We Almost Lost Detroit

It doesn't seem so big anymore, next to that whole turn-Wall-Street-over-to-the-Treasury-Department plan, but the $25 billion handout for the auto industry is still rolling forward. U.S. News has the details. Among the bullet points:

• It's much bigger than the Chrysler bailout of 1980.

• There are few strings attached.

• There's more aid coming.

Apparently, corporate welfare has its own cycle of dependency. "This year's $25 billion is just a down payment," the report concludes. "The automakers now plan to ask the government for another $25 billion in loans next year. It's just spare change, after all."

Comments

[Chrispy]

Or maybe we could get rid of CAFE and worthless restrictions like it, and allow the auto industry to be profitable on its own.

[Brandybuck]

Pardon my French, but fuckity fuck! Just when you think you've hit bottom, gummit hands you a shovel and tells you to dig.

[sv]

what the FUUUCK..... this is getting silly now. havent we socialized enough for one month? not a liberal, conservative, or exactly a libertarian either, but i know i will be damn pissed if this actually comes out of my pocket with no return. damn it. it must all be a plot to popularize libertarianism... that's it!

It's working!

[JB]

I want my billion dollar bailout so I can buy a billion dollar house with a billion dollar mortgage.

[Naga Sadow]

Time for you chumps to become bartenders. Then you can hide your income.

[Naga Sadow]

Almost forgot.

BWAHAHAHAHAHAHAHAHHAHAHAHAHAHA!!!!!!!!!!!!!!!

[Warren]

How badly do you have to mismanage your business before the government will reward you for it?

[Naga Sadow]

Warren,

Depends on how many people you employ and how much you donate to political campaigns.

[miche]

The theft is so blatantly in our faces that I think I'll don my shiny hat tomorrow, go to the local warehouse store and stock up on some dry goods, booze and tobacco. Then I'll sit my ass at home, get fucked up and watch the shit hit the fan.

Or it could be that I'm hungover for nothing but that happens a lot in my house.

[miche]

Oh, and how many times in his speech did Bush mention credit to buy cars?

[Jon H]

"and allow the auto industry to be profitable on its own."

If they're such shitty engineers they really ought to just shut down and give up.

[Naga Sadow]

Jon H,

Too big to fail.

[Jon H]

"Too big to fail."

GM could absorb GMAC and dump everything else, and become an investment bank.

[Lost_In_Translation]

The government might as well go for broke. Everything they say is going to get them more money, so they might as well spread the largesse around.

[Naga Sadow]

Jon H,

LOL! I like that idea. Assuming of course that GM can make better investment decisions than cars. Unlikely.

[troy]

I am so pissed. Where the fuck is my bailout? If they do this, I will never fucking buy American again. If I am going to be forced to give these fucks money, I will never voluntarily give them money. How is it the Honda can make cars in America without unions, make a better product, and make a profit?

This is such stupid economic policy. Why don't they just pay off all the mortgages of us little people? That way, when inflation goes through the roof, at least us little people will have a roof over our heads?

[Kolohe]

GM could absorb GMAC and dump everything else, and become an investment bank.

They went the other way a couple of years ago.

And GMAC is doing just as bad, if not worse than GM. If they were still a more intergrated enitity, it is possible they would have already formally failed.

(It's similar to how GE finanical is totally wrecking havoc with GE, despite the rest of the company doing quite well for the current climate)

[Jennifer]

We almost lost Detroit? Bah. We should be so lucky.

Why don't they just pay off all the mortgages of us little people?

Because you don't matter. Remember that we are "consumers," not "citizens," and megamillionaires can consume a hell of a lot more than little people. Ergo, megamillionaires matter and little people don't.

[prolefeed]

it must all be a plot to popularize libertarianism... that's it!

No, it's a plan to buy Michigan's electoral college votes for McCain. Turning Republicans into libertarians is just a bonus feature.

[SIV]

Why don't they just pay off all the mortgages of us little people? That way, when inflation goes through the roof, at least us little people will have a roof over our heads?

They intend to "pay off your mortgage" with through the roof inflation.

I'm "all in" on credit destruction outpacing
monetary creation so If I'm right you are getting fuckin' foreclosed and evicted.

[prolefeed]

Sorta the way they bought Florida's electoral college votes with Medicare Part D -- also pissing off Republicans and turning them into libertarians. IIRC, Part D was the tipping point / epiphany for me -- started pulling an LP party ticket for the primaries after that.

[Amakudari]

Bear Stearns: $30 billion
Fannie Mae, Freddie Mac: $200 billion
AIG: $85 billion
Troubled Asset Relief Program: $700 billion
Detroit: $25 billion *

Total: $1.04 trillion in corporate loans

I think I'm supposed to divide by 10 billion to come up with a recommended monthly beer allowance, which brings things to 104 beers. Or is it 10.4 on Election Day? I think I'll have some warm Belgian lager right now.

* And seriously, Chrysler? Not only is it private, but Cerberus has enough cash to buy the remainder of Chrysler from Daimler, so why do they need an infusion?

Why don't they just pay off all the mortgages of us little people?

Because dude, the government's gonna make money for you and me giving opaque CDOs hold-to-maturity valuations. Never mind that bankers who sort through their own institutions' rotten mortgage holdings can't really tell you what everything's worth (I'd know because I am one). I'm willing to take bets on whether under the current scheme the government prices securities based on home price depreciation estimates that turn out to be optimistic.

[Paul]

Pardon my French, but fuckity fuck! Just when you think you've hit bottom, gummit hands you a shovel and tells you to dig.

Actually, Brandybuck, it's more like, right after they tell you they're going to execute you with a bullet to the back of the head, then they hand you the shovel.

Oh, but don't expect a cigarette, either, 'cause those things'll KILL YA!

[Paul]

Total: $1.04 trillion in corporate loans

Loans... loans?!! You, sir, are a very optimistic fellow.

[Max]

Omni Consumer Products!!!

[Amakudari]

Loans... loans?!! You, sir, are a very optimistic fellow.

Most events are structured as contingent loans or secured liquidity facilities. That doesn't make them better, but for example AIG's interest rate (3M LIBOR +850 bps) is pretty strict and the collateral is AIG's assets. I really doubt taxpayers will actually lose money there per se.

On the other hand, the JPMorgan-Bear loan had mortgage-backed assets as collateral, which has some real potential to do harm (because Bear actually did go full retard with regard to MBS and CDOs).

It's still secured lending until we get to TARP. The point is that it's a ridiculous commitment of public monies to private businesses, and that's true even if King Henry's plan works.

As for my disposition, I'm extraordinarily pessimistic about everything, especially TARP, and the word "loan" does not give me especially happy feelings.

[JMR]

One string I'd like attached is no more of those annoying "Ditech" ads from GM, since they're clearly taking on a bunch of bad bets on the taxpayer's shoulders.

[Episiarch]

Omni Consumer Products!!!

No, no: Kanemitsu Corporation!!!

[T]

There's really no amount of profanity that suffices to express my thoughts right. I'm listening to anonymous truckers on the radio tell how they drove trucks full of ice to an air force base and dumped the ice to let it melt because FEMA couldn't handle the distribution of ice in Houston in the summertime. How absolutely incompetent do you have to be to fuck that up? And we're gonna give a similar bunch of asshats 700 billion to hand out with no oversight? Is everyone in DC just insane?

I'm getting the sinking feeling that Claire Wolfe was indeed wrong, and it is time.

[J sub D]

Told ya.

[J sub D]

We almost lost Detroit? Bah. We should be so lucky.

Et tu, Jennifer.

[Jennifer]

Now now, J-sub, I'm quite willing to give up my own city along with Detroit. Around here we're slightly less likely to have our politicians wind up in jail, but I consider that a bug rather than a feature. Your city at least inspired KISS and a line in an inexplicably popular Journey song. Mine merely inspires snippy little comments on Hit and Run.

[not an economist]

Isn't all this borrowing on the government's part necessarily going to mean the printing presses at the treasury will be working overtime, resulting in double-digit inflation? And (just thinking out loud here) won't that mean that liquid investments like, say, everyone's retirement funds, are going to be worth a helluva lot less? I guess on the bright side, when (if) my income goes up to cover the inflation rate it'll be a lot easier to pay off my mortgage.