Bridge Loan for Big 3???
OK. Enough of the smokescreen and verbal subterfuge. This meme that all the Big 3 are asking for is a "bridge loan" is crap.
A bridge loan connects two events, and is required because of a timing mismatch between the two events. Hence the name bridge, because it spans that time mismatch.
So exactly waht are the two events that this BAILOUT is bridging? And what is the collateral that ensures repayment.
This is a business deal. Let's take off the ideological blinders and treat it as such. The first step is to answer the above two questions.
A bridge loan connects two events, and is required because of a timing mismatch between the two events. Hence the name bridge, because it spans that time mismatch.
So exactly waht are the two events that this BAILOUT is bridging? And what is the collateral that ensures repayment.
This is a business deal. Let's take off the ideological blinders and treat it as such. The first step is to answer the above two questions.
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Easy - the bailout is bridging the Big 3 filing for bankruptcy and a point in 2012 when they think they'll be "fixed". I don't think they'll really ever be "fixed".
And the collateral that ensures repayment? There is none. That is, it's been pledged to the creditors already. (GM does have some unencumbered assets but F and C are pretty much fully liened up).
So you can't look at it from a collateral perspective. It's a cash flow loan. Yikes
December 4, 2008 9:29 PM | Reply | Permalink
Filing for bankruptcy is supposed to be the thing being avoided by this bogus 'bridge' loan, not one of the events being bridged.
But I think you make my point that this isn't a bridge loan, because there is no 2 event, out-of-sync, sequence being bridged.
It's all just a semantic dodge to conceal the fact that it is a bailout, pure and simple!!
December 5, 2008 12:25 AM | Reply | Permalink
Bailout with lefty ecofreak strings attached:
Obama has made clear he wants the Big Three to finally move toward hybrids, alternative energy, electric power and more efficiency.,?i>
House Speaker Nancy Pelosi, D-Calif., feels the same way. Pelosi, a San Francisco environmentalist, won a crucial political victory when she finally forced venerable Rep. John Dingell, D-Mich., the longest-serving member of the House, out of his chairmanship of the powerful House Energy and Commerce Committee and replaced him with Rep. Henry Waxman, D-Calif. When that happened, the Big Three and the UAW lost their most powerful patron and protector of the old ways of producing gas-guzzling SUVs and business as usual.
http://www.upi.com/news/issueoftheday/2008/12/04/Big_Three_will_get_bailout_but_times_will_change/UPI-20281228420341/
Those guzzling SUVs made good business sense, they sold well and everyone bought them, they were profitable for a while. When gas prices started to soar, the case against them became more compelling (I don't like the trucks because I can't see around them what traffic is like ahead).
But if the automakers are going to do well it must be with successful products. If a Pelosian legislature mandates all sorts of 'eco-friendly' alternative-energy conditions, the automakers may have to try it because they need the money, only to find the market doesn't want to spend large sums on innovative technology of unproven reliability.
Has anyone considered the environmental impact of the batteries in these electric cars, how about the costs of wiring up all those parking spaces so they can be charged up? Are safety concerns relating to natural gas or hydrogen-powered vehicles properly addressed?
December 4, 2008 10:24 PM | Reply | Permalink