GM, Ford, and Chrysler have gone to Uncle Sugar for a handout:
Aug. 22 (Bloomberg) — General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles.
The U.S. automakers and the suppliers want Congress to appropriate $3.75 billion needed to back $25 billion in U.S. loans approved in last year’s energy bill and add $25 billion in new loans over subsequent years, according to people familiar with the strategy. The industry is also seeking fewer restrictions on how the funding is used, the people said today.
What a wonderful idea! Give the auto companies the money to do what they’re going to do anyway. That way they can follow the good old American tradition of nationalizing their risks while privatizing their profits.
The domestic automobile industry just isn’t what it was 25 years ago when Lee Iacocca secured Chrysler’s bail-out and IMO this is simply an awful idea. If the market thought the automobile companies were a good risk, they’d be giving them the dough themselves. But you’ve got to admit they aren’t shy.
This seems like a very fine time to repeat the suggestion that George Will made not too long ago: any company that gets a handout from the federal government of this sort should only get it under the condition that no manager or executive be paid more than a GS-14.
Our automotive companies compete against foreign companies that don’t have to pay for employee medical. Our competitors are getting government subsidies.
That aside, management in the industry hasn’t exactly been brilliant and forward-looking.