Friday, December 12, 2008

More on the Bailout

If you have been reading this blog, you know I have supported the idea of this bailout. Even though the management of the three companies has been bad, and I would have demanded change at the top, I would have supported this bailout. I also know that I would not have supported a bailout if these were normal times, but that's the thing these are not normal times. The dirty fact is that the three companies would not be in this much trouble if not for the financial crisis on Wall Street, and the credit crisis. This is why when that idiot Mitch McConnell comes on the air and says that the U.S. auto industry have only themselves to blame, her is either lying or an idiot. Actually they are not mutually exclusive.

Under the circumstances of today it is an extraordinarily irresponsible thing to do. The Senate Republicans were not, let me make this clear, WERE NOT trying to do things responsibly. They did not ever seem to consider extending the kind of financing that would allow GM and Chrysler to go through Chapter 11 bankruptcy rather than liquidation. That financing would have involved loans, not gifts. It would have allowed an orderly reorganization that they kept claiming they wanted. Instead Republicans are willing to let a million jobs to go down because they wanted to break the UAW.

We are in a recession. We already have millions losing their jobs. We already have an economy on the brink. We have a party of idiots in congress, what is worse the other party is one of weaklings.

In the middle of the worst downturn in half a century the idiots who make up the leadership of the Republican party decide to prove that they care about fiscal responsibility. This after years of being willing to spend money on whatever George W. Bush wanted. This after years of being willing to spend money on whatever lobbyists have written into laws for them. This after years of being willing to spend money like there was no tomorrow, putting this nation so far in debt we may never see it paid off.

The consequences to our economy sound delightful:

"With Congress failing to agree on a bailout for Detroit, the odds that General Motors and Chrysler will be insolvent by year's end are growing rapidly.

The companies have been warning that they would run out of money for some time, but crushing bills from their suppliers are coming due. It appeared unlikely that they could hold on until President-elect Barack Obama takes office next month, when he and a new Congress might be able to provide a lifeline, as a Congressional rescue this year looked increasingly unlikely. (...)

General Motors and Chrysler, for example, owe their suppliers a total of roughly $10
billion for parts that have been delivered. G.M. has held off paying them for weeks, and Chrysler is paying in small increments. But the cash shortages at G.M. and Chrysler are getting more severe, according to their top executives and other officials. (...)

Many of their suppliers are teetering on the verge of bankruptcy themselves, and do not have the luxury of extending credit much longer. (...)

When suppliers big and small start failing, the flow of parts to every automaker in the country will be disrupted because as suppliers typically sell their products to both American and foreign brands with plants in the United States."

"There's no question it will hit Toyota, Honda and Nissan too," said John Casesa, principal in the auto consulting firm Casesa Shapiro Group.

"Many of the small suppliers will simply liquidate because they don't have the resources to go reorganize in Chapter 11 bankruptcy," Mr. Casesa said.

"They'll just go away."

Here was what Rachel Maddow reported on this story before the Republicans fully sank the deal:

LibertyAir Blog

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