Liveblog of the Dan Quayle Bailout

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Word is George Bush is going to give money to GM and Chrysler. He is expected to put the money through their credit arms: GMAC and Chrysler Finance.

In other words, Cerberus (otherwish known as Dan Quayle and John Snow and a bunch of other wired Republicans) will get some benefit out of this. You know, a juicy reward for having made a piss poor decision in buying Chrysler in the first place?!?!? 

Capitalism at its finest.

Here’s the plan, which is basically Bob Corker’s plan, with an escape hatch.

Purpose: The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing.

Amount: Auto manufacturers will be provided with $13.4 B in short-term financing from the TARP, with an additional $4 B available in February, contingent upon drawing down the second tranche of TARP funds.

Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.

Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.

Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:

Firms must provide warrants for non-voting stock.

Firms must accept limits on executive compensation and eliminate perks such as corporate jets. Debt owed to the government would be senior to other debts, to the extent permitted by law. Firms must allow the government to examine their books and records. Firms must report and the government has the power to block any large transactions (> $100 M). Firms must comply with applicable Federal fuel efficiency and emissions requirements. Firms must not issue new dividends while they owe government debt.Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:

Reduce debts by 2/3 via a debt for equity Read more →

Baseball, Hot Dogs, Apple Pie and Chevrolet

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George Bush has joined the malodorous southern Republicans in their heinous attempt to drive US automakers into bankruptcy. From the Washington Post:

An "orderly" bankruptcy may be the best way of handling the struggling U.S. auto industry, President Bush indicated today as he spoke before the American Enterprise Institute, a conservative Washington think tank. However, he said he hasn’t decided what action he will take, the Associated Press reports.
…
Perino said: "The president is not going to allow a disorderly collapse of the companies. A disorderly collapse would be something very chaotic that is a shock to the system."

Bush and the American auto killers are flat out determined to drive the country to ruin and kill the last remaining hard industry the nation has, it appears. And they are able to do so because so much of the country is ill informed to completely uninformed about the real nature of American auto.

In the previous post, Marcy described how Bill Ford schooled Larry King on the truth about Ford Motor Company and the backup credit line they wish to have available should it be necessary. Well, now I am here do a little edifying about General Motors.

Remember all that bashing administered by Richard Shelby, Bob Corker, Jim DeMint and so many other union busting types about "the failed business model", the "backwards out of date products", and the failure to transform to a company for the future? It is hard to tell whether this is a knowing lie or just rank ignorance. Time to school the foreign coddling, un-American, Dixie union and industry busters; a southern man doesn’t need them around anyhow.

First off, that plan for a profitable and sustainable future with progressive products that the Congress keeps demanding? It is already in progress; and, hey Republican nimrods, it has been for almost four years, since 2005. The following information bits are excerpted from various GM information releases forwarded to me by a senior executive at General Motors headquarters.

As to the need to shift from huge SUVs and large trucks and towards efficient cars and smaller crossover vehicles, GM is already doing that:

Eleven of our last 13 new or major launches in the U.S. were cars or crossovers.

Take the Chevy Malibu, for example, which has won 29 industry awards so far, including the 2008 North American Car of the Year. And consumers are reacting with enthusiasm… as Read more →

Bill Ford v. Larry King: Village Idiocy about the Auto Industry

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John Cole is right, this Larry King interview of Bill Ford deserves more attention.

Here’s what Cole pointed to: Ford insisting that (contrary to what the plantation caucus believes) the UAW is not the problem.

KING: What about the UAW in all of this?

FORD: Well, the UAW obviously has been our partner through all of this. Have they made mistakes and have we made mistakes? Of course. The UAW has come a long way. I think their leader, Ron Gettelfinger, is an excellent leader and he really understands our business. In this last contract, he gave up a lot. He’s also indicated they’re willing to come to the table to do more. And so for anybody to blame the UAW as the sole reason for this is frankly wrong.

Hey, David Sanger? Your assertion that the problem is distrust between the UAW and the manufacturers? You think maybe Mr. Ford knows something you don’t?

Just as interesting to me are the number of times that Ford had to instruct Larry King on things that–had he been paying attention at all–he would have known.

There are the 3 times that King suggested Ford was in the same boat as GM and Chrysler.

KING: How much danger, frankly, are you in? Can you give us the picture without being too technical?

FORD: Actually, Ford, we were profitable in the first quarter. Our plan is working. Our market share is picking up. I believe we’re headed exactly where the country wants us to go.

[snip]

KING: What was the key turning point for you that sent this downward?

FORD: As I said, we made money in the first quarter, and we were well on our way.

[snip]

KING: Is that a good point, Bill, that your products were behind the times and now you want a bailout through your fault?

FORD: Actually, Larry, we’re not asking for a bailout. Our competitors are.

Here’s Larry King completely missing the fact that most developed nations are backing their auto industries–and so it’s no big surprise that any American car companies might need credit.

KING: Why do you need the line of credit?

FORD: We’re saying we don’t need it now, but we’re saying, if the global economy does not pick up, you know, Read more →

Chrysler Closes ALL Its Plants

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chrysler-07_photos_ext_pt_09.thumbnail.jpgI guess the Cerberus figures they need to do something more to get Bush’s attention, given that he continues to dawdle on a bridge loan.

Chrysler announced today it will close all 30 of its manufacturing plants for a month starting Friday.

[snip]

Tighter credit markets are keeping would-be buyers away from their showrooms, Chrysler says. Dealers are unable to close sales for buyers due to a lack of financing, and estimate that 20 to 25 percent of their volume has been lost due to the credit situation.

Chrysler claims it is nearing the minimum level of cash it needs to run the company and will have trouble paying bills after the first of the year. [my emphasis]

Merry Christmas, W Scrooge, they said. Bah Humbug!! Said Mr. Bush in return.

In other shutdown news, GM will halt construction of its Flint Volt plant.

More Narcissistic “Auto” “Reporting” from David Sanger

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picture-69.pngAs I keep saying, the NYT is not an institution to quit while it’s behind. Exactly one week after David Sanger wrote a highly criticized article claiming the nationalization of auto companies would carry ominous risks that the forgotten (by Sanger) nationalization of much more expensive finance companies did not, he’s back, this time applying the lessons of the Middle East peace process to the auto negotiations.

As a sitting president and a president-elect maneuver over how to bail out Detroit – and ultimately how to convince the Big Three to radically change their ways — there may be some instructive lessons in the Middle East peace process.

The Middle East? At first blush it may seem a bit farfetched. But all complex, intractable negotiations – especially those involving ancient, entrenched interests in which sheer survival is at stake – share something in common.

Of course, Sanger’s masturbatory exercise is all premised on his assumption that he knows diddly shit about the auto industry. Which doesn’t seem to be the case. Consider Sanger’s inapt comparison of the absence of trust between the stakeholders in an auto negotiation and between the Israelis and Palestinians.

Again, there is no trust: the unions believe the companies are trying to break them, the retired think their pensions are under assault, the company executives don’t want lectures about prudence and planning for the future from a Congress that has run up trillions in deficits.

Um, no, David. If you haven’t noticed, the union and the companies have displayed a good deal of trust in recent past, as the last union contract shows. It crafted a way for manufacturers to take retiree healthcare off their books and bring wages into line with the transplants. That took a great deal of trust. If you need further proof, though, you might consider all those pictures of Ron Gettelfinger testifying with the CEOs of the Big 2.5 before Congress. Did you notice that the UAW and the Big 2.5 were on the same side of the table, in both a metaphorical and literal sense? The UAW knows well who is trying to break them. It’s not the Big 2.5, it’s the plantation caucus. 

Furthermore, it’s not so much that the Big 2.5 don’t want lectures from a Congress that has run up trillions (besides, I thought it was Bush and his unfunded Iraq War that did that?). Read more →

Shelby’s Claims To Be Anti-Bailout Always DID Smell Rather Fishy

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shelbyfishingsm.jpg

(Graphic by twolf)

When confronted by a bunch of UAW workers who were tired with Richard Shelby’s slander of their work ethic last week, a Shelby staffer explained the Senator’s opposition to the Big 2.5 bridge loan to be a principled opposition to bailouts. Given the Alabama Senator’s tireless efforts to claim that the non-union SUV assembly line workers in his state had a successful business model, whereas Michigan’s unionized SUV assembly line workers had a failed business model, that excuse always smelled pretty fishy to me.

Turns out his claims to be anti-bailout were even fishier than all that. 

Alabama Senator Richard Shelby, one of the infamous politicians of the auto bailout fiasco, recently obtained $160 million for the fishing industry nationwide. A portion of this amount is headed for the Alabama fishing industry for reasons they have no control over. Shelby states on his own website and we quote "This funding will provide much needed assistance to an industry that is a vital part of the Alabama economy". The taxpayers of this nation should be aware this is not a government approved loan to the fishing industry but rather a handout.

Of course, given the handouts that Alabama used to convince foreign SUV manufacturers to his state in the first place, I shouldn’t be surprised that his "principled" stance is no such thing. It’s clearly just a stance that ensures Alabama gets to suck at the federal teat, but no other state gets to. 

Bob Corker’s Chumps in the Senate

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I’d like to second a point Trapper John just made at the Great Orange Satan. Senate Democrats have no business hailing Bob Corker’s bad faith claim to broker a compromise on Thursday night.

Let’s make this very plain.  Bob Corker just led the charge to kill the American auto industry, and with it some 10% of the American economy, because he wasn’t allowed to bust the UAW.  As such, Bob Corker is definitionally one of the most traitorous and despicable human beings ever to track slime across the floors of the Senate. He is attempting to take advantage of the financial crisis to literally dismantle the American middle class. He is beneath the contempt with which partisans regard even their most radical and craven domestic political opponents.  And to see three of the most prominent leaders of the party that portrays itself as the party of working Americans line up to commend this sanctimonious puppet of big money, this enemy of working Americans . . . well, it’s disgusting.  There’s really no other word for it.

I’d add one thing to Trapper’s post. Trapper is right that Corker should not be celebrated because of the way he attacked the notion that our workers ought to be able to sustain a middle class life.

Also, Democratic Senators ought to be a little more skeptical about Corker’s alleged good faith when considering his actions on Thursday.

As I pointed out the other night, Corker demanded that workers make date-certain concessions, without making the same demands of the other parties: the bond-holders in particular.

But since Thursday, it has become increasingly clear that the bond-holders appear to be the only other stake-holder Corker was demanding real concessions from. In the statements I’ve seen him make, for example, I don’t think I’ve ever heard him ask for concessions from dealers. Take his description of negotiations on Fox yesterday.

We began a process by first getting the bondholders to take $0.30 on the dollar, a $0.70 haircut. That had to happen first by March 15 and if it didn’t…

WALLACE: And they agreed to that.

CORKER: They have agreed – they got – yes. They have agreed that if they don’t get there, the company has to file bankruptcy.

So General Motors was at the table, Chrysler was at the table, Ford was at the table. They were in the ante room. They agreed to that.

Read more →

After Tennessee and Alabama Refuse, Canada Agrees to Help US Automakers

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ambassador_bridge.thumbnail.jpgTurns out I mistook which signature Michigan bridge would serve as a symbol for the loan the US automakers will get to hold them over until a saner Administration takes over: that bridge is not the Mackinaw bridge, connecting the two peninsulas of Michigan, but the Ambassador bridge, connecting Detroit to Canada.

The Canadians, you see, are coming to Detroit’s rescue.

 U.S. and Canadian governments say they will ride to the rescue of the beleaguered Detroit auto makers, hoping to head off a catastrophic collapse of Chrysler LLC or General Motors Corp. that would cascade throughout the North American economy.

Ottawa and Ontario will provide an estimated $3.4-billion to the Canadian units of the Detroit Three, while U.S. President George W. Bush will throw a $14-billion (U.S.) lifeline to their parent companies.

[snip]

[Canadian Industry Minister Tony] Clement would not provide a specific figure, but he said the amount of money in the Canadian bailout represents this country’s one-fifth share of the Detroit Three’s North American vehicle production and on Canada maintaining that percentage.

“Clearly, this amount of money is meant to be, as the U.S. is finding out, a way to keep the doors open for the domestic auto sector while they continue their long-term planning,” he said.

The move is not all that surprising. Ontario probably has more Big 2.5 workers than either Indiana or Ohio, and it has assembly plants that are at risk of being closed down, as well as a chunk of suppliers hoping to get paid.

Still, I wonder if it embarrasses Senators Corker and Shelby and McConnell that the Canucks care more about the American auto industry than the plantation caucus does? 

Though I guess it’s not surprising. For all his shortcomings, Prime Minister Stephen Harper probably realizes–as members of the plantation caucus apparently don’t–that it’s a stupid idea for politicians to actively pursue the impoverishment of a country’s workers.

In any case, skdadl, Petrocelli, the rest of you lovely Canucks? Thanks for the help! I’ll have to buy you all a bridge loan beer when we have that meet-up in Toronto, I guess.

Okay, Okay, Invade Michigan. But You Can’t Have the Coaches Back.

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John Cole has found a solution to the Big 2.5’s woes–and frankly, it sounds a whole lot smarter than Bob Corker’s plan to require two corporations to revoke the pensions of a bunch of blue collar retirees. And he’s right–the Republicans are gonna love this plan.

His solution? Invade Michigan, make it safe for democracy again.

We need to invade Michigan and rebuild the state from the ground up. We will be greeted as liberators, we have clear supply lines, and we can easily rebuild the auto industry with the kind of money we spend on other countries we invade. Hell, our new Secretary of State, Hillary of Clinton, spent the better part of the past year fighting for the rights of average folks from Michigan, so think of the good will we have with the public. This is very doable. Just tell Congress we will give KBR no-bid contracts to fix Detroit.

Thing is, I’m a little suspicious of John’s motives. You see, John’s from West Virginia, and he’s a sports fan. 

I just have this awful feeling that John’s great plan is really a plot to come to Michigan and steal back the two coaches we stole from West Virginia, hoops coach John Beilein and football coach Rich Rodriguez. Sure sure, Rodriguez hasn’t yet worked out like we’d like. But Michigan’s basketball victory over Duke is one of the only good things that has happened to Michigan of late (I mean, think of the Lions!!), and I’m just not willing to give Beilein back.

So, fine. If you must, invade Michigan. Please bring bales of cash, just like they did in Iraq.

But you can’t have our sports coaches.

Shorter Governor Granholm

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 Richard Shelby, favoritism for foreign companies at the expense of American companies is un-American.