Bailout Watch 10: TTAC Called It– Wall Street Journal Reveals Motown's $25b Bailout Plan
And so it begins. The Wall Street Journal' s lead editorial makes it perfectly clear that Motown's plans to tap your taxes is well advanced. And guess what? It's a god damn conspiracy! "Earlier this month… the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline. They figure they'll need $40 billion or so to ride out their current troubles until they reach the promised land of hybrids, the Chevy Volt, and, who knows, maybe even profits. We've since heard that lobbyists for the car makers are taking their pitch for direct federal loans around Washington, with a goal of unveiling the plan after Labor Day — conveniently in the frenzy of the fall election campaign. They've briefed Congressman John Dingell, the dean of Michigan Democrats, as well as officials in the Bush White House… The plan is for the government to lend some $25 billion to auto makers in the first year at an interest rate of 4.5%, or about one-third what they're currently paying to borrow. What's more, the government would have the option of deferring any payment at all for up to five years." TTAC will have an editorial on this shortly.
There is a perspective that has not been voiced in this, or the other, thread about a possible Detroit bailout: the corrupting effect of such bailouts on the Federal government. As we ask the Federal government to do more and more for us the temptation for corruption within the Federal government grows. This could be in the form of bribes, kickbacks, illegal campaign contributions, or other malfeasance. It becomes increasingly difficult for politicians to avoid temptation and thus they become entangled in legal (e.g., "pork") and illegal activities that are unsavory to the average citizen. Note that this is not an "anti-government" position but rather strongly pro-government in the sense of good government. I have read and taken to heart the position that a failed Detroit will cause economic havoc and I believe it to be essentially correct; however, I feel the threat to the Federal government of a bailout is worse for the country in the long run.
I'm pretty sure a bailout is coming but my main fear is that unfortunately there will be no strings attached and that the current management and culture will remain intact and in charge.
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