Dems want to bail out the Big Three

I guess the threat of a Chinese takeover of the US auto industry is going to drive more corporate socialism. Looks like elected Democrats want to fork over cash to the failing businesses.

Isn’t it time someone pointed out no one — no one — has any clue what is happening financially right now? Our treasure is being spilled and spent in the Middle East and now on Wall Street and the Rust(ed out) Belt. Main Street will eventually turn to garbage can fires and gunplay if this keeps up.

From the second link:

Democratic congressional leaders, seeking to salvage a bailout of the Big Three automakers, demanded executives provide a business survival plan in exchange for their support of up to $25 billion in loans.

The ultimatum came on Thursday after the Democratic leaders failed to persuade the White House and congressional Republicans to use part of a $700 billion financial rescue fund to prop up the auto industry.

Hanging in the balance is the future of General Motors, Ford Motor and Chrysler LLC, whose losses have mounted during a severe economic downturn that has prompted Americans to largely stop buying cars.

Shares of GM and Ford rebounded from multi-decade lows as the developments in Washington kept bailout hopes alive.

While many lawmakers are anxious to see the companies survive, Republicans have been more wary of whether the money would really help, and Democrats have been more inclined to be generous to the huge employers of unionized labor.

Democratic leaders acknowledged on Thursday a growing public resentment over government bailouts of U.S. business in slowing the automakers’ demands, saying they will take a look after the auto industry provides a roadmap to its survival.

Big Three about to be Big Red?

Maybe so. Well at least two of the three.

From the link:

Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today. [A National Enquirer the paper is not. It is one of China’s leading business newspapers, with a daily readership over three million.] The paper cites a senior official of China’s Ministry of Industry and Information Technology– the state regulator of China’s auto industry– who dropped the hint that “the auto manufacturing giants in China, such as Shanghai Automotive Industry Corporation (SAIC) and Dongfeng Motor Corporation, have the capability and intention to buy some assets of the two crisis-plagued American automakers.” These hints are very often followed with quick action in the Middle Kingdom. The hints were dropped just a few days after the same Chinese government gave its auto makers the go-ahead to invest abroad. And why would they do that?

 

A take-over of a large  overseas auto maker would fit perfectly into China’s plans. As reported before, China has realized that its export chances are slim without unfettered access to foreign technology. The brand cachet of Chinese cars abroad is, shall we say, challenged. The Chinese could easily export Made-in-China VWs, Toyotas, Buicks. If their joint venture partner would let them. The solution: Buy the joint venture partner. Especially, when he’s in deep trouble.

At current market valuations (GM is worth less than Mattel) the Chinese government can afford to buy GM with petty cash. Even a hundred billion $ would barely dent China’s more than $2t in currency reserves. For nobody in the world would buying GM and (while they are at it) Chrysler make more sense than for the Chinese. Overlap? What overlap? They would gain instant access to the world’s markets with accepted brands, and proven technology.

No corporate socialism for automakers

Or so it seems. The Big Three flew their private jets to DC with very natty, custom-made hats in hand for a little government scratch to tide ’em over for a while.

Looks like maybe they should have flown coach on a commercial carrier and crawled in with moth-eaten ski caps. Image is everything there guys.

From the link:

A year-end drive to win new aid for the ailing auto industry was near collapse in Congress on Wednesday, pulled down by old resentments toward Detroit’s Big Three and continued fighting between Democrats and the outgoing Bush administration.

Midwestern senators mounted a last push to try to craft a compromise $25 billion loan package to be administered by the Commerce Department and financed in a manner acceptable to the White House. But even on a day of punishing economic news, the leadership vacuum in Washington is such that many prefer to leave any bailout in the hands of the two men who have handled so many already: Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.

Also from the link:

“They don’t have a lot of chits here. They have people who are upset at them,” Reid told Politico. “I want to help them. It’s not the companies. I want to help the workers. That’s where I am. The people who work there deserve our attention. But the path has been laid by these bosses who came here yesterday on their corporate jets. … They all flew down here in their corporate jets. It’s just not the right picture.”