Tag: Automakers

Using $13.4 billion as an excuse to snatch $350 billion more


On Friday morning, George W. Bush announced he would allow the Treasury Department to use a small fraction, $13.4 to $17.4 billion, of the $700 billion financial bailout to help automakers GM and Chrysler.

While normally Bush would have just let the automakers go bankrupt, he explained in a televised speech before the U.S. markets opened. “But these are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action,” Bush said.

Then shortly after Bush’s finished his remarks, Treasury Secretary Henry Paulson announced that he needed more money. According to the Washington Post, Paulson noted that “that nearly all of the funds remaining at his disposal have now been committed for a loan to the nation’s automakers.”

The message being crafted is that helping the automakers forced the Bush administration to ask the second half of the bailout money. The message has been developing over the past two weeks.

The “reasons” why the automaker bailout is opposed

This morning in Docudharma Times, Mishima noted that polls indicate

That Americans believe that the big 3 shouldn’t be bailed out. Do they understand the residual effects it will have upon the economy if they are allowed to fail? It doesn’t appear so.

The “reasons” why many Americans do not support the bailout are mixed. I think these are the main “reasons” that I’ve heard:

  • Anger over the Wall Street bailout

  • Anger over Detroit vehicle selection (electric car versus SUV)

  • Anger over rich automaker executives

  • Anger over “overpaid” union workers

So, what’s behind this anger?

“Many Americans have already bought their last car”

In his most recent missive, “Presto Change-o“, James Howard Kunstler shares his thoughts on bailing out the big three American automakers.

The dilemma is essentially this: the consumer economy we all knew and loved has died. There will be pressure from nearly every quarter to keep it hooked up to the costly life support machines even though it is dead. A different economy is waiting to be born, but it is nothing like the one that has died. The economy-to-come is one of rigor and austerity. It is not the kind of thing that a nation of overfed clowns is used to. Do we even have a prayer of getting to it, or are we going to squander our dwindling resources on life support for something that is already dead?

A case in point: the car industry. The Big Three, all functionally bankrupt, are now lined up for bail-outs from the treasury’s bottomless checking account. Personally, I believe the age of Happy Motoring is over. Many Americans have already bought their last car — they just don’t know it yet.

The changing reality that is our cratering, consumer-driven economy won’t stop the big three automakers from asking for a bailout.