Editorial: Bailout Watch 444: Support Your Local Junkie

Bankruptcy is more than a financial reckoning. It’s a psychological way-point, from “we’re doing our best” to “re-do.” Let’s call that middle point “we blew it.” That’s not too harsh, is it? I mean, if Chrysler and GM didn’t blow it, they wouldn’t be bankrupt. Oh wait; they’re not bankrupt. Which means Chrysler and GM don’t have to face the otherwise inescapable fact that they NSFWed-up. Of course, they should face reality. You know: the first step to recovery is admitting you have a problem. But as long as they’re supported by enablers, they’re happy to stick with “we’re doing our best”—even though their best is nowhere near good enough. Uncle Sam’s support I get. But the media’s participation in this delusional denial is unconscionable. I speak specifically of, you guessed it, The Detroit News.

TTAC’s Best and Brightest know that I regularly OK routinely give The Detroit News NSFW. As the hometown paper, the News could have steered their readership towards a greater understanding of the domestic carmakers’ predicament. They could have been at the forefront at the debate over the automakers’ future (if indeed there is one). Instead, they stayed on the sidelines, pom-poms in hand, perpetuating every excuse proffered by the piss-ant PR pansies blowing smoke up America’s NSFW, actually cheering the automakers’ multi-billion dollar raids on the public purse. And they’re still doing it.

“ Give GM, Chrysler some breathing room” is yet another example where The Detroit News gets it badly, completely, foolishly, dangerously wrong.

Leaders of President Barack Obama’s auto task force now say that deadline isn’t likely to be enforced, taking away a gun from the heads of Chrysler and GM and allowing them more time to carefully put together their new business plans.

It makes sense for the government to provide that flexibility. No one will be able to say for certain whether the two automakers are viable until the administration thaws the credit freeze and Americans regain confidence in the economy.

The auto industry is not suffering as much from a failed business strategy as it is from the inability of its customers to get loans and the wariness of consumers to make big purchases.

Are these guys NSFWing nuts? Well, yes. Obviously.

Obviously, Chrysler and GM’s unions and bondholders can’t be “encouraged” into ripping-up and re-writing their agreements with the automakers if there isn’t a gun to GM’s head. Why would they?

Obviously, waiting for the economy to recover is not a viable “plan” for either Chrysler or GM.

Obviously, Chrysler and GM (NOT “the auto industry”) were and are suffering from a failed business strategy. They were losing money and market share hand over fist when the economy was booming.

The really tragic part about this: The Detroit News and, by extension, the automakers, actually believe that they can keep dancing the waltz as compartment after compartment fills with water. They are willfully ignorant of their plight. They refuse to abandon ship—even if it means taking tens of billions of our hard-earned tax money down with them. Well, it already has. So tens of billions of additional dollars.

Notching down the urgency level a bit ought to give everyone the room they need to make sound decisions.

The task force can do one more thing for the automakers: Approve the next round of loans to help them continue operating until the market rebounds. Rattner has before him $22 billion in loan requests from GM and Chrysler, and acknowledges they need the money.

But taxpayer backlash to bailouts makes additional loans dicey. The money would be well-used.

WHAT!? In fact, correct me if I’m wrong (I know you will) but it’s the taxpayer that’s going to be well-used. The News begs to differ.

Chrysler, which needs $5 billion by the end of the month, says it is making progress in its alliance talks with the Italian automaker Fiat.

The alliance would allow Chrysler to cut its expenses and expand its markets, and place it back on the road to profitability.

GM has showrooms filled with attractive product and is negotiating a new labor pact with the United Auto Workers union that should sharply reduce its operating costs. Once consumers start buying vehicles again, it should be in good shape.

There’s a light out there at the end of this tunnel. If GM and Chrysler are given the time and the help they need to reach it, the entire economy will benefit.

Not to coin a phrase, the light at the end of the tunnel is the headlamp of an oncoming train. Somebody should pull the brake on this bailout express, ’cause full speed ahead is only going to make things worse, not better. Or, to return to our original metaphor, preventing Chrysler and GM from bottoming out will guarantee their death in the gutter.