“A bankruptcy of any of the Big Three could be even worse, a harsh reality considered unthinkable a year ago.” So says Detroit Columnist Daniel Howes in his latest column— despite having discussed (and dismissed) GM’s C11 with me two years ago. As proof that a year is an eon in politics, presidential candidate Barack Obama is promising personal intervention in Detroit’s downfall, telling a TV interviewer that he would meet with all the parties concerned, without preconditions. “Sen. Barack Obama, D-Ill., said in a TV interview that if he were elected president, he would meet immediately with the heads of Detroit’s automakers and the UAW to discuss a strategy to make the industry globally competitive. ‘The notion that we can’t compete in an industry that we created I think is, you know, unacceptable. And not only that, but you’ve got an entire Midwest, Ohio, Michigan, big chunks of Indiana, parts of my home state of Illinois, that — the entire fabric of those, those states’ economies are built around the auto industry,’ Obama said, according to a transcript from NBC News.” I wonder what they’ll talk about *cough* bailout *cough*. Meanwhile, the DetN acknowledges our last story: the White House says a GM – Chrysler merger subsidy isn’t on the cards. But the hometown paper claims GM hasn’t given up.

Not our man Warren Brown, obviously; although the Washington Post’s automotive critic (and I mean that in the nicest possible way) recently tore Ford a new you-know-what for replacing the Escape’s rear discs with drums. No, I speak here of Steven Pearlstein, who’s ready to put the meat on the bones of DetN Auto Editor Manny Lopez’ contention that’s there’s a bi-coastal conspiracy of nattering nabobs of negativism ready to let Detroit die (by its own hand, but who’s counting?). “You can just imagine [ED: hear] the pitch from the populists of the Michigan congressional delegation: If the government is willing to invest $250 billion to bail out pinstriped bankers, then the least it could do is throw an extra $10 billion to rescue the domestic auto industry and the millions of workers and retirees who depend on it. There’s only one difference: The government will make money on its bank investment, while the GM-Chrysler deal is a lemon.” Regular TTAC readers will know Pearlstein’s rationale without having to read it. But if Hayden Christensen can make jumping look cool, well, why not?

Detroit News auto jeffe Manny Lopez seems to think there’s orchestrated opposition to a Motown bailout. In this he could not be more wrong. Not a single elected representative has come out against federal mammary provision to Motowns’ mavens. Lest we forget, Senator John McCain reversed his anti-Detroit-bailout rhetoric in time for the election. Besides, the $25b Department of Energy is a done deal, and TARP provisions for Detroit’s captive lenders are on their way. Still, paranoia rules! “I’m not buying the ‘Let Detroit die’ line that’s being promoted by people across the country. It’s tired. It’s simplistic. And it’s misguided… Most notably the jobs that would be lost, though the ‘thought leaders’ on the coasts and politicos in Washington, D.C., don’t seem to be giving that much consideration. Carly Fiorina is among them. The former chief executive of Hewlett-Packard Corp. said in Detroit this week that the government can’t rescue the auto industry. ‘The auto industry cannot be saved from its own bad bets,’ she told the Detroit Economic Club.” Now THAT took some balls. Not that Manny’s ready to cede the point (as if). But it does inspire some classic “this is not my beautiful welfare” rhetoric.

Yup, chalk-up another successful suckle on the federal teat, as Uncle Sam GM adds GMAC to the Commercial Paper Funding Facility. Reuters bears the glad tidings. “GMAC LLC, the auto and mortgage finance company, on Tuesday said it had been approved to use the commercial paper funding facility created earlier this month by the U.S. Federal Reserve with the aim of easing pressure on the corporate credit market.” Way-hey! Surprisingly (not), veteran GM spinmeister Gina Proia was a cagey as a canary on the deal’s specifics. For example, timing. “[GMAC] granted approval of its application ‘recently,’ Proia said.” And logistics. “Proia said GMAC would participate in the Fed’s borrowing window through its New Center Asset Trust (see: Bloomberg), a $10 billion asset-backed commercial paper facility. But she said GMAC would not discuss in a more detailed way how it planned to use the borrowing facility. ‘We are not discussing in any detail our participation in the Fed program,’ she said.” I agree! Why should the company benefitting from MY TAX MONEY tell me when, how, how much of it its hoovering? Hmmm. Something’s screwy here…

Down the rabbit hole our tax money goes, as a “merger” has become a “rescue.” Reuters reports General Motors and Cerberus Capital Management have asked the U.S. government for roughly $10b in an “unprecedented rescue package” to support a merger between GM and Chrysler, according to “two sources with direct knowledge of the talks.” But don’t worry, because only $3b of that would buy Uncle Sam preferred stock in the merged automaker, “according to one of the sources, who was not authorized to discuss the matter publicly.” You may have qualms about government ownership of a large slice of the American auto industry, but Reuters writers are down with that. “It would… give U.S. taxpayers a large stake in the turnaround of a struggling auto industry that employs over 350,000 American workers and is credited with supporting employment for another 4.5 million in related fields.” So what of the remaining $7b?

The Detroit News reports that the White House wants the feds to cover GM, Ford and Chrysler’s bad paper. “White House spokeswoman Dana Perino said that GMAC, Ford Motor Credit and Chrysler Financial could be part of the Trouble Asset Relief Program — the $750 billion Wall Street rescue package approved by Congress. ‘It’s possible that some of those financing arms could be a part of the rescue package — the TARP, as they call it at the Treasury Department. So that’s why — that’s one of the reasons Treasury has been in contact with them.'” (The other: to buy 5k Trailblazers on the cheap.) Meanwhile, The Energy Department named a senior career U.S. Treasury Official named Lachlan W. Seward to oversee the Department of Energy’s $25b low-interest-for-20-year-old-or-more-auto-plant-retooling loan program. (Either that or buy Siberia from the Russians.) Parenthetical asides aside, it looks like TTAC’s Ken Elias was on to something. Something that smells BAD. “People familiar with the matter said General Motors Corp. chairman and CEO Rick Wagoner was in Washington last week for meetings with U.S. Treasury officials. GM spokesman Greg Martin declined to confirm or deny the visit. Bloomberg News reported that GM had offered to swap an equity stake in the company in exchange for federal help.” Looks like I was right about the race against bailout fatigue, as well.

As Ken Elias points out in his latest General Motors Death Watch, GM is asking the feds for money to fund their merger (now buyout?) plans for Chrysler. The Wall Street Journal [sub] tells the tale, highlight analyst Ron Lache’s “come to Jesus” moment re: the automakers’ cash conflagration. “”Without external intervention, from consolidation or government assistance, we expect GM to reach its minimum cash position in under 12 months,” Deutsche Bank auto analyst Rod Lache wrote last week. In an interview, Mr. Lache added that Chrysler is also running dangerously low on funds. “We believe Chrysler is in the same position. It’s either August 2009 or December 2009 they run out. Both have a limited runway.” OK, so, now, bring on the anonymous source! “GM and Chrysler ‘are basically waiting on the government,’ said one person involved in the merger talks. ‘The three choices are bankruptcy, a big intervention from the government or some big deal like this that has massive cost-cutting possibilities,’ this person said. ‘That’s it. And even the big deal may require government help.'” Or… the feds could do nothing. You know, theoretically. But wait! It gets worse!

File this one under TTAC called it. Yes, even before the The Big 2.8 can tap the Department of Energy’s $25b low to no-interest loans, even before the feds “rescue” GMAC/Chrysler Financial’s bad paper (under the Troubled Asset Relief Program), the automaker/UAW’s duly elected representatives are petitioning The Honorable Henry Paulson (Treasury Department) and Ben Bernanke (Federal Reserve) to use the Emergency Economic Stabilization Act (EESA) to bail the domestics’ asses out. Automotive News [sub] reports on Carl Levin’s group love telephone press conference, wherein the Senator and his pals “opened the door to the federal government acquiring rights to ownership stakes in troubled automakers and suppliers.” We’re talking stock warrants– the same play Chrysler made for its survival back in ’70. “We are after all servants of the broad public interest, and if warrants are of value, or other steps to assist or protect taxpayers, we would have no choice but to be supportive,” House Energy and Commerce Chairman John Dingell, D-Mich. opined. Don’t you hate it when that happens?

[full letter after the jump]

Former NADA president and prolific car dealer Ron Tonkin has gone public with a new plan to fix the mess we call Detroit. And you’ll never guess what it isn’t. You see, Tonkin believes that government loan programs written with Detroit in mind are just not enough of a non-bailout. The federal shore-up of domestic auto lenders? Also insufficient. Tonkin thinks the country needs a non-bailout that’s easy to understand and, most importantly, one that doesn’t cut the dealers out of the non-bailout loop. So he’s written a letter to the D2.8’s executives calling on them to lobby President Bush for a $2,500 consumer tax credit towards the purchase of any new GM, Ford or Chrysler product. “I don’t know what I expect to hear from them,” Tonkin tells KATU TV. “I just hope that it triggers a response of some sort. And I think that if they really sit down and think about it, maybe this is a key that will unlock some progress.” Our friends at KATU are quick to point out that as well as not being a bailout, Mr Tonkin’s proposal isn’t motivated by self interest. After all, “if you think this is Tonkin’s way of drumming up business for himself, think again. Of his 18 dealerships, only two are domestic.” Read Tonkin’s credibility gulf after the jump.

Automotive News [AN, sub] reports that “Growing political interest in another federal spending package to stimulate the U.S. economy is opening the door to more government aid to the auto industry.” Excellent! I recommend Uncle Sam buy as much Toyota stock as possible. And while we await more details on this, the real bailout, it’s nice to see AN join the journalistic march towards quoting anonymous sources as much as humanly possible. “Automakers and perhaps suppliers would have more flexibility in using the new money than they do with retooling loans that have been approved but not issued, industry officials say.” Who? Anyway, we all know where the United Auto Workers (UAW) stands on federal teat sucking– although they seem to want us to believe that their enthusiasm is a recent development. “Now we’re looking at the effect of a recession and depressing sales overall and what that does to the industry,” said Alan Reuther, the UAW’s legislative director. The next round of funding, rather than being tied to fuel economy, ‘would just be flat out in order to survive an extended recession,’ Reuther told Automotive News this week.” This week? What’s the hurry with revealing the info? So guess what Ford (a.k.a. the last domestic standing in waiting) thinks of the idea…

Fresh off his recent membership in TTAC’s Cassandra club, Daniel Howes of the Detroit News has gone back to spinning bad news into industry gameplans. His latest column extolls the virtues of a GM-Chrysler merger, while admitting that such a move would be disasterous for everyone except GM and Chrysler. “Seen from the viewpoint of blue-collar labor, white-collar employees, local governments, dealers, the state of Michigan and the industrial Midwest, just about anyone whose livelihood depends on the dubious survival of Chrysler would pay a dear price,” writes Howes of a possible GM absorption of Chrysler. But, from the narrow perspective of an industry suit, these myriad viewpoints are just so much firewood to be burnt at the altar of survival. And Howes is conveniently on hand to stack it up and pass the matches.

Does anyone edit Jerry Flint’s columns? And yes that’s a trick question. If I were the editor in question, I would sit in awe of any curmudgeon brave enough to argue that GM deserves an extra long root in the federal taxpayers’ trough by admonishing readers that “we should remember Percy Bysshe Shelley’s poem.” Ozymandias? That particular poem is about hubris and inevitably of death and decay. And yet our man Flint’s uses the work to suggest that U.S. taxpayers should bail out General Motors because we don’t want a great empire to, uh, decay and die. Here’s the deal: we owe them. “I have a long memory,” Flint opines, synapses firing like mad. “I remember World War II, when the president of GM– his name was William Knudsen– headed the successful effort to build our great war production machine. GM helped save America then.” That would be the same GM that aided and abetted the Nazi war machine. “I remember the great GM pay, pensions, health care and dividends that made life good for millions of Americans.” And the union corruption, intransigence and feather-bedding that made GM a sitting duck for transplant attack. But wait ’til you hear what Flint has to say about GM’s current management. You’re not going to want to miss this. Right after the break.

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…

Sadly this is not a story about how Ford has been doing reasonably well and actually wants to buy off debt with some cash it’s socked away. No, if Ford wants to live to fight for another bailout, it has little choice but to use cash to pay off $1.5b in debt that comes due tomorrow. “We expect them to use cash out of hand to pay those down,” said Mark Oline, a credit analyst at Fitch Ratings Co. in Chicago. “In the current environment we simply expect these sorts of debts to be paid off, not refinanced.” Not that paying off debt with more debt isn’t awesome, and Ford does still have access to an $11.5 billion revolving line of credit which it has yet to tap. But like the guy says, “in the current environment” is the operating term here. A billion bucks’ worth of debt that comes due tomorrow is owed by Ford Credit, which has a relatively high degree of flexibility for refinancing. So while Ford Motor has no choice but to cough up $500m in cash, Ford Credit could potentially refinance without reaching for its revolving credit line. Ford is also planning the sale of about $500m in new stock. According to Bloomberg, that money will be used to buy back bonds maturing before Jan. 1, 2012. Given that GM just had to tap into its own $3.4b revolving credit account, Ford’s decision to mortgage itself to the hilt prior to the credit meltdown now seems like an inspired business move.

Once upon a time, Barack Obama and John McCain actually disagreed about the proposed automaker bailout. Obama took his cues from the UAW and backed the proposal. McCain remained principled– until he realized he had to win Michigan. Now, not only is McCain camping-out in Obama’s rhetorical territory, promising that “change is coming,” he’s also pushing to be seen as Detroit booster-ier than thou. His new ad literally opens on the corporate logos of the Detroit three, while a honey-voiced narrator coos that “Michigan families depend on the auto industry.” But can McCain really win by following his opponent into populist positions? A post over at Wired indicates that not only is he pandering after already-committed voters, but he’s also helping to fuel protectionism, corporate welfare, and jingoistic anti-innovation. Because there is less daylight between the McCain and Obama positions, McCain is coming under increasingly narrow and divisive attacks, the latest based on his opposition to “buy American” stipulations for (get this) secret service motorcycle purchasing. McCain’s opinion that mandating the purchase of Harley-Davidsons is “unnecessary and counter-productive” has caused the Obama campaign to start a “hybrids and Harleys” initiative. At a recent rally in Grand Rapids MI, Hybrids and Harleys for Obama banned all foreign-built hybrids from the parade of vehicles. Er, all non-D3 hybrids, anyway. Canadian Silverado hybrids were welcome, as were Mexican-made hybrid Vues. Holding Americans and their presidential candidates to an impossible standard of driving American-made, eco-friendly hybrids is the result of a lack of substantive debate. When neither side refuses to take a principled stand on an issue, contrast is derived only through pandering and empty symbolism. For two candidates who claim to be agents of change, this is a lot of the same-old tired politics as usual.

Great news for all you auto-industry bailout fans! The Ukrainian Journal (what, you don’t have a subscription?) reports that Ukraine’s Industry Ministry and the Ukravtoprom Car Producers Association (acronym unknown) have proposed allocating UAH 3.884 billion ($826m) from the national budget to finance the development of the car industry by 2015. And guess what? It’s not a bailout! The appropriation will simply secure nearly $12b in financing to help its industry adapt in a changing global market. Where in the Hell do they get those crazy ideas? But one crucial point differentiates the Ukrainian loans and the bailout currently being sought by Detroit: the Ukrainian car market isn’t up effluence creek. Just-auto [sub] reports Ukrainian Q1 sales are up a tidy 61 percent over last year. The moral of the story? The government helps those who help themselves. Or Detroit desperately needs to master the art of the bribe. Oh wait…

Warning! Video unsafe for narcoleptics or readers enraged by elevator music