Bailout Watch 110: You Get What You Give
Though we can’t do anything now to prevent the passage of the $25b industry loan package, there’s still plenty of scope for measuring results and demanding accountability. After all, as Danny Howes of the Detroit News puts it “Implicit in the federal loan package, it seems to me, is a message from Congress and their constituents: Get it right this time because there may not be a next time.” In his latest editorial, Howes qualifies his earlier bailout support with a call on the Detroit to get back to the business of being in business. Recent hybrid and electric hype coming out of Detroit “has the eerie feeling of a cranky heart patient running on a treadmill because he has to, not because he wants to,” reckons Howes. And when there’s a shortage of heart attack medication, such calls to action should be even more closely heeded. An S&P press release published in Automotive News (sub) claims that receiving $25b in low-interest loans has done nothing to boost the credit ratings of Detroit automakers. A full FAQ is published at S&P’s subscriber-only ratingsdirect.com website, but the argument’s broad strokes are that nobody knows how or when Detroit will actually get the federal loans. Until such time as the loans are approved and the checks clear, S&P sees no reason to elevate the credit ratings of domestic automakers, currently standing at (B-/Negative/–) for GM, (B-/Negative/–) for Ford Motor Co., and (CCC+/Negative/–) for Chrysler LLC.
Delaying the inevitable?
Yep, hanging drapes on the windows of the titanic.
I wonder if anybody at the federal level is doing any contingency planning. I'm afraid I know the answer, but what the hell is going to happen if the 2.8 go down? Will we see Toyota and Honda go to three shifts to fill the void? Is there any provision for taking over a large corp. about to fail due to national interest or emergency? The recent $700B and $25B bailouts would have been a good time to put in some performance requirements and specified some what-ifs given all the tax money involved. Nature might abhor a vacuum, but DC seems to be immune from natural forces so far.