Shorter WSJ: Will the government use TARP funds to bail out the automakers? Maybe. Will it ask Congress to release the second tranche of TARP funds? Don’t know. If it did, would there be ugly scenes in Congress? Don’t know. Will the government require the automakers to declare bankruptcy? Don’t know. Is there any way to bail in bondholders without forcing the automakers into bankruptcy? Don’t know. How much will all this cost? Don’t know, could be anywhere between $8 billion and $50 billion.
Shorter shorter WSJ: With banks, you need to get things done over the weekend. With automakers, evidently, not so much.
This all bespeaks a lack of leadership, which is the one thing clearly needed to avoid a worst-case liquidation scenario which is looking increasingly likely.
The answer is no bailouts at all for anyone.
Let’s see – the government should invest risk capital in companies that private investors shun, banks deny and that carbuyers avoid. Makes sense to me. A further assumtion that is making the rounds…if the Big Three go down, car consumption will decline proportionately. I think not. Let the marketplace work.
Someone was saying, and I tend to agree, that the banks need to be brought, with greater or lesser force, back into their proper business of lending money to borrowers. Until that happens, until banks can find a properly remunerative way of lending to the car companies and other companies, the US is still in deep trouble.
Lenders got us into this mess by making risky mortgage loans. Now, with federal funding, we are to push the banks to make risky business loans? This makes no sense.
I haven’t seen the wording of the TARP law. Is it legal to use these funds for auto company bailouts? The law is targeted at the mortgage situation.
Katherine, don’t forget that it was also government pushing banks to make the risky mortgage loans.
Yes, I know, Dave C. And it’s not ending. Take a look at [url=http://www.spectator.org/archives/2008/12/15/extortion-in-chicago]this article[/url] about how Bank of America has been successfully pressured to extend a loan to the failed door and window company in Chicago. This loan will not be repaid and everybody knows it. We haven’t learned our lesson at all.