Automaker bailout dies in Senate
Articles — By forcechange on December 11, 2008 1:01 pm
Unfortunately for Detroit, they’re not in the coal mining business– otherwise, they may have received the necessary support from Senate Republican leader, Mitch McConnell of Kentucky, who basically doomed the bailout proposal by speaking out strongly against it on Thursday.
As we’ve indicated before, our position is that comprehensive bailouts should really be reserved to threats of systemic collapse, which may not be the case here.
As it now appears, the bailout bill, passed by the House on Wednesday, will die in the Senate. McConnell indicated that he did support a Republican proposal for a bailout, offered by Sen. Corker of Tennessee. That alternative plan would give company bondholders 30 cents on the dollar to reduce the automakers’ debt burden, would bring workers’ wages in-line with foreign competition, and force the UAW to eliminate payments to workers after their jobs have been eliminated.
Nonetheless, it seems unlikely that any compromise between the two competing proposals will be possible this year. GM has indicated that it may not make it to 2009 without a bailout, and Chrysler retained bankruptcy council earlier this month.
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I’m not surprised the bailout failed. Frankly I think citizens are getting really frustrated by the idea of bailing out all these businesses that are “too big to fail” for their bad decisions.
I did see a real time reaction to the news in the precious metals markets when platinum, heavily tied to the auto industry, nose dived on the news of the failure.
It’s going to be an interesting couple of years I think.