Bailout Watch 407: The Hometown Reaction: Just Do It

Detroit’s hometown newspapers are reacting positively to the most recent requests for another round of automaker bailouts. Shocking, I know. After all, Detroit’s media is fast becoming the most notorious bailout boosters on the block. But titling an editorial “U.S. auto producers make a solid case for federal aid” is really stretching things, even by Detroit News standards. And as conditions worsen, the rose-colored-glasses act is really wearing thin. To paraphrase an old Soviet joke, there are two ways Detroit can be turned around: the natural and the miraculous. The natural way is that the Archangel Michael and his bands of angels descend to earth and work 24 hours a day to save the city’s economy. The miraculous way is that the automakers do it themselves. Detroit’s local media clearly believes in miracles.

“There are still some hangups,” admits the DetN editorial board. “Final deals with bondholders and the United Auto Workers are incomplete. They are working diligently to come to agreement. When the process is completed, they will be different companies, and Michigan will be a different state.” Of course embedded in this bit of Pollyanaism is an admission that the automakers have failed to coax the necessary concessions to have an actual viability plan. Of course as viability aspirations, the current GM and Chrysler plans are magnificent.

And despite urging the feds to keep the automakers clasped to the tax-money bosom, the DetN editorial can’t help but point out that bailout checks won’t prevent the consequences they were meant to head off. “Congress and the administration should see in these reports a good faith effort by companies struggling to survive,” deadpans the editorial. “They’ve already made huge sacrifices and they’re willing to make more. They are demanding wrenching, painful changes of their investors and their employees. And ultimately, the pain of these changes will be felt by Detroit, Michigan and large swaths of the industrial heart of the nation.” Though the DetN takes up the alarmist call, arguing that “if the government fails to provide the necessary aid, the consequences, not just for this state, but for the nation, may be too difficult to imagine,” the real message for lawmakers is lurking below the surface. Bailout money hasn’t elicited the necessary union or bondholder concessions or prevented job loss, but more would be great.

Over at the Freep, Mark Phelan makes the extraordinary case that the “latest plans embrace reality.” Ya think? Rick Wagoner’s admission that 2009 US sales wouldn’t reach the 10.5M “downside” scenario from GM’s December 2 plan tells Phelan that GM is embracing said reality. Funny, because my impression was that it simply proved that GM constantly trots out the most optimistic numbers they can get away with. In fact, in order to hit the current 9.5M unit “downside” scenario, economic conditions can’t get any worse. If you think that assumption “embraces reality,” you might as well start buying GM stock now. Tellingly, Phelan doesn’t even try to explain how Chrysler’s plan reflects a stronger grasp on reality. And yet the title still uses the plural for “plans.” Credibilitygasmic!