Reuters is reporting President George W. Bush announced today the government would make available $17.4 billion in short-term loans to General Motors and Chrysler to prevent the imminent collapse of the U.S. auto industry."Given the current state of the auto industry and the economy, Chapter 11 is unlikely to work for American auto makers at this time, " said the President in announcing the bailout.
Rick Wagoner, CEO of General Motors, said his company would promptly access billions and proceed with implementation of their restructuring plan. Ford, on the other hand, claims at present it has adequate liquidity and would not seek a loan.
Conservative Republicans criticized Bush's decision as throwing good money after bad. Sen. John McCain, R-Ariz., the unsuccessful 2008 Republican presidential candidate, said on www.freep.com, he regretted that Bush had decided to “give away” $17 billion to automakers “while failing to receive any serious concessions from the industry.”
President-elect Obama at a press conference in Chicago to announce more cabinet appointments, called the move "A necessary step for the auto industry." MORE>>
I'm having a real hard time with these well-dressed CEOs who fly to Washington DC aboard private aircraft to ask for government handouts while I'm buying clothes at Wal-Mart, canned goods at Big Lots and driving a truck with a cracked windshield to make ends meet. Something has gotten completely out of balance in this world when those who fail to manage their businesses effectively are rewarded and those of us who scrimp, save and live within our means get to pick up the tab.
In the short term it may be really ugly for the auto industry and the economy as a whole if a large manufacturer failed, but long term perhaps it's what needs to happen. Detroit's Big Three account for 45% of auto sales, according to a story in Business Week, while 16 others pick up the rest. The herd needs some thinning in these tough economic times.
While Bush thinks he's doing what's best, if a supposedly conservative president is throwing around money like this, what's the likelihood of a new-age FDR Democrat making the right decision for the long-term health of the economy in three months time?
While Bush thinks he's doing what's best, if a supposedly conservative president is throwing around money like this, what's the likelihood of a new-age FDR Democrat making the right decision for the long-term health of the economy in three months time?
image: Spencer Platt-AFP/Getty Images
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