:
If you played by the sensible financial rules all your life, saved money, invested most of it in mutual funds now find that the government has taxed you over a trillion dollars to bailout institutions of immense former wealth, whose top employees have prospered outrageously.
Now you may end of giving more of it to neighbors who bought houses they couldn’t afford and mortgage companies that were contemptibly greedy. You can also expect to be bailing out some lost cause state and local government or quasi-governmental agencies.
Finally, after the markets have been successively devastated by each new round of bailouts your residual portfolio will be subject to the ravages of a bout of inflation that makes the 70s look tame.
There will then be no bailout for you.
A very distinct possibility.