Dream: The Big three, after watching the senate bail on the bailout, will be saved by the George Bush and the White House who will use tarp funds to bail them out in the nick of time. Reality: Not so fast there, son…
There is only $15,000,000,000 left in the first tarp installment, and up until now the Treasury has not wanted to use these funds for the auto industry. Now they do. But it will leave almost nothing in the till should another company in the financial Sector need it, which will make at the very least Mr. Kashkari (Cash Carry) less than willing to give those funds to the men and woman who work the lines in Detroit for $38 an hour. And the conditions the President looks like he is looking at are good I guess, but i don’t know that a) creditors will reduce the amount of debt the car companies owe enough to make a difference, and b) the UAW would take half of the money due for a retiree health-care trust fund in stock, instead of cash or bonds. That stock isn’t worth a plug nickel right now, why would they accept that as payment to retirees who have earned this with a lifetime of hard work? Sure, if the big three actually make it through alright, and if the employees wait long enough, it might turn into a sound investment, but if is not something you want to base an investment for your health care after you’ve retired. If it was your health care on the line, would you take an if?
And just because Henry Paulson says he will “stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry.” doesn’t mean he will actually help. Truthfully I don’t trust him, but that has been the case since day one.
And then there is Ben Bernanke, who said last week that the Fed would probably not lend the money the big three needed if the bailout measure did not pass. Does that change now that the measure has actually failed? Knowing mister Bernanke by his previous decisions, I don’t think so.
And what if the Auto companies actually need more than the $15,000,000,000 that is left in the tarp? It is a distinct possibility, and that might well lead to Hank Paulson asking Congress for the 2nd $350,000,000,000 from Tarp if he really is true to his commitment to the Auto industry. And the Congress seems less than willing to do that without some guarantee of help for Financially strapped homeowners. Which means a fight, one that the treasury could well lose.
The last time congress rejected tarp, the market dropped like a stone, lost over 650 points that day in late September as i remember. How much damage would that do to the markets this time?
The point of the entire statement here is simple. Just because the President says he wants to help, and Paulson says he wants to help does not mean that help is on the way. Negotiations are underway and I for one hope the auto industry can be saved. Any money spent on the auto companies would be a fraction of that which was spent on wall street. With $335,000,000,000 spent using Tarp, a great many jobs have been lost in the financial markets and the like. With an expenditure of less than 1/10th that, you can save millions of jobs.
I’d be overjoyed if the President and Mr. Paulson and Mr. Bernanke could save them, but I must admit I am not expecting it.
A Viddy, a few quotes and I am done.
The Viddy is from the Rachel Maddow show on Hoover-ism, Republicans, and The Big Three:
That’s It from me. Later!
Today’s Nuggets, Via Wikiquote: Ours is a practical people, to whom ideals furnish the theory of political action, upon which they want not only firm assurance, but also effective practice. They want programmes, but they want action to flow from them. They want constructive common sense. They want the development of the common will, not the views of a single individual. They are beginning to realize that words without action are the assassins of idealism. On the other side, they are equally disgusted with seeking for power by destructive criticism, demagoguery, specious promises and sham. Herbert Hoover
The animals to whom nature has given the faculty we call cunning know always when to use it, and use it wisely; but when man descends to cunning, he blunders and betrays. Thomas Paine