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Son of a Bush!

Rumors of a structured bankruptcy were greatly exaggerated. President Bush has kicked the automaker bailout can down the road and decided to offer GM and Chrysler $17.4 billion in loans from the TARP fund. On the plus side, Bush's conditions appear to be substantially the same as the plan Corker devised. They've got until the end of next year to bring their labor costs in line with "transplant" automakers.

On the double plus side - from a political standpoint - Obama and the new Congress will be forced to revisit the matter no later than February 2009.

The structure largely follows the pattern of legislation that failed in Congress last week in the Senate because of Republican opposition. In stepping in as he is, Bush risks angering conservatives in his party but the administration felt it had no choice given the fragile state of the economy

First off, the Senate plan failed not because of Republican opposition but rather the UAW opposition to an "arbitrary" date (12/31/09) by which GM and Chrysler were to have adjusted their labor costs. That and the four Democrats (Baucus, Lincoln, Reid, and Tester) who voted against it and four Democrats who didn't vote at all (Biden, Kennedy, Kerry, and Wyden). Ten Republicans voted for the bill that failed to reach cloture by a 52-35 margin (Bond, Brownback, Collins, Dole, Domenici, Lugar, Snowe, Specter, Voinovitch, and Warner). Fifty-two plus eight equals cloture.

Secondly, Bush has already angered conservatives with his bailout shenanigans. What's another $13.4 billion, right? At least this time he's punted a politically unpopular football to President-Elect Obama and the Democrat-controlled Congress. The automakers won't fail on his watch and his plan is essentially the Corker plan. It could have been worse.

The big loser is Ford. They've got $15 billion in the bank and stood to increase their market share if GM and Chrysler's bankruptcy affected car buyers' image of the companies. They're also preparing to roll out the wildly-popular-in-Europe Fiesta in the US; whether or not a new subcompact proves popular with Americans remains to be seen. The European Fiesta's diesel engine skirts sky-high gasoline taxes and the US version will be gas powered. Its success or failure will be a canary in the coal mine for the "green" auto designs sure to be foisted upon GM and Chrysler by Pelosi and Reid.

Bankruptcy would have been the best long-term solution for GM and Chrysler. Bush didn't want their failures to be his legacy. We probably got the best band-aid solution, all things considered. Now it will be the Democrats who ultimately pay the political costs for future and continuing cash infusions to GM and Chrysler. Bush is just running out the clock. Faster please.


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Comments (16)

Band Aid solution? The way... (Below threshold)
Matt:

Band Aid solution? The way GM and Chrysler is bleeding red, it should be the tourniquet solution.

All the polls indicate that any kind of bail out is wildly unpopular with the U.S. populace. Glad to see the government openly defying the will of the voters to support their big money contributors.

It would be great to see the media, all versions including blogs, debating the constitutinallity of any kind of bail out for anybody. Last time I read the constitution it didn't authorize the Federal Government to give money to private corporations.

They need to force GM and Chrysler into bankruptcy, that is what they are. We know bankruptcy does not immediately shut down a corporation, it allows them to reconfigure and restart. Bankruptcy wouldn't require either company to immediately dump all their employs, stop manufacture, sales etc.

Obamalala and the Democrats... (Below threshold)
MPR:

Obamalala and the Democrats will get eight years of Bush bashing with the help of the Obamamedia. The Republicans could have hung the financial crisis around the neck of the Democrats even without the help of McCain in September but, didn't show the stones to do so. It will be a rough eight years if the Republicans don't grow a pair and fight for conservative policies instead of liberal socialism.

"The big loser is Ford"????... (Below threshold)
Macy:

"The big loser is Ford"????

I would say they look like the big winner.

I have supported the Presid... (Below threshold)
apb:

I have supported the President's decisions in the past - including the war on terror and the post-9/11 economic policies.

Now he's turned into a moron dhimmicrat. He wasn't failing the US before; he is now.

Ah fun. We get a double wha... (Below threshold)

Ah fun. We get a double whammy this morning: a bailout that ensures the automakers will be back in three months (bonus - more Gettlefinger whining), and nationalization of the US auto industry. A Christmas miracle, if there ever was one. Hugo Chavez must be laughing at us right now.

apbYou don't suppo... (Below threshold)
Grady:

apb

You don't support the President's decision? Why you unpatriotic america-hating deranged traitor!!!!

Well, got to hand to the pr... (Below threshold)
jmc:

Well, got to hand to the president, after 8 years of making some of the worst decsions in the history of this nation, he ignored the crazed idealogues in his party and got one right.

Republicans should rejoice, Your unlikely now to be known only as the party of Hoover.

Grady -My remarks ... (Below threshold)
apb:

Grady -

My remarks are substantially different from the typical lefty douchebag's rants about 'Chimpy McHitlerHalliburton'. Bush is still succeeding in the war on terror; his economic policies until now have been sound, although undermined by the moron dhimmicrat contingent of Dodd, Frank, Pelosi, Reid etc.

This 'bailout' is miserable, and the Administration's proposal is failing all of us.

I have supported ... (Below threshold)
jmc:
I have supported the President's decisions in the past - including the war on terror and the post-9/11 economic policies.

Thos "post-911 economic policies" Have really done the country a world of good haven't they?

We should de-regulate some more, get goverment out of the way and let the smart bankers make us all rich.

So now we are in the busine... (Below threshold)
James:

So now we are in the business of throwing good money after bad, wonder if we are going to borrow this money or just print more. This nation is in debt now and this bail out will only be added to the debt. This is just another stupid idea, throwing money at a problem.

jmc -The Bush poli... (Below threshold)
apb:

jmc -

The Bush policies were fine - the treasury has had record tax income for years.

The problem really originated with the housing bubble from Clinton's 'Community Reinvestment' rewrite, and mandatory lowering of standards for loans. Once you have a great demand, builders will attempt to create a supply.

Once you had failures - even from those that should NEVER have been able to get loans, you've jacked supply greater than demand, and pricing plummeted.

Once pricing plummeted, all the folks with valuation-based ARMS got hammered with increased rates, and home equity loans disappeared - leading to reduced spending in the rest of the economy.

The real lack of oversight came from bank subcommittee douchebags like Dodd and Frank, who blocked attempts to provide Freddy/Fannie oversight, as well as forcing bad policy on banks. Thanks, dhimmicrats!

Here's a great quote I read... (Below threshold)
JFO:

Here's a great quote I read which is surely apropos to this discussion:

"It used to be said that a recession was the Republican method for shortening the lift lines at the ski hill. A Depression must be their method for making the ski hill their own private playgrounds"

As a corollary to JFO, one ... (Below threshold)
apb:

As a corollary to JFO, one could argue the following:

If the 'rich' benefit the (R)'s, then the (R)'s need to keep the 'rich', rich.

If the 'poor' benefit the (D)'s, then the (D)'s need to keep the 'poor', poor.

apbActually it's t... (Below threshold)
JFO:

apb

Actually it's the repubs who try to keep most people poor - as a corollary, of course, to your comment above.

Actually it's the repubs... (Below threshold)
James Cloninger:

Actually it's the repubs who try to keep most people poor - as a corollary, of course, to your comment above.

Then, to conclude your statement. If the Republicans are the ones trying to keep the people poor, then Democrats are for the Rich, and if they claim they are for the poor, they are liars.

Democrats...Party of the Rich Snobby Elitists.

Q.E.D.

I like this game of yours.

It would have been nice if ... (Below threshold)
hcddbz:

It would have been nice if the president just left this all for the new administration. He has spent several Trillion Dollars in bailouts and look at how well the market is doing. He has done nothing but help nationalize the banks, insurance and now part of the auto industry. Marx would be so proud and Adam Smith would flip.

We should de-regulate some more, get goverment out of the way and let the smart bankers make us all rich

When in 2002 the SEC discovered irregularities in the books of Enron and Worldcom that occurred in the 1990s the reaction was to fire the current head of the SEC.

When in hearings were held about FM/FM you had congress complain that the auditor needs to be investigated.

The press and congress set the tone that they would shoot the messenger and then wonder why anyone would not come forward with bad news.

The government has pushed for 17A-4 for digital records thru fines
CRA (Anyone not remember the rallies Jesse Jackson had on Wall Street to help remind the companies that he was willing to sue them under the CRA if they did not help "minorities".
Sarbanes Oxley Acr 2002
FAS 157 2006

The government has failed the people. The DEM by pushing for unsound policies CRA,FM/FM big Unions and the hate the rich attitude and the Republicans by allowing big spending, increase of government and failing to act on abuses by FM/FM. They saw the FM/FM with the gun and instead of tackling criminal and risking getting called bad names they just made the gestures and allowed things to continue.

However we still keep electing RHINO and people like Frank and Pelosi s maybe we get the government we deserve.

The Government runs Amtrak at such a high rate of profitability, hopefully they can take those same principles to the Automakers.

Congress know how to run a bank look at how will they did the the House Bank founded 1789 closed 1992.

How about the Social Security Administration. We heard during the immigration debate how we need more illegal aliens to fund social security. Sounds like Ponzi Scheme to me.

I am all for regulations let have the government regulated like the rest of the public. Mr Rangel there a cell waiting for you.




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