Compared to the Bush-Pelosi Wall Street Bailout, which is twenty-eight times more expensive, the Bush-Pelosi Detroit Bailout is downright fiscally prudent!
US Congress passes 25 bln loan guarantees to automakers
The US Senate Saturday approved 25 billion dollars in loan guarantees for the financially strapped US auto industry, intended to spark a wave of automotive innovation.
The loan guarantees were included in a continuing resolution that included funding for the US government and the wars in Iraq and Afghanistan.
The Detroit Bailout is a companion to McCain’s gas tax holiday, Obama’s energy tax credit, and other such give-aways. Obama is right to say that the price of gas should be high, but it went up too fast. Industries did not have the time to adjust, because we did not implement my plan in time.
The loan guarantees to Detroit will help speed development of high-tech ways to minimize gas consumption. Or at least, they better.
Some highlights from the Emergency Economic Stabilization Act of 2008, the current draft of the Bush-Pelosi bailout:
Calculated Risk: Draft: Emergency Economic Stabilization Act of 2008
Here are some parts on pricing mechanism:
(d) PROGRAM GUIDELINES.â€”Before the earlier of the end of the 2-business-day period beginning on the date of the first purchase of troubled assets pursuant to the authority under this section or the end of the 45-day period beginning on the date of enactment of this Act, the Secretary shall publish program guidelines, including the following:
(1) Mechanisms for purchasing troubled assets.
(2) Methods for pricing and valuing troubled assets.
(3) Procedures for selecting asset managers.
(4) Criteria for identifying troubled assets for purchase.
So it’s all up to the Secretary to establish the rules. Same with Warrants – it’s up to the Secretary to negotiate.
Treasury Secretary Hank Paulson is of course the Ken Lay of Goldman-Sachs — the CEO who bailed out shortly before the whole thing imploded. Hank was closer to our President than Kenny Boy, however, so while Enron went bankrupt, Goldman-Sachs was bailed out in the nick of time and now we’re going to trust one of the men who built this mess to solve it.