Is Bush's Detroit bailout a ruse to bankrupt General Motors and Chrysler?

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Kirsten Hollered

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Bush's Detroit bailout looks like a path to bankruptcy for General Motors and Chrysler. Billed as a way to give the two automakers breathing room, the deal actually imposes tough targets that must be hit in only three months.

It's likely the companies will fall short, which would force them to file for Chapter 11 protection. But that's not necessarily bad - so long as they use the coming months to cut the deals with workers, creditors and others that they'll need to get out of bankruptcy fast.

The government wants the carmakers to modify or reduce their debt by at least two-thirds, lower executive and worker compensation and benefits, and cut new deals with suppliers and dealers, among other things. Come March 31, they'll also have to prove they're "viable" - defined as having a positive net present value. For this, the companies get debt with a skinny interest rate of 3 percentage points over Libor.

If the carmakers fall short, they have to pay the debt back. Since there's little chance they'll have the funds, the government will be able to force them into bankruptcy. In that case, the government loans become part of a debtor-in-possession package.


By Dwight Cass, breakingviews.com
Last Updated: 6:46PM GMT 19 Dec 2008
Jeff Rense http://www.rense.com/
 
Without the bailout, they are bankrupt now. This way they can pre-plan the bankruptcy, or Obama has time to structure a longer term deal.
 
Chrysler shouldn't get money anyways...it's own parent company doesn't even want to invest money in them...why should we?

Sure, Bush is kicking the turd down the road for Obama to step in later...but Obama is the one pushing so hard to get them this money...so he wants it...he gets it.

and the donkey is correct...they will be back in 3 months for more...the UAW probably won't even have to beg with Obama in office.
 
Chrysler shouldn't get money anyways...it's own parent company doesn't even want to invest money in them...why should we?

Sure, Bush is kicking the turd down the road for Obama to step in later...but Obama is the one pushing so hard to get them this money...so he wants it...he gets it.

and the donkey is correct...they will be back in 3 months for more...the UAW probably won't even have to beg with Obama in office.
 
No

The bailout still goes to Banks for New Car Loans.

The automakers are not getting the cash, rich contributors to the GOP are simply getting New Cars that Tax Payers are signing for.
 
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