Bailout Watch 410: Freep Does The Math: $97.4b And Counting.

by Edward Niedermeyer

February 19th, 2009 8:03 PM

bailout watch 410 freep does the math 97 4b and counting

In a rare turn of truth-embracing, the Freep is printing the total cost of a fully-funded auto industry bailout: a cool $97.4b. That’s “up to $39 billion in survival loans for General Motors Corp. and Chrysler LLC, a $25.5-billion rescue sought by auto suppliers and $25.4 billion in requests to retool auto plants to build more efficient models” plus $6b for GMAC and $1.5b for Chrysler Financial. “And,” admits the Freep, “it’s likely not the end.” They even mention the minor detail that “the aid sought by Detroit’s automakers is many multiples of their current market values,” but not before forcing the reader to sit through some choice relativism from Clinton Labor Secretary, Robert Reich. And they wonder where the love is?

Comments

Join the conversation

4 of 23 comments

Kurt. on Feb 20, 2009

Interesting...had to type the below twice to get it in. Deleting first post in EDIT.

Like Reply
Kurt. on Feb 20, 2009

I am getting tired of the "they dont know how to produce a small 4 cyl Car" routine. It's a machine. Engineers design and build machines. They have engineers on the payroll who haev successfully designed and built 4 cyl cars. I have a Ford 4 cyl with 500,000 miles. I have some body cancer to attend to but I expect at least another 100,000 out of it (if I can save the body in this salt air environment). It is in in house design (Ford) and not an engine sourced from another supplier (i.e. FIAT). Both GM, FORD, and for that matter Toyota and Honda are International Corporations. They long ago stopped being American or Foriegn. Well, until the US Govt bought them... Please, lets drop the "they dont know how to produce a small 4 cyl car" and buy American routine. We've bashed it to death.

Like Reply
Bunter1 on Feb 20, 2009

hey mikey, Nothing personal on this side either. Perhaps you missed my point. I was NOT critisizing YOUR choices. My point is that many (not all) of the Domestic Defenders try to shift the blame to those who have chosen other vehicles and ignored the fact that the internal systems at GM are terminal. I was mearly asking that they recognize that we are not the problem, GM is it's own self-sufficient problem. See Mr. Kleinbaum's excelent series on this. If anything, the attempt to blame GM's finacial difficulties on the "Import Lovers" illustrates that GM's destructive culture extends far outside of the company itself. Respectfully, Bunter

Like Reply
Geotpf on Feb 20, 2009
MMH : February 19th, 2009 at 5:36 pm Huh. So, if I remember Econ 102 (macro) correctly, the auto industry has a smallish number of players because it has significant barriers to entry, yes? It costs a bunch of money to start a car company (see Tesla deathwatch). Let’s exaggerate and say it costs a billion dollars, for the sake of argument. That's probably an understatement of entry costs, not an exaggeration. I would estimate that if one wanted to start a mass market auto manufacturer in the United States (not a niche maker of expensive sports cars like Tesla), one would need to have twenty billion dollars one would be willing to invest. Needless to say, there hasn't been a new mass market auto maker in the US in at least fifty years.

Like Reply