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What are Lobbists Pushing at the Conventions?

September 4, 2008 - by Donny Shaw

To be certain, a lot of things. But one of the most substantial and controversial of them is a $50 billion government bailout of the big three American automakers.

CNN Money:

>Plunging auto sales, high gas prices and election year politics could help convince Congress to approve a $50 billion loan package to embattled U.S. automakers that Detroit’s Big Three claim is key to their future success.
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>The Big Three are now in the process of closing truck assembly lines and rushing to catch up with hybrid and other fuel efficient offerings from Toyota Motor and Honda Motor.
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>But with GM and Ford saddled with junk bond debt ratings and privately-held Chrysler with the thinnest capital cushion of the three, Detroit is caught in a credit squeeze that will make such investment difficult if not impossible.
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>Thus, the automakers have deployed what one industry official describes as a “surge” of lobbyists and executives at both the Democratic and Republican Party’s political conventions. The Big Three’s hope is that if they can win speedy passage of the loan package, they can move more quickly to retool their plants to produce more smaller cars.

Here’s the kicker:

>Industry experts say that while the savings from the lower interest rates would amount to billions of dollars for the automakers, the program may not necessarily save a member of the Big Three from eventual bankruptcy in the way that federal loan guarantees rescued Chrysler in the 1970’s.

So, what do you think? Are the Big Three like Bear Stearns, Fannie Mae and Freddie Mac – “too big to fail”?

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Comments

  • Anonymous 09/04/2008 1:18pm
    Link Reply
    + -2

    Columbia Free trade. Obama and Chicgo says this is bad. Do unions still want land?

  • Anonymous 09/04/2008 4:40pm

    based on what i know of the Big Three in Detroit, Chrysler seems to be in the worst shape right now. they desperately need cash flow— more than what they are getting. But 50 billion dollars? that’s not a bail out, that’s a free ride to financial health. Congress should help the companies get back on track, but not much more than that.

  • zane 09/06/2008 10:56am

    Bailing out any of the US automakers is an incredibly bad idea. We’ve already bailed Chrysler out once, and look what they did. Companies that make bad business decisions need to be allowed to fail, or they don’t improve. I don’t think the job protection argument really holds much water, because it isn’t as if, after Chrysler implodes, all those cars that they would have made won’t get built – they’ll be built by other companies who take over Chrysler’s market share (assuming the market size stays fixed). As a politician, I think the right thing to do would be to try and make sure that the labor and infrastructure that Chrysler currently holds in the US was passed on smoothly to another automaker that has made good business decisions, and thus has a mountain of cash to spend at a bankruptcy auction (say… Toyota?). The idea that there are “US” and “Foreign” corporations is just not true. Large corporations have no national loyalties and really should not be treated differently based on the nation they were founded in. People all over the world own Toyota (and Chrysler) stock. A huge amount of GM’s manufacturing takes place in Mexico. Most of Volkswagen’s profits don’t come from Germany. Etc., etc.

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