Bailout of the Day: Automakers to get $17.4 Billion, Detroit Auto Show Still On
by Michael Graham Richard, Ottawa, Canada 
on 12.19.08
Detroit Gets Bailed Out
Lame duck president George W. Bush has approved today a $17.4 billion bailout for the Detroit automakers, proving once again that in this bizarro-Keynesian world, if you run your big business well, you get nothing, and if you don't, you get a reward.
"The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry." Read on for more.
First Half of $700 Billion Bailout Package Spent
Tapping the $17.4 billion for the auto industry basically exhausts the first half of the $700 billion total, so now Treasury Secretary Henry Paulson said that the second half should be released.
We'll have to wait and see if Detroit will really change as it says it will, or if they'll use this taxpayer pile of cash to stay the same and just delay their eventual demise in the marketplace. We sincerely hope that they'll grab this second chance and stage a green comeback. A good start would be bringing some of their European models to North-America (see for example the 63.6 MPG Ford Fiesta).
You can almost hear the sighs of relief coming from GM's headquarter.
Detroit's North-American International Auto Show
You just know that times are hard when you read something like this in the Detroit Free Press:
Joe Serra, cochair of the 2009 North American International Auto Show, drew applause Thursday simply by reassuring hundreds who attended a preview event that there will be an auto show. [...]"To begin my discussion about the 2009 North American International Auto Show, let me start by saying, there will be one," Serra told an audience of about 450 at Cobo Center in Detroit, who had come to see the North American Car and Truck of the Year finalists revealed.
And a good thing too, because TreeHugger is already planning to be at the press preview event.
Via Yahoo News, Detroit Free Press
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That's a lot of money!
Why is this picture here if the news has nothing to do with it... Well, it's money, yes, put this picture was taken in Mexico... you can tell from the Mexican pesos there...
--
MGR: I just wanted a gigantic pile of money and that's the best I found.
...and I hope you give 'em HELL, too!
I think this photo might be a little more appropriate: http://ui21.gamespot.com/180/jokermoney_2.jpg
in all seriousness... at least the money was pulled from the pool of money we already allocated for bailouts. and I'm not a fan of the big 3, but there's a few good arguments for keeping those auto makers around. If they go down our economy will be hurting even more, and there's possible national security implications to outsourcing all of our vehicle production.
Obama applauded the White House's decision. The major parties have completely lost touch with the main public. Why do we keep voting for them?
Wow that’s a lot of money, the picture looks like loose change in comparison.
According to CNNMony.com
10.3 billion public transit trips for 2007,
$17.4 billion to make more cars.
= That’s almost free transit for everyone in the US for a year.
= $100 per licensed driver in the US
= $2500 per car produced in the US per year.
Given there are approximately 250,851,833-registered passenger vehicle and only 190,888,912 drivers you might say the industry is saturated and producing more vehicle is unnecessary.
This isn’t socialism it’s more like a disease, I think the Romans also made weird decisions as there empire collapsed. Then again they used led to pant their faces cook their food and heat there water, and make their wine.
Tim
Wow that’s a lot of money, the picture looks like loose change in comparison.
According to CNNMony.com
10.3 billion public transit trips for 2007,
$17.4 billion to make more cars.
= That’s almost free transit for everyone in the US for a year.
= $100 per licensed driver in the US
= $2500 per car produced in the US per year.
Given there are approximately 250,851,833-registered passenger vehicle and only 190,888,912 drivers you might say the industry is saturated and producing more vehicle is unnecessary.
This isn’t socialism it’s more like a disease, I think the Romans also made weird decisions as there empire collapsed. Then again they used led to pant their faces cook their food and heat there water, and make their wine.
Tim
A bailout could have worked to our advantage if there were better terms involved.
1) Seats on Board of Dir.
2) Reducing executive wages (they ran the business into the ground, repercussions should be expected)
3) Cutting the fat.
This is an opportunity that the gov did not capitalize on.
Well, at least it wasn't the $25 billion that the House approved earlier. Still, I agree that it is absurd to pump cash into businesses that are in bad shape due to management that was focused solely on short term profits. The Detroit automakers are doomed to fail at some point if they don't change the way they due business. I hate to see people lose their jobs, but it seems now that we as taxpayers are just wasting our money to prolong the inevitable.
It is not like the issues that they face today were hard to foresee years ago. As I said before, I think they were just focused on short term profits a few years ago when they should have been noticing the trends in world wide oil consumption and thinking ahead. I would rather see Congress give that money to the many small companies who have done just that.
Oops, I meant to say "do business" not "due business". Obviously I rely too much on spellcheck.
OK, so now our US friends cannot rag on the Canadians for being socialist because if fact now that these bailouts are happening and especially the auto industry one, you have become (but always actually were) a socialist system. The government now holds very large shares in some of the largest US corporations. Now was that so bad.
The U.S. government is STAGGERING in it's stupidity. You can't throw taxpayers money at money problems & expect it'll fix things. The American taxpayer gets reamed over & over again, rewarding these clowns with decades of bad management & greed. My local Congressman in Santa Cruz voted in favor of H R 7321, aka Auto Industry Financing and Restructuring Act on 12.10.08. I sent him an email explaining how dismayed I am with him which was probably a waste of time, since every time in the past he's sent me canned letters explaining why the bankruptcy laws in place would be a worse choice if exercised. Detroit is in it's death bed, the cash will simply defer the inevitable since these manufacturers are dinosaurs. I'm truly convinced that the Federal Government right down to your local Congressman don't listen to you. Last, I thought it very strange that the rep. on the phone said that no one has called in mentioning this issue even though it's dead center front page news.
Hey hey hey! Let's not generalize here. It is less than the beginning number of $25B because Ford decided to drop out of the deal, saying that their finances were in reasonably good shape and that they do not need a loan at present. (This info should REALLY be included in the article.)
So this isn't a bailout of the big three, or of Detroit - it's a bailout of the Big Three's TWO WORST performing companies, GM and Chrysler.
So the mention of the new Fiesta is somewhat unrelated and tangential, particularly because Ford has been vocal that they ARE going to be bringing it stateside next year - just not with the Econetic Diesel engine option for now. Still, it'll finally be a Detroit competitor for the Honda Fit.
NOTE: This is NOT a BIG 3 Issue - Ford did not ask for a bailout at this time. It's $13 B for GM and $4B for Chrysler.
Quote from the AP news story:
"Some $13.4 billion of the rescue money will be available this month and next — $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC, the two auto giants that have said they could be facing bankruptcy soon without government help. GM is slated to receive the remaining $4 billion in loans after more money is released from the financial rescue account. Ford Motor Co. says it doesn't need federal cash now but would be badly damaged if one or both of the other two went under."
So, try as we might, we probably can't convince GM or Chrysler to sell Ford's new Fiesta. (Especially since Ford has said over and over again that it WILL bring the new Fiesta over next year, albeit it without the fancy diesel option for now.)
That's not money folks, that's paper fiat "currency", printed up on a printing press by our private banking cartels. The more they print up out of thin air the less valuable the paper fiat currency you already hold in your bank account becomes. This phenomenon is called "hyperinflation". Gold and silver are the only true "money".