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Sunday, August 24, 2008

Auto Bail Out... What's Another $25 Billion?

When I called this the Ener-GM Bail... I Mean Energy Bill earlier this month (guaranteeing the debt of poorly managed / failing auto companies is somehow good for the environment), U.S. Representative (surprisingly from Michigan) John Dingell was asking for a measly $25 Billion.

It looks like the big three (GM, Ford, and Chrysler) need a little more these days to stay afloat; per Bloomberg:

General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles.

The U.S. automakers and the suppliers want Congress to appropriate $3.75 billion needed to back $25 billion in U.S. loans approved in last year's energy bill and add $25 billion in new loans over subsequent years, according to people familiar with the strategy. The industry is also seeking fewer restrictions on how the funding is used, the people said today.

Another $25 Billion? Fewer restrictions on how it's used? So $50 Billion for auto markers when it was approved as part of an Energy Bill (i.e. hardly any connection) and it should be LESS restrictive??? Sounds more and more like a pure bail out, but can't be right?

Well, Global Insight's Aaron Bragman doesn't even pretend the loans are meant to help the big three transition to new energy efficient technology:
"We've seen these kinds of bailouts for the financial companies, why not the automakers?'' said Aaron Bragman, a Troy, Michigan-based auto analyst for Global Insight Inc. `"The big problem is that a lot of people in Washington don't see a value in the U.S. auto industry because they have a foreign plant in their district that is doing just fine.''
So foreign plants are doing just fine? Isn't that the EXACT reason the failed U.S. Auto Industry should NOT get $50 Billion in unappropriated loans?