GM on Strike, Mortgage Lay Offs, and More Bad Credit is on the Way.
by Dave LaLonde on Tuesday, September 25th, 2007I not going to take sides on this one, the passion on both sides of the argument is strong, I’m certain that I could make a strong case for both sides. I’d rather look at the long term effect this is going to have some of the people at GM, especially if the strike lasts a long time.
I’m guessing that workers at GM are similar to many Americans, that is to say a majority of them live paycheck to paycheck, have little savings put away, and carry a decent amount of credit card debt. When the income stops coming in these workers will have to make some hard choices. What do you stop paying first; credit cards, insurance, auto loan payments, mortgage? It really does not matter, if you cannot pay your bills you end up with bad credit score.
If this happens, the additional cost of a bad credit rating may negate any advances won by the union. One or two additional percentage points on the average Americans current debt would have a grave effect on their monthly payout; not to mention the additional cost of any new credit or debt after the bad credit rating. In addition to the extra credit costs to GM workers, the strike will affect workers in other industries and all Americans.
At the end of the day, the mission statement of all corporations could be summarized as “we’re in business to make money”. Corporations have to do what ever it takes to earn a profit, if they cannot earn a profit they cease to exist. The speed at which a corporation can cease to exist was displayed recently in the sub prime mortgage industry. In one week a handful of large companies went under, and other companies lay off thousands to maintain their profitability.
As we’re recovering from the sub prime mortgage mess the strike at GM could not have come at a worse time. Corporations will find a way to make money, they have to. The GM strike and Mortgage mess will affect us all, if we don’t end up with bad credit we pay higher prices so that these corporations can stay in business.
The type of credit a person has depends mostly on him. Paying off your balance on time is one of the ways to get rid of bad credit and to have more opportunities.