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Bailout Plan for the Auto Loans and Mortgages

volkswagenGeneral Motors, Ford and Chrysler LLC will be some of the biggest beneficiaries if the new bailout bill will be passed by the Senate. The bill intedns to create a provision of $11 billion which would allow the U.S. taxpayers to deduct for tax purposes interest paid for auto loans and mortgages.
Of course, we at think this is a hidden financing of purchases of such goods, which it is. But the U.S. auto sales fell 37 percent in January, the worst sales month since 1981. But since most of the U.S. citizens are consumers of such financial products, this is a measure which will probably gain more support than the publicly-criticized bank bailout funds.
“We think it will entice a lot of those people sitting on the sidelines into the marketplace.” said Jerry Howard, president of the National Association of Home Builders.
But this comes at a cost – which is wiping out the $20 billion initially foreseen for building public shools. This is seen as very short-sighted by some analysts, who claim that this way the U.S. government pays with future money for the current situation.
On the other hand, 2 out of the 3 biggest U.S. car producers might be forced into bankrupcy if their sales follow this decrease trend for several months from now on. So the question is – what do we choose to save?

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