Bailout Watch 33: What Do We Get For Our Money?

by Robert Farago

Published: September 9th, 2008

bailout watch 33 what do we get for our money

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?

Robert Farago

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4 of 23 comments

TJ on Sep 10, 2008
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?

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Highrpm on Sep 10, 2008

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.

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BigOldChryslers on Sep 10, 2008
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.

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Nudave on Sep 10, 2008
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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