The $25B Detroit “Bailout” You Don’t Know About

While we were all watching our parents cry over their lost retirement accounts and House Republicans decided not the bail out the rich – I was expecting stigmata or the seas to turn to blood. Instead, I found a little blurb on CNN that noted a $25B loan to the auto industry that was quietly approved with some MAJOR implications.

First, the background: the American automakers have been struggling with pensions and pay increases for union workers who have dedicated their lives to American cars. Unfortunately, the automakers themselves have the reflexes of a 90 year old Parkinson’s patient.

While the world is moving forward with hyper-efficient cars, American automakers have what’s called a ‘backlog.’ In essence, they can’t start building efficient cars until they finish all the gas-guzzling SUVs that they currently have cued for production. Over $4.5B in SUV parts are not even in production yet, but “have to be used” before the companies will move onto the basic planning stages of new vehicles.

So, what do you do when you make grossly unethical and miscalculated business decisions that have the potential to cripple an entire industry of the American GDP? You bet your ass, you go to Uncle Sam for money.

The auto companies wanted a sub-prime loan, even to the extent that the interest rate would be below the interbank rate and the US government would actually lose money on the loan (given inflation). In exchange, the US government said, “Sure, but you need to move to a drastic fuel efficient car-production plan.”

This was a sticking point for almost a year. This bill has been around for THAT long. Congress’s stipulation seems fair to me. You screwed up, you need to pay some of the cost yourself. Easy – done deal right?!

Not so fast. Lobbyist were able to get the bill changed so that there are NO qualifications forcing them to shift to a different production model at all. It is basically, “Here is $25B! Enjoy!” Companies like GM and Ford have already admitted that they will use more than HALF the money to write off the costs of producing large SUVs that probably will never sell. Once that is done, then MAYBE some of it will go towards R&D, but most likely it will go towards incentives for people to buy large trucks and Hummers.

*sigh*

Yet another example in how our representatives have f**ked us out of our tax dollars. Cheers assholes! Thanks for the oversight!

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