by Frank James
The Big Three auto makers take their pleas for an auto industry bailout to the House side today and as we saw yesterday after the Senate's hearing, it's far from certain they will get the $34 billion in taxpayer-subsidized bridge loans they're seeking.
They may get some perverse help from the economy today, with the Labor Department reporting this morning that the nation lost more jobs in November, 533,000, than economists had expected, more than anytime since 1974.
The Detroit Three employ 250,000 U.S. workers. GM alone has 100,000. So the November job loss figures could perhaps ease the resistance of some lawmakers who've been dubious about the bailout.
And even after yesterday's contrite appearances by the newly humbled auto chief executives, there still were lawmakers who remained to be swayed.
As Tribune Washington reporter Jim Puzzanghera reports:
But skepticism remained high on Capitol Hill during a hearing of the Senate Banking Committee, with lawmakers questioning Detroit's commitment to becoming more competitive and worrying that the taxpayers' money would quickly be frittered away.
As a result, General Motors Corp., Ford Motor Co. and Chrysler still face tough odds in getting government help this year.
"In just two short weeks the price tag has jumped from . . . $25 billion to $34 billion," said Sen. Richard C. Shelby of Alabama, the Banking Committee's top Republican. "I'm interested in hearing what changed and why we should believe things will get better."
What is particularly worrisome not just for the Big Three but anyone anxious about the overall economy, which should be everyone, is that a failure of one of the major automakers would place the nation even further out in unchartered waters than it already is.
The economy is presently extraordinarily weak. Further major shocks could accelerate the downtown, extending and deepening the recession or even sending the economy into a depression.
An insolvency by one or more of the Big Three definitely would qualify as a major shock.
The world learned a lot about the unintended consequences of allowing the failure of major players in the national and global economy earlier this year when federal policy makers allowed Lehman Brothers, the venerable investment bank, to go insolvent.
That led to the seizing up of the commercial paper market which companies use to provide their short-term cash needs which in turn contributed to the further tightening of the credit markets which in turn put the Big Three in an even more precarious position.
Who knows what a Big Three collapse would lead to and do we really want to find out?
Comments
No bail out-Total waste of American taxpayer's money-
The only soluition but no one likes to admit it-
Let the automakers go broke and reorganize like their foreign competors and then they will be competive global.
Posted by: Inky | December 5, 2008 9:55 AM
The Night Before Bailout Christmas
(The Night Before Christmas)
WilliamBanzai7
Twas a fortnight before Christmas, when there came to the House
A cadre of Detroit clowns doing a sad bailout grouse.
Their company's were hung by years of inept stupidity and greed,
Now there they were standing, the last of a dying breed.
The union ranks were nestled all snug in their beds,
While visions of hybrids and plug-ins danced in their greedy heads.
And John Dingell with his big auto ‘kerchief, that old Detroit hack,
Had just settled his brains for some more motown crack.
When out on the lawn there arose such a clatter,
It sounded like a vehicle powered by reverse anti-matter.
Away to the window all flew like a flash,
Tore open the shutters and threw up the sash.
There on the pavement without snow
With the lustre of well designed objects below.
What to their wondering eyes should appear,
But a brand new Toyota Prius powered by eight tiny reindeer.
With a little old driver, so lively and quick,
All knew in a moment it must be Bailout St Nick.
More rapid than eagles his coursers they came,
And he whistled, and shouted, and called them by name!
"Now Toyota! now, Nissan! now, Daihatsu and Honda!
On, Isuzu! On, Suzuki! on, on Mistubishi and Mazda!
To the top of the market! while the big three all fall!
Now dash away! Dash away! Dash away all!"
As dry leaves that before old hurricane Katrina fly,
When they meet with an obstacle, mount to the sky.
So up to the rotunda the coursers they flew,
With the hybrid sleigh full of Bailout Toys, and Bailout St Nicholas too.
And then, in a twinkling, there was heard under the Capital roof
The silly prancing and gnawing of each Big 3 auto goof.
As all shook our heads, and made a skeptical frown,
Then through the hearing room doors lept Bailout St Nicholas with a bound.
He was dressed all in red Texaco overalls, and black harley boots,
And his clothes were all tarnished with 10W40 and soot.
And billions of bailout dollars he had flung in his bailout sack,
And he looked like a used lemon peddler, just commencing his attack.
He spoke not a word, but went straight to his work,
And filled all the bailout stockings, then turned to those three Big 3 auto jerks.
And laying his fingers to cover his nose,
While giving a nod, all the taxpayers got hosed!
He sprang to his Bailout sleigh, to his team gave a whistle,
And away they all flew like one big Detroit bailout missile.
But they heard him exclaim, ‘ere he drove out of sight,
"Happy Bailout Christmas to all, see you next year good-night!"
Posted by: williambanzai7 | December 5, 2008 10:37 AM
The big three. Buy stocks. Buy a Ford. Buy a house. One will break you. One will burn you. The other will bury you. These auto manufacturers can seriously down size to survive. I believe Bush said, "No institution should have this much power to jeopardize the economy." It should be the same for corporations. It's a good thing the big three go under. Then the auto industry would be wide opened to competition and alternative energy vehicles. I really think if they go under, no ones going to miss them.
Posted by: Steve Herbelin | December 5, 2008 10:59 AM
i've been out of work for 55 weeks,no unemployment, no credit cards,no car,checking account or bank account,77 applications,no interviews,over qualified,reverse discrimination,political correctness has killed the skilled craftsperson in this country,screw detroit,they had years to get it right,and now their crying,walk in my shoes,what worker with a 10th grade education,deserves with benefits $73 an hour,kiss my a..................file bankruptcy and reorganize,the environment changed 15 years ago,but hell were ripping off people with gas guzzling suvs,get over it........drop dead................
Posted by: adrian | December 5, 2008 12:53 PM
A precondition of the bailout of GM should be a bankruptcy filing. I don't have a problem with the feds providing bridge financing in bankruptcy. Any handout short of bankruptcy means its just a political payoff. Mostly to the UAW and existing dealers who are big supporters of the Dems
GM proposes to use a portion of the bailout money to buy up excess dealerships. GM can do that for free in bankruptcy -- no need to buy them out at all.
United (and their unions) survived bankruptcy. GM can too.
Posted by: Trey | December 5, 2008 2:14 PM
And this just in:
http://www.huffingtonpost.com/2008/12/05/treasury-dept-hosting-hol_n_148693.html
Paulsen is holding the Treasury's holiday party in the "Cash Room". Doesn't that warm your heart they they have money to keep on partyin' this holiday season?
Posted by: lochnessmonster | December 5, 2008 3:29 PM