Who Will Bail Out America?By Sandra Knispel | Published 26 Aug 2011 08:00am |
What do automobile giants GM and the U.S. government's financial crisis have in common? Apparently quite a lot. MPB’s Sandra Knispel explains.
Paul Ingrassia, a Pulitzer prize-winning journalist and news executive at Reuters news agency, has been covering the automotive industry for decades. Speaking at the Overby Center for Southern Journalism and Politics at the University of Mississippi, he told the audience that the U.S. debt-ceiling crisis and Standard and Poor's subsequent downgrade of the country’s credit rating is not unlike what General Motors faced when it collapsed into bankruptcy in 2009.
“The ratio of our debt to our gross domestic product in the last three years has gone from 40 percent to 70 percent. You can’t keep that going forever. It’s sort of like Detroit. There was denial on one hand but everyone in America, I think, agrees that this path is unsustainable," Ingrassia says.
Evidently, there are lessons to be learnt from the government bailouts of GM and Chrysler…
“The dangers of huge amounts of debt, which helped kill Detroit, and denial, are things that you can apply from what happened to Detroit two years ago and frankly what is happening to our country in some ways today," Ingrassia says. "I think the other big lesson is the importance of shared sacrifice when you’re dealing with troubles like this.”
In the audience, retired engineer and business owner Sam Jennings is concerned about America’s economic woes:
“I think we’re going to have a pretty hard time. We’re going to go half way off the cliff before we recover and get some sense and stop arguing among ourselves," Jennings says. [Reporter: When you say half-way off the cliff – what do you think that would look like?] "I think we’re going to have some more stock market declines, more housing declines, I think we’re going to have a debt-bubble pop, unemployment is going to be high for quite some time. I think we’re going to have some real troubles for the U.S. currency, Jennings explains.
So, maybe we should look more closely at Detroit’s bad example in order to prevent the continuation of the same mistakes as a nation.
Sandra Knispel, MPB News, Oxford.
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