President Bush announced a rescue plan for General Motors and Chrysler LLC Friday morning that will make $13.4 billion in federal loans available almost immediately.
A senior administration official briefing reporters said he expects that GM and Chrysler LLC will be signing the loan papers to access the cash later Friday morning.
The money will come from the $700 billion fund set aside to bailout Wall Street firms and banks in October.
Of course, at least as far as I'm concerned, the use of these funds is illegal, as they were set aside specifically to secure the monetary system - something which is arguably the job of government, although I'm not sure the size and extent of what it has done is really legitimate.
However, dipping into that fund to bailout a private industry is clearly not the intent of those funds nor a legitimate function of government. But no one, apparently, is going to raise the serious questions this brings forward. They'll ignore the legal Constitutional questions this raises.
With these loans, Treasury will have committed virtually all of the $350 billion of that fund that it can hand out without additional authorization from Congress. Once Congress releases the other $350 billion, the two automakers will be able to borrow an additional $4 billion.
The loans are three-year loans but the money will have to be repaid immediately if the firms do not show themselves to be viable by March 31. It is expected that the companies will have to negotiate new agreements with unions and creditors in order to do so.
When you hear stupidity like this coming out of the president's mouth, you know we're sunk (and don't get me wrong - we're going to hear similar stuff from the guy who is getting ready to replace him):
"I've abandoned free-market principles to save the free-market system," Bush told CNN television, saying he had made the decision "to make sure the economy doesn't collapse."
That ranks right up there with "we had to destroy the village to save it".
Well, they get their loans (even with one of them being owned by a 150 billion hedge fund which has never been called to task on this). The story claims that they'll be required to negotiate new agreements with unions and creditors.
What part of that wouldn't bankruptcy have required?
We're now on track to spend more (8.7 trillion) than we spent on all the wars we've ever fought in the history of our nation (7.3 trillion) and we meekly allow it to happen.
"I’ve abandoned free-market principles to save the free-market system"
Bush has said many stupid things during his two terms, but I guess he wanted to top them all as part of his legacy. That’s just an instant classic for any list of the most idiotic statements by world leaders.
Seriously, though. Have we so abandoned our history? At what point does this "government salvation" end? We already are broke, yet we pile on trillions(!!!) in new debt and obligations. We trample the magnificent Constitution into the ground and spit on it over and over again. We are leaving our offspring a world of debt and hopelessness.
Has the population’s regard for liberty and personal responsibility become so insubstantial that we don’t even pay these terms lip-service anymore? I am astounded at watching the people willingly throw themselves into a whirlpool of subjugation.
I think its political. If he lets GM go under before Obama gets office, then they will blame it on him and the GOP. Much as I agree that GM should go under, and probably its worth the political hit to allow that even now, I have to consider how the media and the Dems will sell it.
Hoover is not a beloved name. Only after 70 years do we hear how maybe FDR’s policies weren’t so smart. Maybe it is best to punt here and let these issues fall to the Dems.
I don’t think you could find a better example to remind the American people about capitalism, government, etc. than GM and the UAW. This is a "Teachable Moment" It may be the silver lining to the recession that we get to see this story play out...how unions, central planning, and regulation do not work so well.
If I were a libertarian, I would be thinking about how to exploit this to educate the public. Its probably the one crisis we are having where Joe Public would be willing to listen and learn, as opposed to say mortgages where he may be tempted by gubmint "free money" to drink the kool-aid.
McQ - We’re now on track to spend more (8.7 trillion) than we spent on all the wars we’ve ever fought in the history of our nation (7.3 trillion) and we meekly allow it to happen.
There’s nothing "meek" about it. Most people don’t know, don’t WANT to know, and don’t care. They are only concerned about having a job or at least some sort of income. We’ve had government fiscal irresponsibility, deficits and debt for so long that people don’t care any more. The US is already in debt; what’s a few more trillions, right? Given that the average person probably couldn’t tell you the difference between debt, deficit, trade debt, etc, why should you expect anybody to be upset that Bush is spending more money that we don’t have?
As much as I hate to admit it, slntax has a point. Bush and the GOP have done such a thorough job over the past several years of demonstrating just how incompetent they are that it’s no wonder that a slim majority of Americans are willing to hand the country over to just about ANYBODY else at this point, including an empty suit with communist leanings. McCain would have been just as bad, and perhaps even worse.
Sigh...
This is the way the country ends. This is the way the country ends. This is the way the country ends. Not with a bang, but with a whimper.
"the money will have to be repaid immediately if the firms do not show themselves to be viable by March 31"
Incredible. Either he is incredibly dumb or incredibly cynical (as in "Nobody ever went broke underestimating the intelligence of the American public"). Or both.
