Bailout Watch 115: Wait For It…

Edward Niedermeyer
by Edward Niedermeyer
bailout watch 115 wait for it

And we’re back! Our ongoing coverage of GM’s attempts to squeeze yet more money from your elected officials continues apace. We’ve got two stories on a potential “stopgap bailout” designed to keep GM afloat while funds from the already-approved bailout clear regulations. The first story from Automotive News [sub] indicates that while GM is flailing around for a merger partner, it is seeking access to the fed’s discount lending window, which is already pumping some $420b a day into distressed financial firms. Such access would allow GM to borrow at a 1.75 percent rate, a far better deal than the already-sweet 4.5 percent it will get when the $25b bailout becomes available. With its stock at 60-year lows, GM will likely need this access to put any kind of merger together. The feds won’t comment on this plan, and Automotive News [sub] reports that GM has not yet sought the funds. However…

“In this period of continued uncertainty in the markets, you really can’t rule out anything,” say GM spokesfolks. And an interim bailout would not just help GM survive until bailout funds arrive, it could also help GM maintain eligibility for them. In order to claim its share of the $25b, GM has to be a “commercially viable” firm, according to rules in the 2007 Energy Independence Act. So, GM is not going bankrupt and not seeking an individual bailout, so… it’s just going to let its stock slide and cash burn? Something’s gotta give, and past experience proves that federal fiscal responsibility is the weakest link in the chain of (ir)responsibility. Stand by for another big public investment in a failing firm.

Join the conversation
4 of 7 comments
  • Mel23 Mel23 on Oct 13, 2008
    The government has millions and millions of overpaid underworked employees all making big bucks and benefits. Based on direct knowledge I assume. Actually from what I read, large parts of the civil service functions have been contracted out. I heard an interview with a reporter (OK, liberal media) a while back talking about lots of empty desks and near-empty offices in federal buildings. When I was in the military years ago, we did everything including the dreaded KP (feeding the troops). So we put in a 15+ hour day for our measly pay. Now KBR or some such handles it at documented ripoff rates. But hey, KBR pumps in huge [s] bribes [/s] campaign contributions and lets the politicians brag about cutting the size of government and, by definition, saving tax dollars.
  • on Oct 13, 2008

    14.6million just Federal employees. Add in the state and local employees and all the groups like ACORN living off the taxpayer and you will get the idea. "Roll all of those together -- and mix in the numbers of postal workers and military personnel on the federal payroll -- and the "true size" of the federal government stands at 14.6 million employees, said Paul C. Light, the study's author and a government professor at New York University."

  • Mel23 Mel23 on Oct 13, 2008

    The numbers are the numbers. As to whether the numbers are excessive, how hard and effectively the people work, whether they're overpaid and whether their benefits are excessive, some facts would be helpful. The Republicans have been in the WH for 8 years; 20 of the last 28 years. And they've been in majority control or able to block whatever they don't want, for most recent years. Oh yeah, Ron Paul's the answer. Fine sack 'em or cut their compensation so only the dregs are involved. When W was elected and then re-elected I figured the 'conservatives' would wake up after seeing the results. OK, two wars that we can't win nor even define what win means, the economy in the worst mess in the last 75 years, yet people want more. Insanity.

  • ZoomZoom ZoomZoom on Oct 13, 2008

    "yet people want more". What does that mean? And unless I haven't been paying attention in the last two years, both houses of Congress are not in Republican control. Congress controls the purse strings. Or not, as the case may be. My point is that there's plenty of blame to go around. For both parties.