Motown Bailout - Have they thought this through? (yes, vanity)

self ^ | 12/09/2008 | self

[Riflema]

Please pardon the shameless vanity, I just wanted to raise a minor, technical point with the "big-3" auto bailout proposal. Perhaps some astute Freeper can clarify?

If we lend $15-25B to the little-3, does this consitute a subsidy to the companies since it is, by definition, on terms superior to those available in the free market?.

If we thus subsidize certain auto manufacturers does this expose these companies and our Govt to all manner of actions under the WTO, GATT etc.? Will the rest of the world's auto companies feel justified in grabbing their subsidy or otherwise "level the playing field"?.

Great thing, these global trade agreements/sarc

[Riflema]

Any freepers know if this is a minefield Frank an Pelosi are leading us into?

[TomGuy]

If we lend $15-25B to the little-3, does this consitute a subsidy to the companies since it is, by definition, on terms superior to those available in the free market?.

I'm not sure about the legalities.

But, Bob Lutz, Vice Chairman of GM, on Fox&Friends this morning, said that they 'neeeeeeeeed! this bailout. It would get them through the early part of the Obama administration.'

Translation: We'll be back for more -- after Obama settles in as prez.

[Riflema]

Okay, turns out I’m not the first to stumble into this. I guess sometimes the blind pig NYT does the same:
http://www.nytimes.com/2008/12/09/business/economy/09nationalize.html?_r=1&hp=&adxnnl=1&adxnnlx=1228824118-DOHFF3N8tBJw7LfVIR1nDA

Essentially, this means that Franks-Pelosi can be our very own Smoot-Hawley.

[Army MP Retired]

Since, at least the verbiage indicates, this is a “loan” it's not really a subsidy in a strict sense. In as much as other than the big-three in this industry are already weighing in demanding a piece of the pie - most noteworthy thus far being the electric auto industry - there's a chance that conflicts of interest and unfair business practices will at least be mitigated to some extent. As far a minefield.... well, has federal government involvement in a capitalistic venture ever succeeded?

[Leisler]

Think 150 billion for next year. This 15 billion is for a couple of months, only.

[Riflema]

Yes, but the loan, since it comes from Uncle must be at preferential terms to those available in the market - else, why not go to the bank as usual?

Agreed, anytime the Govt gets involved in the market, they tend to emulate an epileptic in a minefield.

[depressed in 06]

It is a subsidy, but, Detroit is not going to build vehicles anyone wants to buy. So, from a trade point of view it is a non sequitur. It is a gift to the unions from Pelosi-Frank. Merry Christmas.