THE BIGGEST IMMEDIATE RISK TO YOUR RETIREMENT ACCOUNT IS . . .

. . .  the collapse of the Big 3 Automakers, at least according to Jim Cramer, the host of CNBC’s popular show MAD Money.

This is important – the retirement account you save could be your own.  If the government doesn’t take action soon, retirement accounts could drop another 20-30% in value from where they are right now.

Read on . . .

Jim Cramer followed up today on a theme from last week’s show. He said Friday that if the government doesn’t bail out GM, the value of 401(k)’s and other retirement accounts will plummet. The effects on the economy would be a disaster.

On his show last Friday, Cramer blasted the government for cherry picking companies by letting Lehman collapse while saving other companies. The collapse of Lehman sent shock waves through the economy that the government seriously underestimated. Had the government saved Lehman, the DOW would be at 10,000, or higher, and the stock portions of our retirement accounts would be worth 25% more than they are now. So we can thank Uncle Sam for part of the drop in our retirement accounts.

More here and here (with some highlights below the next page break).

Continuing that theme today, Cramer again urged the bailout of the auto industry.  Why?  An auto industry bailout is very unpopular with government officials, not to mention a lot of the public. The one bright spot is that some of our representatives in Congress realize the importance of an auto industry bail out.

It is hard to do a brief synopsis of Cramer’s talk tonight, but it went something like this (I can’t write as fast as he talks):  The Big 3 Automakers didn’t create our financial crisis. It was caused by financial dealings in the mortgage and financial srvices industries, and shared in by major insurance companies that overbought risky securities. So Uncle Sam has now spent $290 billion in bailout money, investing much of it in the financial services industry, and $40 billion along to  AIG. So the government is spending hundred of billions on the companies that caused the crisis, and doesn’t want to lift a finger to help the auto companies that didn’t create this crisis. They are just suffering because of it. Auto sales have dropped dramatically for all auto dealers, both foreign and domestic. The irony is that bailing out the automakers will cost a fraction of what it is costing to bail out the financial services industry, and it could stave off a national unemployment crisis.

According to Cramer, if the Big 3 go under, millions of jobs will be lost never to be recovered, hundreds of millions of income tax revenues will be lost, millions of people will go on unemployment, and a horrible prospect goes back on the table: Great Depression II.

In Cramer’s opinion, if the government waits until Obama takes office to do something about the Big 3, it could already be too late.

What do I think?

Do the Big 3 deserve to be bailed out? Maybe not. They haven’t been very nimble in the marketplace, and it has taken them a while to catch up to the quality of cars made in other countries.

BUT -  they didn’t create the sub-prime mortgage crisis that put us in this mess. They didn’t sell houses to people who couldn’t possibly make the mortgage payments. They didn’t repackage and sell those mortgages with the clear knowledge that the mortgages were bad. They didn’t sell and resell these risky instruments with the sole incentive of getting rich on the sales fees with no regard to the victims that bought these shady financial instruments.

Americans scream and shout and complain about jobs going overseas. Do we really want to lose the U.S. auto industry and send several million more jobs overseas? If we do, those jobs won’t come back. If you want to know what economic pain is all about, travel to Michigan and talk to people. I have recently. The pain in the auto industry has impacted all of Michigan as unemployment rates rise, straining every area of the Michigan economy, including the state government. Now imagine that bog 3 have gone under and that pain is multiplied nation wide.

Losing the auto industry, like it or not, is an immense economic gamble that our country can ill afford to take. We are bailing out the companies that put us in this mess. Drops are being lost at an increasing rate.  The least we can do is to spend a fraction of that money and save an industry that is one of the biggest employers in the country.  This is not the time to lose millions of jobs that we have the power to save.

Do your research. If you think the American auto industry is worth saving (and your own retirement account), write to your representatives in Congress and tell them you support the bailout of the auto industry.

FYI, Jim Cramer’s MAD Money airs on CNBC twice a day.
A few highlights from Jim Cramer’s Friday show, as found on CNBC.com

“GM is on a hyper borrowing spree and there’s no way it can pay any of that money back — in fact it’s losing money at that incredible pace. One look at its terrible retail sales numbers this morning proves that things are getting worse, not better, for the troubled automaker.

“Unfortunately, unlike Lehman, GM also is a “jobs machine.” The auto industry employs MILLIONS of people. It’s too late to debate whether that’s good or bad — the fact is, a GM bankruptcy would simply crush U.S. employment.

“Everybody has an opinion about what to do. Some want to let GM die, others want it reformed and yet others want to make sure the workers are safeguarded. Cramer’s job isn’t to offer an opinion on that — his job is to tell you what could happen if GM DOES go bankrupt, and what to do if it happens. Cramer’s not asking, “Is GM worth saving.” He’s asking, “Is your 401(k) is worth protecting?”

“Simply put: if you own stocks, then you need this bailout. Cramer reflects that if Lehman was saved in time, the Dow still would be at 10,000 — if not above.

“So what if GM fails? Cramer advises selling “a ton” of the stock in that situation, and says if HE still managed a hedge fund, he likely would short them hand over fist. The one thing he wouldn’t do? Buy. But… if the government DOES save GM, and Europe and China cuts key rates, there could be a substantial rally. “The autos are the fulcrum of the current market.”

“Unfortunately, Cramer isn’t willing to bet on the government saving GM — not with Tim Geithner, the New York Fed president and “alleged genius” who spearheaded the decision to let Lehman Brothers die (now seen as “the single worst decision the government made among a host of horrible decisions”), may be appointed Treasury Secretary by President-elect Obama. If that happens, Cramer doesn’t see a government lifeline for GM. “Lehman’s death crushed the market. So will the death of General Motors.”

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