The Truth About Cars » Bailout

Editorial: There May Be a New Buyer for Opel. Get a Mirror

Bertel Schmitt — Fri, 31 Jul 2009 12:45:17 +0000

As time goes on, Opel's chances to be rescued by an outside investor are dwindling. A member of the German government's Opel Task Force told Reuters on Thursday that negotiations between GM and the two competing bidders (RHJ and Magna) for Opel could drag on longer than expected. The way it looks, the deal may never close - because GM doesn't want to. There could be another rich sugar daddy: It's you.

Editorial: GM Can’t Read

Bertel Schmitt — Wed, 29 Jul 2009 18:32:22 +0000

Did we say the Opel sale is getting messier and messier? GM seems to be in urgent need to attend remedial reading class. There is the German government making noises that if GM doesn't say "Ja" to Magna, the government can't guarantee that another suitor gets loan guarantees. Which in German means, they won't. GM can't read the writing on the wall.

Toyota’s Bad Day

Ken Elias — Mon, 01 Jun 2009 19:37:11 +0000

It might be a bad day for GM but it’s a much worse one for Toyota. Really. The days (really decades) of weak domestic manufacturers shooting themselves in the foot with bad design, poor assembly, and non-existent customer satisfaction in passenger cars are coming to an end. Toyota didn’t have to outrun the bear, it just had to stay ahead of GM, Ford, and Chrysler. Years of producing huge profits in North America hit the wall for Toyota in 2009, and they’re likely not to return. Ever. The game has now changed---and it’s not good for Toyota.

Editorial: Opel Watch: Henderson: “We Are a Victim of Coicumstance!” Fiat: “Andiamo!” Magna: “Jetzt reicht’s!”

Bertel Schmitt — Fri, 29 May 2009 10:29:40 +0000

Today, Berlin will re-attempt to save Opel after the disastrous Wednesday night / Thursday morning confab. From most accounts, that meeting was a remake of The Three Stooges, with the actors sent by central casting in Washington and Detroit. Berlin is still fuming about the "impertinence" (finance Minister Peer Steinbrück) of the junior Treasury staffer who demanded an extra $415 million more in short-term cash, above the bridge financing of $2.1 billion Berlin had been ready to sign that night. They also are still grumpy about being lied to, or handed "information with a short half-life" as the finance minister put it ever so politely.

Editorial: Chrysler Zombie Watch 7: Friends of the Undead

Robert Farago — Wed, 13 May 2009 15:39:23 +0000

The moment the Chrysler - Fiat hookup was announced, savvy pistonheads nasally ejected their coffee. Chrysler and FIAT? That's like throwing a drowning man an anvil. Ignoring the brands' history of complete crapitude, the mainstream media took the idea seriously. Their complicity/complacency has done wonders for the executives and elected officials in charge of this epic non-starter, but it does nothing to serve the public interest. After all, we've got to pay for this turkey. Now that Chrysler is about to axe dealers, permanently shutter plants, fire union workers and ditch a big ass chunk of their pensions and benefits, the MSM is beginning to consider the possibility that the deal sucks. Or, as the ever-faithful Detroit News puts it, "After bankruptcy, Chrysler still faces uncertain future." Ya think?

Editorial: Bailout Watch 527: Bankruptcy Sucks. Some More Than Others

Robert Farago — Mon, 11 May 2009 19:23:55 +0000

Back in the day, I recommended Chapter 11 for GM and Chrysler. With court protection, the American automakers could ditch non-competitive union contracts, pare bloated dealer networks, terminate extraneous products and sell-off non-core brands. In '05, consumer confidence was strong. All three automakers had plenty of cash and assets. If they had filed then, they could have reinvented themselves and. . . Forget it. I was wrong. These automakers are so poorly run that an earlier bankruptcy would only have prolonged the misery. How could I think otherwise when Chrysler and GM's idea of a "surgical" bankruptcy is to swing an axe at the patient's diseased limbs, laugh at their next of kin, storm out of the operating theater, hand the case over to another doctor and repair to Aruba?

Chrysler Bankruptcy Analysis III: Will The “Absolute Priority Rule” Kill The Sale?

Steve Jakubowski — Tue, 05 May 2009 15:23:22 +0000

Well, the initial pleadings have been filed. Chrysler's argument is essentially that it's a "dead man walking." In its opening memorandum of law in support of its motion to approve the sale, Chrysler argues that if the "sale" doesn't close on the accelerated timetable proposed, it will wither on the vine, resulting in "a rapid and severe loss of value." (Mem. at 10). Surprisingly, though, Chrysler's opening memorandum doesn't squarely address the issue laid bare in my previous post and in the preliminary objection of the dissident lenders; that is, why isn't the proposed transaction a sub rosa plan of the kind prohibited under the law of the Second Circuit?

Editorial: Bailout Watch 509: The Silver Lining

Robert Farago — Mon, 27 Apr 2009 02:10:13 +0000

I used to worry that TTAC was too negative. I'd publish "good" news to try and balance-out our no-holds-bared criticism of Motown's follies. At some point, I gave up trying to find a silver lining. It wasn't simply the fact that there wasn't one. Or that the news coming from Detroit became undeniably dire. It was more of a personal "come to Satan" moment, when I realized that making people happy wasn't my first, best destiny. My job: tell the messy, pay-no-attention-to-the-logical-fallacy-behind-that-PR-curtain truth about cars. But there are times like now, on the cusp of Chrysler's C11 (or worse), when I wonder what good can come of all this. Will we ever look back on this time and think that the Motown bailout was, somehow, a good thing?

Editorial: Britain Makes Scrappage Schemes Euro-nanimous

Edward Niedermeyer — Thu, 23 Apr 2009 18:21:45 +0000

Britain's new budget, recently presented by Minister of The Exchequer Alistair Darling, contains a vehicle scrappage incentive that makes Old Blighty the final major European economy to jump on the alleged "green stimulus" bandwagon. 13 other European nations, including France, Germany, Italy, Spain and Poland have introduced similar measures, which provide government incentives to new car buyers who scrap an older vehicle. But will Britain's new program (which offers up to $2,900 in incentives) have the same salutary effects on new car sales as France (March sales up 8 percent) and Germany's (March new registrations up 40 percent)? Closer to home, how will the solidified Euro-consensus on scrappage schemes affect the chances of a similar program in the US? Although the schemes have already been hailed as the saviour of European new car-sales, such plans don't always translate well across different markets. Under a critical lense, issues with the latest British plan indicate a number of problems in bringing such a program stateside.

Editorial: Opel Soon Set Free?

Bertel Schmitt — Sun, 19 Apr 2009 13:56:16 +0000

There are growing indications that GM's "surgical bankruptcy" is imminent. They are already scrubbing down the surgical theaters around the world. The operation may just happen within a few weeks, and the "good brands"/"bad brands" not-so-final solution will create another mushrooming government agency that would be loath to put itself out of business. One of the many indications for rapid action: The patents tug-of-war between Opel and General Motors (or rather between the German and U.S. governments) appears to be solved.

Editorial: Bailout Watch 499: Barack Obama, Sergio Marchionne and the GM Pensioners

Robert Farago — Wed, 15 Apr 2009 14:21:00 +0000

As TTAC approaches its 500th Bailout Watch, the autoblogosphere is abuzz with bailout-related news. But first, a word from a TTAC reader experiencing shaudenfrade by proxy. "Robert, I think you are going to need some counseling if GM doesn't crash and burn. Your little columns are getting more breathless by the week. Best to make some therapy appointments in advance, cause it aint going to happen. Keep up whatever it is, I enjoy glancing at it." [Jeff: is he saying my therapy sessions ain't gonna happen?] So, as I remind my electronic correspondent to remember to turn off the lights on the way out, here's what's going down in the Motown district of Bailout Nation. . .

Ford. Buy!

Ken Elias — Mon, 30 Mar 2009 22:12:53 +0000

It’s time to buy Ford stock. It’s the big winner from the Presidential Task Force on Automobiles (PTFOA) announcement today-- although you wouldn’t know it listening to the MSM. That’s the way Ford wants it… below the radar, off the screen, out of the limelight. They've been getting a dead cat bounce already; never has silence been so golden. The dictum "never gloat in the misery of others" makes for good business sense, since one never knows when the table will turn. Anyway, here’s why Ford will ride high.

TTAC Commentator H82w8 On Obama’s Auto Industry Intervention

Edward Niedermeyer — Mon, 30 Mar 2009 18:17:29 +0000

The U.S. government (ostensibly representing “the taxpayers”) is right to insist on conditions to the second round of federal loans to Chrysler and GM. As always, the devil is in the details. As always, the government has put politically motivated strings onto every moving appendage in this latest example of federal largess. The fundamental question here is not whether or not these strings-- from a shotgun marriage between Chrysler and Fiat to a GM bondholder haircut-- will rescue either company from liquidation. It's whether or not the federal government should be involved in bailing out any company in any industry. Period. Though others may disagree, I believe that only companies absolutely essential for national defense/security might qualify for direct taxpayer support. Might. Otherwise, NFW.

Editorial: Bailout Watch 456: PTFOA to OK $22 Billion for Chrysler, GM

Robert Farago — Thu, 26 Mar 2009 12:06:28 +0000

You'd kinda hope that the Presidential Task Force on Automobiles (PTFOA) would negotiate with Chrysler, GM, the United Auto Workers and GM's bondholders down to the wire. After all, the actual deadline for the yes/no decision on the next round of bailout billions is March 31. So it kinda makes sense to hold their feet to the fire until the very last minute, forcing them to satisfy the conditions laid down by the first, $17.4b federal bailout. But nooooooo. Six days out from the deadline, the leaky ass quango known as the PTFOA has let slip the fact that they will, indeed, bless (a.k.a. "loan") Chrysler and GM with $22B of your hard-earned tax dollars. Maybe more! But that's OK, ’cause THIS TIME there will be strings! Timelines! Deadlines! The Wall Street Journal reports . . .

Editorial: Bailout Watch 455: The Forgotten Men

Robert Farago — Tue, 24 Mar 2009 17:30:33 +0000

In 1979, Chrysler was staring down the barrel of bankruptcy. ChryCo's charismatic CEO stepped forward, publicly lobbying for $1.5b worth of federal loan guarantees. Lee Iacocca captured the American taxpayer's respect and trust-- to the point where the automaker's ad folk made Lee the company's pitchman. "If you can find a better car, buy it!" he dared. They did and they didn't. Either way, Iacocca's communication skills were beyond reproach. Contrast that with today's mumbling, bumbling Motown CEOs, who've managed to alienate well over half of the American public, who no longer want to buy Detroit's cars OR provide them with a second (third) chance. And no wonder. The CEOs have demonstrated an abject inability to call a spade a spade, or sell the spadework that must be done (which is largely grave digging by now). Wagoner, Nardelli and Mulally's failure is what it is. But what about the little guy in all this? Who speaks for them?

Editorial: Bailout Watch 444: Support Your Local Junkie

Robert Farago — Wed, 18 Mar 2009 15:47:02 +0000

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.

Editorial: Bailout Watch 431: Bailout Nation Must Die

Robert Farago — Sun, 08 Mar 2009 17:30:52 +0000

The president who did more to expand the federal government than any other in modern history began his first term assuring Americans that the only thing they had to fear was fear itself. Flash forward seventy-six years and FDR's spiritual successor wants his fellow countrymen to live in fear---so his administration can achieve the same Big Government goal. Lets call it the Fram filter doctrine. Remember the old Fram filter ad? "You can pay me now or you can pay me later." There's your philosophical justification for the Detroit bailout. We have to bail out Motown (and everyone else) NOW or the whole economy will go to hell and we'll WISH we'd made the "investment." Rubbish.

Editorial: Bailout Watch 404: Crime of the Century?

Ken Elias — Wed, 18 Feb 2009 12:55:32 +0000

The viability plans presented by Chrysler and GM to the U.S. Treasury and the public yesterday signaled the end game. The plans amount to nothing more than begging for enough cash to stay afloat until the market turns upwards. Not only are the automakers' arguments based on flawed assumptions about the U.S. car market, but they singularly fail to address the fundamental problems that brought Chrysler and GM to their knees. The fact that anyone would take these pleas seriously indicates the simple triumph of fear and over common sense. You'd have to be willfully ignorant not to see these plans as the worst kind of cheap fiction. Well, maybe not so cheap...

Editorial: Bailout Watch 395: Complexity Sucks

Ken Elias — Mon, 16 Feb 2009 17:01:53 +0000

Ever heard a movie hero say, "It sounds simple, but it just might work!" Humans have a natural tendency to over-complicate problems and, thus, devise inherently delicate solutions. Have a look at Operation Eagle Claw, the 1980 Iranian hostage rescue attempt. Or consider the upcoming Presidential Task Force on Autos. The PTFA will waste countless hours with Chrysler and GM auto execs, union reps, dealer council chiefs, supplier supremos, investment bankers, outside analysts and not a single average car buyer. They will devise a clever plan that will please no one and fix nothing. What a waste. In this case, all the Obama administration need do is nothing whatsoever.

Editorial: Bailout Watch 381: Congressional Bailout Report: What They Knew Before They Loaned the Money

Robert Farago — Mon, 09 Feb 2009 02:33:18 +0000

TTAC proof reader and Editor Jeff Puthoff has been helping me chase down the Chrysler - Cerberus story, trying to identify the automaker's secret co-investors. In the midst of that pursuit, Jeff has unearthed this heretofore unreported document: "U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring" Dec. 3. 2008 (Prepared for Members and Committees of Congress)." The Congressional Research Service (CRS) drafted the report for elected representatives contemplating whether or not to loan Chrysler and GM money to prevent their bankruptcy. The U.S. Senate and House of Representatives eventually failed to create a bill to fund the loans (though not for lack of trying). Then-president Bush stepped in at the eleventh hour and provided $17.4 worth of federal loans, by stretching the provisions of the Troubled Asset Relief Program (TARP). There are some startling-- and not so startling-- insights.

Editorial: Bailout Watch 374: Trade War Looms Large in Bailout Nation

Bertel Schmitt — Thu, 05 Feb 2009 10:08:26 +0000

Ever since bailout measures for the auto industry were first mooted, free market detractors whispered: "WTO." Nobody took it seriously. True; according to the World Trader Organization's rules, direct subsidies are not allowed. But it's equally important to note that the 153-member quango has never put a single issue to a vote since its birth in 1995. Consensus governance means that as long as nobody complains, and especially, as long as everybody plays the same game, the WTO hangs fire on principle. Auto industry "loans"? They're all doing it. Still there is a line a WTO member mustn't cross. And America almost crossed it.

Bailout Watch 372: The Man Who Would Be Czar

Edward Niedermeyer — Wed, 04 Feb 2009 18:39:59 +0000

Point three of Barack Obama's ethics pledge to the American people is that "no political appointees in an Obama-Biden administration will be permitted to work on regulations or contracts directly and substantially related to their prior employer for two years. And no political appointee will be able to lobby the executive branch after leaving government service during the remainder of the administration." Obviously that's a high standard, and one that seems increasingly important as the lines between government and industry are blurred by rampant bailouts. And clearly not everyone makes the cut. But as Obama assembles a team to "restructure" the auto industry, the spirit (if not the letter) of his ban on revolving door hiring seems to be falling by the wayside.

Editorial: Bailout Watch 371: The Moon’s a Balloon

Ken Elias — Wed, 04 Feb 2009 17:29:40 +0000

In fourteen days, GM and Chrysler will submit realistic plans for viability to Congress. See what I did there? With January's sales slaughter revealed, it's obvious neither automaker can survive without a huge and ongoing injection of working capital from the nation's working capitol. Even if Uncle Sam provides this staggering amount of money-- more than enough to start a car company from scratch-- GM and Chrysler wouldn't make enough profit to pay the interest and the principal during the loan's term. The plans the automakers are about to present to your elected representatives are a fictional moon shot-- with a make-believe launch vehicle that couldn't propel a chimpanzee ten feet.

Editorial: Why Buy American?

Daniel Morgan — Sat, 31 Jan 2009 01:11:58 +0000

We are like fish swimming wide-eyed through an ocean of blood that no longer taste the horror in which we are suspended. On Dec. 19th, eight days after the automotive bailout bill failed in the senate, former President George W. Bush used his executive power to direct $13.4 billion to the automotive industry — $9.4 billion for General Motors and $4 billion for Chrysler. This is a measure only 36 percent of the country supported, according to a December CNN poll. The cost of this bailout will be tossed atop the $10.6 trillion U.S. debt, according to the treasury. This is a debt our generation will be forced to spend its lifetime repaying.

Editorial: Bailout Watch 349: Price Conquers All

Robert Farago — Sun, 18 Jan 2009 22:12:29 +0000

My five-year-old looked into the bag and spied the chocolate-covered strawberry. "Just one?" she asked with equal parts indignation and incredulity. "That cost me six bucks," I responded defensively. "I wish they were cheap," Lola said as the treat succumbed to dental destruction. "Then we could have lots." And there you have it: proof that price conquers all. If Godiva wants to sell me a dozen chocolate strawberries, all they have to do is lower the price. Dramatically. Of course, they can't do that. Ingredients, labor, transportation, administration, marketing, rent, fancy bags-- it all adds up. By the same token, there's only one way automakers seeking to sell vehicles cars in today's market can stimulate sales: slash their prices by 50 percent or so. Of course, they can't do that. Or can they?

Editorial: Don’t Stop Believing

Edward Niedermeyer — Tue, 13 Jan 2009 19:51:02 +0000

After a weekend of concept-touting and audacious hoping, Detroit is praying that the bitter taste of bailout beggary will be cleansed by the redemptive powers of PR. From the sight of hundreds of rallying GM workers to a lineup of future concepts, the North American International Auto Show played host to a number of highly-managed media messages aimed at convincing skeptics that it's no longer such a lonely world for American automakers. But the emphasis on public relations highlights how far Detroit still has to go, and fails to mask the desperate need for, well, bankruptcy. And while cheerleaders for a largely-imagined Detroit renaissance hold on to that feeling, time marches remorselessly on.

Editorial: The Truth About Chrysler and GM Bankruptcy Fears

Richard N. Tilton — Tue, 06 Jan 2009 20:20:44 +0000

A recent NY Times op ed gave plaudits to a Senate investigation held in the 1930’s to discover the causes of the Great Depression. But the power of congressional investigators is vastly overstated and overrated. They can be stymied by resourceful, deep-pocketed corporations. Considering the current attitudes of US automakers, it's unrealistic to expect any voluntary disclosure to Congress, any meaningful disclosure to taxpayers. But, as the Bermie Maddoff liquidation shows, bankruptcy court is another matter entirely. The trustee in the Madoff liquidation/investigation can ask the bankruptcy court to authorize subpoenas, which can be used to compel production of documents and to compel witnesses to testify. The prospect literally scares GM and Chrysler witless.

Editorial: Bailout Watch 299: The President’s Non-Plan Plan

Ken Elias — Sat, 20 Dec 2008 12:47:16 +0000

The President’s non-plan for saving the American auto industry actually works. Believe it or not, it’s a stroke of genius for what it doesn’t do. And that’s not forcing any change on the automakers other than to come up with yet another restructuring plan subject to certain government imposed guidelines. Readers of TTAC know that it’s almost a sure bet that this next round of restructuring will fail. And that’s why it’s such a smart plan. Bravo to Bush!

Editorial: Bailout Watch 295: All The President’s Plans

Ken Elias — Thu, 18 Dec 2008 14:54:29 +0000

I am going to go out on a limb…sort of…and state the following: GM will go into bankruptcy within the next 60 days, and Chrysler will be liquidated. Dollars to donuts that will be the President’s plan… although in a highly disguised form. The public may see it as a rescue, but it’s really just the beginning of a long and painful readjustment coming for Detroit. So how did I reach this conclusion? Follow the breadcrumbs. Given the time necessary to craft the President’s bailout plan – likely to be presented by this Friday – this tells me that it’s going to be much more than just a loan with a few strings. Methinks it will have three key points:

Editorial: Bailout Watch 287: Executive Orders

Ken Elias — Sat, 13 Dec 2008 13:44:32 +0000

Earlier this month, in their search for bailout bucks for Detroit, Congress caved to the President's insistence that legislators leave the $700b Troubled Asset Relief Program (TARP) alone. Last week, Congress failed to activate Plan B: hijacking the $25b funds they'd already allocated to the Department of Energy for "retooling" loans. At the eleventh hour, President Bush said, "Oh, alright then. Let's talk TARP." And so Plan C: the President of The United State will outline his plan to put up to $15b in play from the TARP monies. It's a stunning about-face, whose details will be revealed on Monday. Those are the broad strokes. Before suggesting the presidential approach to Detroit's debacle, let's zoom in...

Editorial: Bailout Watch 286: Executive Decision

Edward Niedermeyer — Fri, 12 Dec 2008 18:38:59 +0000

The bailout bill's demise in the Senate is inspiring all kinds of unhinged commentary this morning. Even by the recently declining standards of discourse, some of the comments we're seeing around the autoblogosphere are sublimely ridiculous. By the tone many commentators are taking you'd think the US has never overcome adversity before, and lacks the entrepreneurial vigor to survive a highly necessary reorganization and rebirth of our domestic automakers. Rather than calling on Detroit to slow down its little red love machine and find a business plan that's gonna last, we're hearing some of the most prominent names in the business calling for a new lender of last resort. Namely that lamest of lame ducks, President George W Bush.

Editorial: Bailout Watch 275: Ken Elias’ Final Final Plea to Congress

Ken Elias — Wed, 10 Dec 2008 14:17:54 +0000

There’s still time left for the Senate Republicans to stop the insanity. The Detroit bailout plan is a hastily written piece of legislation that gives an open-ended commitment to government support of the domestic auto industry. One that makes a single individual responsible for “determin(ing) appropriate measures for assessing the progress of each eligible automobile manufacturer in transforming the plan submitted by such manufacturer to the Congress on December 2, 2008, into the long-term restructuring plan to be submitted.” And that same individual also will help negotiate a restructuring program “between the interested parties” and will then determine within a date certain whether the plans themselves lead to the expected outcome of financial viability. If not, this same individual can pull the plug by calling the loans and forcing a bankruptcy. If he or she does that, I hope they get Secret Service protection. And a Medal of Honor...

Editorial: Bailout Watch 270: A Final Plea for Sanity

Ken Elias — Tue, 09 Dec 2008 12:43:15 +0000

The last hope. We’re making a final appeal. Senate Republicans, led by Jim Shelby (R-AL) and Bob Corker (R-TN), need to send the proposed loan program to Detroit into the dustbin of history. As constructed, the legislation represents a waste of taxpayer money. It’s a pretend piece: A bridge to nowhere. The bill's based on the false hopes of a new car czar, entrusted to negotiate a restructuring outside of court for General Motors and Chrysler. That won’t happen-– and shouldn’t happen. Only the party of Lincoln can stop this foolishness now.

Meanwhile, in an Alternate Universe… GM’s 100-Day Pre-Negotiated Chapter 11

Richard N. Tilton — Tue, 09 Dec 2008 02:23:10 +0000

GM’s plan to Congress for its long term financial viability results in GM being insolvent in 2012 in amounts ranging from $30-43 billion. It's not much of a plan for long term viability. UAW management points out that GM’s plan leaves some creditors making no concessions and correctly asks why it should re-schedule payments or make other concessions when other creditor groups make no concessions. While chapter 11 is no panacea, it is far better to fully restructure GM in chapter 11 than to support the half-baked plan now before Congress. Some of the problems with GM’s current plan...

Between the Lines: Jalopnik’s Ray Wert Writes “Case For Rick Wagoner”

Justin Berkowitz — Mon, 08 Dec 2008 18:04:44 +0000

Jalopnik's Editor and I have had some major differences of opinion. Ray Wert recently opined that a Chrysler-GM merger made good business sense. I disagreed. When Jalopnik sold "Save GM" t-shirts and claimed it was ironic, I begged (metaphorically) to differ. Today, Wert posted an editorial entitled "The Case for GM CEO Rick Wagoner." Again, I disagree. The rant is deeply misguided, the logic and conclusions just plain wrong. And in a twist of [yet more] unintended irony, the editorial stinks of the sloth and corner-cutting that's brought GM to its knees.

Editorial: Maxine Waters is Insane

Ronnie Schreiber — Mon, 08 Dec 2008 02:29:56 +0000

In the House Financial Services Committee hearings on loans to the auto industry, Rep. Maxine Waters hectored the CEOs of Chrysler, Ford and GM. The California democrat attacked the execs on behalf of "small” independent auto dealers on "Main Street." "Is there a commitment by any of you to give support to these small independent dealerships that include a lot of minority dealerships that are going to close down?" Never mind how they replied. Implied but not stated: The Big Three are guilty of, at best, racial insensitivity. At worst, racism. It’s untrue, unfair and outrageous.

Editorial: Bailout Watch 259: Hype, Haircuts and Hysteria

Ken Elias — Sun, 07 Dec 2008 13:00:05 +0000

Detroit needs a thorough cleansing, from top to bottom. Think along this line and the answer to the question of how to handle the bail out becomes self-evident. But given an unemployment rate at 6.7 percent and growing, Congress hit the panic button and succumbed to the pleas for help from Detroit. Nancy Pelosi decided not to play scrooge with your money. And that’s not good. We’re not against saving jobs, and preserving holiday cheer. But it’s just plain dumb to give money to those who can’t manage their own businesses. It’s like giving crack as a Xmas present to a crack addict. Recovery just gets delayed.

Editorial: Bailout Watch 258: Now What? (Part Two)

Robert Farago — Sat, 06 Dec 2008 20:14:38 +0000

If there is one man responsible for GM’s successful semi-suckle on Uncle Sam’s teat, it’s Steve Harris. I reckon GM’s PR mastermind moved the Congressional bailout hearings from the beginning of the week to the end. Tuesday’s catastrophic new vehicle sales numbers highlighted the fact that SOMETHING HAD TO BE DONE. Friday’s unemployment stats added the critical word NOW. Once Congress convinced itself that it could convince the American public that really bad shit was about to go down, the bailout was a done deal. In truth, it’s just the start. Harris knows it, you know it, and the American people know it.

Editorial: Bailout Watch 257: Now What? (Part One)

Michael Martineck — Sat, 06 Dec 2008 15:47:47 +0000

Between 1848 and 1852 telegraph line miles in the US increased by more than 1000 percent. By 1860, most of the companies that laid those lines were gone. The telegraph did not disappear, but the market for cable unraveled. Now that the CEOs of GM, Chrysler and Ford have sent a collective SOS to Congress, its relevant to step back and look not at the now, but the whole. The cycle’s called boom-bubble-bust. Not, bailout. Put another way, what kind of market does Detroit expect to find on the other end of their bridge loans?

Editorial: Bailout Watch 258: House Call

Edward Niedermeyer — Fri, 05 Dec 2008 22:02:23 +0000

As yesterday's Senate hearings wound down, it was hard not to be impressed with how pragmatic the conversation had become. By DC standards, at any rate. But any hope that the second day of testimony would build on the previous day's momentum was misguided. Far from picking up on the previous day's progress, the House Financial Services Committee testimony and questioning returned the conversation to step one, in a flurry of irrelevant posturing and evasive non-answers. Backsliding and tangential wanderings notwithstanding, we did learn a little more from today's hearings.

Editorial: Bailout Watch 243: The Bottom Line. For Now.

Edward Niedermeyer — Thu, 04 Dec 2008 22:40:37 +0000

The tone at today's nearly six-hour congressional hearing on the auto industry bailout was markedly different than the now-infamous hearings of 11/18. Last time around, the automakers thought they were flying walking into a bailout-friendly environment, and maintained their PR-fluffed facade of a few good companies who had fallen on hard times and needed a hand to reach a glorious, fuel-efficient future. And though several representatives laid into the CEOs and their companies, those bashes were little more than populist sound and fury, signifying nothing. Today's hearing was by no means devoid of politicking or disingenuousness, but a new sense of urgency was palpable. And for good reason. With Senators still far from a consensus, the automakers and their sidekicks had to abandon their long-held preferences in favor of the best available outcome. After all, saying "bankruptcy is not an option" only works when everyone agrees with you.