… and the borrower is the slave of the lender. (Prov 22:7)
From the Politico Blog:
Bush announces $17.4 billion auto bailout
President Bush stepping in Friday to keep America’s auto industry afloat, announcing a $17.4 billion bailout for car manufacturers, with the terms of the loans requiring that the firms become profitable soon.
“If we were to allow the free market to take its course now, it would almost certainly to disorderly bankruptcy and liquidation for the automakers,” Bush said at the White House, in remarks carried live by the national broadcast networks.
“Such a collapse would deal an unacceptable blow to Americans far beyond the auto industry. … It could send our suffering economy into a deeper and longer recession.”
Bush also said it could mean the next president would be dealing with the bankruptcy of huge American emploers in his first days in office.
Of the total, $13.4 billion will be paid out in December and January. The last $4 billion is contingent on the second installment of the Wall Street bailout funds from Congress.
The announcement immediately affects GM and Chrysler, not Ford, administration officials said.
The government gets a stake in the company, and can call in the loans on March 31 if the firms cannot prove “viability” by then. The manufacturers do not have to be profitable immediately but have to be “profitable soon,” a senior administration official said.
That last sentence should give everyone a hitch in their gitty-up. I imagine the principle laid down in Prov 22:7 applies to the Big 3 as much as it does to me, but perhaps Dan Phillips – The Lover Of Proverbs* – could weigh in here.
There used to be an old joke in the Soviet Union, where the government owned the auto industry: “When shopping for a car you may have any color you like. As long as its black.” You may like black… your neighbor? Not so much.
*Dan has a great little bit on the Proverbs at TeamPyro. I order you to check it out.