Ball point pen on the morning newsprint
Nancy Pelosi will not schedule a vote on the bailout until it is clear the bill will pass the senate. That may not be feasible until after January 20th when the democrats will increase their numbers. Ford, perhaps the healthiest of the three, has burned through seven billion in assets in the third quarter but has enough liquidity to survive into the new year. GM however is only months away from closing up shop and warned it might not see years end. While that news may have some wanting to act quickly, Pelosi did say that auto makers will need to show long term economic viability before being considered for a loan. That makes sense. After dividing the 25 billion between the big three, that provides each with a little over eight billion each. When you consider that Ford and GM are loosing about two billion a month, that gives them a four month window to turn their industry around. Will Detroit be able to retool and make a product Americans want in four months? Will this recession be over in four months? Will they be able to restructure contracts in four months to be competitive with other American made cars that have half the labor cost. What about the nearly half a million retired GM workers receiving pensions and benefits for life?
If the argument for putting this deal together is that the collapse of GM alone will cost the government an estimated 200 billion in additional unemployment insurance, then it's certain it will cost the taxpayers much more than 25 billion before this bailout is done, because that argument will still be here at the end of the four month window when the automakers are unable to address any of the issues that have caused them to fail.