By on September 9, 2008

Just had a quick confab with TTAC’s Deep Throat. He makes an excellent point: against what can Detroit’s automakers secure their share of the $50b low-interest federal loans they seek? Ford’s mortgaged everything up to– and including– their logo. GM’s currently paying around $250m a month in interest payments on its current debt, pegged at $40.4b. (Some $9.1b in debt is coming due by January 2010, including $4.3 billion of long-term debt and a $4 billion note owed to a new trust fund for retiree health benefits.) The General has already sold off everything that isn’t nailed down, and much that was. Its foreign ops are its only remain asset of any value (and for how long?). Chrysler? They got nothing worth anything, except, possibly, the “value” of their Jeep brand. Quite aside from the question of what happens to the “old” debt (can the ailing automakers use the federal funds to pay off, pay down or even just maintain their existing loans?), what we’re looking at here is $50b of unsecured loans. In other words, if one or all of the automakers goes tits-up AFTER they suck on the taxpayer tit, John Q. Public will get nothing. Zip. Zilch. Nada. How great is that?

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23 Comments on “Bailout Watch 33: What Do We Get For Our Money?...”


  • avatar
    KixStart

    Well, we’d each get a Chevy Volt for our trouble, right?

  • avatar
    Cody

    I’ve got an idea…why don’t we just make a law that says you HAVE to buy American. Or maybe Honda and Toyota should just pay the Big 3 $100 per vehicle they sell. These all seem as (im)moral as forcing me to prop them up through my taxes.

  • avatar
    TexN

    I’d like to opt out of this “exercise”. Where is THAT box on my November ballot?

  • avatar
    yankinwaoz

    When you get house construction loan, they cut checks to the contractors as milestones are met. They don’t give you all of the money and do nothing has you use it to pay off your credit cards, your bookie, and your local loan shark.

    This should be no different.

    Oh.. and the US gov’t should have a lien on all the factory land and equipment that is being purchased with this loan.. just like a house loan.

  • avatar
    Redbarchetta

    Every American gets some ancient tooling and shuttered factory, oops forgot that gets sold to pay the other debts. “Upper Management Lawn Service” that’s a green initiative I wouldn’t mind seeing.

    I sure won’t be a conquest sale after they stole money out of my pocket for a bailout.

  • avatar
    timd38

    Jobs in China, India, Mexico and Canada.

  • avatar
    detroit1701

    Mr. Farago — were you watching “Dirty Harry” on AMC last week, too? ;)

    We probably get some indirect benefits if the loans work for the auto companies — 100,000 workers on unemployment, welfare, food stamps, medicaid/medicare — all of which is a taxpayer burden, I suppose. One would also lose a fair amount of personal and corporate tax revenue.

  • avatar
    monkeyboy

    We bailed out the S & L’s.

    Bailed out the airline companies.
    Bailed out Haley Burton.
    Bailed out Freddie Mac and Fannie Mae.
    Bailed out Chrysler,,once before.
    Bailed out G.W.
    Literally bailed out 1000’s in a flood plane, on welfare, in New Orleans.

    Now bailing out more banks.

    And you all balk at helping several 100,000 honest taxpayers that work everyday, pay their mortgages, and pay YOUR S.S. at GM and Delphi.

    Wow.

  • avatar
    TexN

    monkeyboy,
    Valid points, and my answer is “NO”. What I do object to, however, is the 30-50 grossly overpaid, unapologetic, unaccountable slugs in the Executive suites who have been abusing their positions of power for a number of years. Get rid of them and much of the rancor will leave with them.

  • avatar
    DearS

    I want to see what the options are. Helping home owners is ok, except I rather not see folks making bad financial decisions owning really expensive (for me to buy) homes. Owning a house and also economic activity may just get harder if homeowners are bailed out. Just like bailing out GM will give the UAWs a reason to not look for a better job. I hear a bit of complaining about this job and that job, but what about folks looking for an honest answer? What about learning more about economics? Maybe they need to lose their ******* jobs and homes so they can wake *** **** up! Maybe the whole ******* economy needs to go ** **** so folks can get a fucking (oops) clue? They can all kiss my *** and **** my **** if they say I should give a fuck about them.

    Its scary and painful to lose something as loved as a home, to lose a job, to feel without a place to turn to. That does not mean giving someone money is a good idea. Just like GM, Americans are making a lot of dysfunctional choices. I do not want to things get worse for me. I think the truth about how economics work needs to be learned about. Also the political process.

    Ehanol is costly. GM and the AUW are not relinquishing some money or looking to work well together. Politicians are very very insane. America is childish and ignorant, and life can really get Its a new world with new challenges. On the positive side, it could be much worse for many people. I’m grateful for a bit.

  • avatar
    hltguy

    What do we get for our money? F—-d!
    Bailing these clowns out is insane. I don’t want to hear about the loss of jobs etc, the companies and unions made this bed let them sleep in it,since they have been screwing each other for years, now they want to screw the taxpayer. All you folks who want to give these morons billions of dollars, don’t complain when interest rates hit 12% or higher because the U.S. has to beg, borrow and steal from other countries to pay for its social programs. No, I am not a Republican or Democrat, just a hard working, tax paying, business owning American citizen who sees this great country going bankrupt, literally. $50 billion to build more vehicles that people aren’t buying? Typical corruption and stupidity.

  • avatar
    jkross22

    For all who support the bailout, let me give you my address and you can write me a check to pay for my portion and my wife’s portion of this train wreck of a bailout.

  • avatar
    factotum

    How about we don’t pay our taxes next year? I’ll just tell the IRS I need a bailout. Now, if 10+ million did the same thing, we might start a revolution.

  • avatar
    NoSubstitute

    What do we get for our money?

    Well, presuming GM ends up with around half of the 50 (very) Large, at their current burn rate of $1.3B-ish a month, that’s maybe 20 extra months.

    Which means something like 95 bonus GM Death Watches.

    Who says there are no silver linings?

  • avatar
    srclontz

    You’re all wrong, we get the promise of a brighter future, where all of the domestic automakers are competitive, building high quality and desirable cars, and the rust belt will boom like never before. They will promise to build American cars that ride well, and actually go around corners, which will confuse the British immensely. GM, Ford and Chrysler might have enough money to out a check for a trillion dollars to the federal government, just to thank them for their help when they needed it most. So, for all this, we will be getting something as tangible as a promise. Isn’t that great? Doesn’t it make you feel proud as an American to consider the possibilities?

  • avatar
    jurisb

    Wow, every 4 months Gm is paying amount of one potential new model just to service debt. 3potential car models don`t see daylight every year because those suckers have to pay interest on servicing debt. How about we spend that bailout wad to whip our education system and manufacturing practices. We need 50bn plus 20 dollars to buy that Deming book. Can you imagine spending those 50bn on educating engineers so they can make US robotics able to stamp something more than wire harnesses ,for example industrial robots for Dearnborn. Wouldn`t that plug the fountain of jobless rate a bit?

  • avatar
    Adub

    Ha! I checked Deming’s book out for FREE at my local library last week! What we need is a Deming/Dirty Harry clone to stalk the halls of the Ren Center, making everybody’s day…

    The rust belt has been sucking it up for alost forty years. Put a fork in it already!

  • avatar
    AggieKnight

    This is unbelievable. The UAW and these corporations work together to build poor quality cars that nobody wants for decades and NOW they want us to bail them out?

    We can make do a lot better with our money than bail these companies out. This money isn’t a loan – its a give-away. These companies will go bankrupt before they can every turn a profit. We should let them.

  • avatar
    crackers

    When a business goes bankrupt, isn’t the Government always first in line to get their cut? If I had loaned the D3 money, I would be worried about this $50B loan. If anything goes wrong, there could be nothing left after the Government has finished picking over the carcass.

  • avatar
    TJ

    monkeyboy,
    Valid points, and my answer is “NO”. What I do object to, however, is the 30-50 grossly overpaid, unapologetic, unaccountable slugs in the Executive suites who have been abusing their positions of power for a number of years. Get rid of them and much of the rancor will leave with them.

    Perhaps you should use the number 537 instead of the 30-50. You know, 435 in the House, 100 in the Senate, and a Pres and VP. Maybe the best thing that could happen is these 537 could get together with the 30-50 and drive their high class domestic autos across the bridge to no where.

    Additional comment: If this were not a presidental election year with Michigan and Ohio must win states does anyone think this bailout would even be comic page news?

  • avatar
    highrpm

    Seriously, we are giving away Billions of dollars to countries that hate our guts. The last one I read about is Georgia, right? The only thing we ever get back from these countries is their spite and envy and hatred for all things American.

    If the choice is giving my money away to a country that hates us anyway or loaning it to the Big 3, I’d vote to help save our auto manufacturing base. Don’t make it easy though. Put performance hurdles in. Don’t let Wagoner get away with a $14M salary while he’s sinking the company. Etc.

    I hate to say it, but when the country is hurting like it is now, why don’t we limit sales of foreign brands here? Every other country in the world does this exact thing to us right now.

  • avatar
    Mike66Chryslers

    I hate to say it, but when the country is hurting like it is now, why don’t we limit sales of foreign brands here? Every other country in the world does this exact thing to us right now.

    I believe that used to be covered by the US-Canada Auto Pact, but the EU and Japan complained to the WTO, who abolished it in 2001.

  • avatar
    nudave

    highrpm:

    Every other country in the world…

    Errr – I beg to differ. My guess is you neither have, nor have ever used a passport.

    There are many place in the world where US manufactured vehicles are available. However, since US manufactured vehicles are generally designed by and for North Americans, whose tastes and requirements are so different from the rest of the world, sales are usually poor. So, while you can sell a car designed for $7.00 a gallon gasoline in the US, it’s virtually impossible to sell a car designed for $2.00 a gallon gasoline anywhere else.

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