TTAC Called It: Failed Bailout Leaves Automakers High and Dry

Robert Farago
by Robert Farago

Before Congress rejected the $700b Wall Street bailout bill, TTAC warned that its failure would send a spear through the heart of the domestic car industry. Unless Uncle Sam made good on The Big 2.8’s blizzard of bad paperand re-started the car loan snow machine, car buyers would crawl off into a deep, dark and cave and enter a period of extended hibernation (or something like that). And lo, it has come not to pass. The symbolic snow machine has become a plain old fan, with excrement heading towards it. “Absent intervention from Congress, the ability of manufacturers to finance motor vehicle sales may come to a halt,” affirms Chris Stinebert, president and CEO of the American Financial Services Association. (That’s the cash-dispensing machine trade group representing Detroit’s Big Three automakers’ finance arms, as well as major foreign auto finance companies.) The Democrat for Dearborn, chairman of the House Energy and Commerce Committee John Dingell, also knows the score (F-R-E-E, that spells free): “If access to credit continues to dry up, the automobile financing companies will be unable to keep vehicles on dealership lots and help customers obtain financing.” And then what? TTAC’s Ken Elias has his take on the prospects, and the Street has theirs. After the bailout bill vote, GM’s stock price plummeted 12.8 percent to $8.50, its lowest closing price since June 1954. Ford stock fell 13.3 percent to $4.17, its lowest level since February 1986. Chrysler is privately held. For now.

Robert Farago
Robert Farago

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  • Dean Dean on Sep 30, 2008

    Using public money to bail out banks and corporations is not socialism. Do you think that everything that is not radical free-market fundamentalism is somehow socialist?

  • VerbalKint VerbalKint on Sep 30, 2008

    Re: "GM’s stock price plummeted 12.8 percent to $8.50, its lowest closing price since June 1954. Ford stock fell 13.3 percent to $4.17, its lowest level since February 1986. Chrysler is privately held. For now." Just wondering... what would the dollar values be if instead of using worthless 2k08 dollars a constant 1954 or 1986 dollar was used to make the comparison. I heard that Bloomberg's newsletter estimated the "$700,000,000,000.00" bailout of the bankers could reach $5,000,000,000,000.00 (5 trillion, if ya lost count of the zeroes...)

  • Anonymous Anonymous on Sep 30, 2008

    The world economy is crashing. The Big 3 have proved to be the canary in the coal mine.

  • Johnster Johnster on Sep 30, 2008
    dean : Using public money to bail out banks and corporations is not socialism. Do you think that everything that is not radical free-market fundamentalism is somehow socialist? I think that giving public money to fat cats like bankers and corporate honchos is fascism.
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