President Bush didn’t get the memo.
After being shot down in the Senate, the Auto Maker Bailout was revived by the President.
President Bush authorized the Treasury Department to use TARP funds on friday to provide the failing Automakers with loans until the end of March.
The US government said Friday it would provide ailing automakers with 13.4 billion dollars in short-term financing, setting a deadline of March 31, 2009 for them to become viable. – AFP
There is no way that GM and Chrysler can be viable by that time. GM has said it needed $4 billion just to pay creditors for just this month. That translates to about $16 billion for GM alone for the four months starting December.
Does anyone honestly think that without some serious efforts to restructure their business that GM can even be remotely viable in that period of time? Apparently the President thinks so.
Sales of cars and trucks have fallen in the last quarter of the year. GM and Chrysler have led the way in sales declines. Mainly because of the high cost of the vehicles and gasoline prices.
Even with falling gasoline prices, sales are not likely to increase quickly enough to pull GM and Chrysler’s butts out of the financial fire. Both have idled their plants and may not open some of them back up until the end of January.
The best way for the automakers to get out of their predicament is to allow them to fail. Allow them to enter bankruptcy. Allow them to renegotiate the debt and contracts they currently hold that are not viable or conducive to financial stability.
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