Senator Harry Reid has revealed the devilish details of the bailout bill for Motown’s meltdown. First, as predicted here, the Dems are sticking to their guns. They’re insisting that the money come from the preexisting $700b Wall Street bailout, not the $25b Department of Energy Loans (which would incur the wrath of environmentalists everywhere). Under the Congressional bailout plan, Detroit could stick their snouts into $25b worth of Department of Treasury funds exactly one month after the authorization receives the President’s signature (should he decided to so affix). Automotive News [sub] crosses the i’s: “If enacted, the bill would direct the Treasury secretary to accept loan applications from companies three days after it becomes law and would require a decision on the applicant’s eligibility within 15 days. Disbursement of funds would have to occur within the following seven days.” Or what? They turn into a pumpkin? As for those strings attached, they’re no longer of the Jewish maternal nature (i.e. made of piano wire). “Companies getting loans would have to grant stock warrants or senior debt instruments to the government. Top industry executives would have to give up bonuses and golden parachutes; stockholders would receive no dividends.” Oversight board? Perhaps when Harry met Nancy they read TTAC. It’s nowhere to be seen. But there are other caveats…

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Detroit’s slow-mo meltdown has been rife with tipping points for years now. As bad decisions piled upon bad luck, we’ve seen the signs become increasingly ominous. The light at the end of the tunnel has become so faint now that each new misstep comes hard on the heels of the previous one, each taking on ever more existential significance. Perhaps though, we have reached a new low in the news coming out of GM today, as Automotive News [sub] reports that GM will delay incentive payments of $302.4m to its dealers for two weeks. If this decision was made based on GM’s liquidity crisis, it means that GM can’t come up with $300m until December 11: A stuffed stocking of not good. On the other hand, if it’s another twisted ploy to generate political support for a bailout, it’s some inspired stuff. Based on the letter (after the jump) sent by GM VP of Marketing Mark LaNeve, it’s looking like a little of both. After all, blackmail has always been a crime of desperation. Read More >

I think it’s about time to dub Freep the official home of pro-bailout agitprop. When you make the Detroit News look like it’s being run by H.L. Mencken’s Tabasco-marinated ulcer, it’s time to rethink your priorities. Or adopt the tagline “fair and balanced.” Anyway, the Freep’s unabashed Detroit boosterism is reaching a fever pitch, with everyone capable of wielding subject and predicate pitching in for the noble cause of disguising self interest as principle. From old standby (and former Cassandra) Mark Phelan, to financial columnist Susan Tompor, to a condescending missive by the Freep’s editorial board, the latest issue rotates faster than a Baghdad Bob interview in Spin magazine. Let’s pop a Dramamine and take a look, shall we? Read More >

One point on which the mainstream motor press has always agreed with TTAC is skepticism towards Cerberus’ claim that it doesn’t intend on “stripping and flipping” Chrysler. It’s been conventional wisdom since the Cerberus purchase was announced, and it makes perfect sense. They got ChryCo for a song, so why not break it up and sell? It’s what private equity does, and like a new Sebring, Chrysler is definitely not worth more than the sum of its parts. Well, we were wrong. Maybe. Bloomberg reports today that Cerberus has agreed to give up any profit on a future sale of Chrysler LLC should the company receive federal financial aid. Of course, this is classic bailout fodder, the proverbial spoonful of sugar to make the federal equity position go down smoothly with taxpayers. Chrysler is at a huge disadvantage in bailout wranglings, thanks to its ownership by a secretive private equity fund, and several pro-bailout commentators have already suggested throwing Chrysler to the wolves. Want some hard-hitting analysis on this revelation? “This is a sign they need the money and are willing to do anything to get it,” says Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. Ya think? Cerberus forswearing profit on a future sale is a metaphor-defying repudiation of everything everyone has assumed about the New Chrysler project. It can only mean that Cerberus would lose even more money breaking Chrysler up and selling its parts than by limping along on a ‘bring and a prayer. Oh yeah, and a federal equity position.

You’d be hard pressed to find a justification for The Big 2.8 bailout that The Detroit News doesn’t like. But even the hometown paper’s cheerleaders are having a tough time swallowing claims that America’s national security would be jeopardized if GM, Ford and Chrysler aren’t kept afloat. Reporter Gordon Trowbridge provides generous airtime to the Lexington Institute’s Loren Thompson and his unfettered support for the automakers rescue plan. However, Trowbridge seems resigned to allowing a bit of journalistic objectivity to creep in, conceding that “the Big Three do relatively little business with the Pentagon,” adding that “the serious hardware — fighter planes, armored vehicles, ships and missiles — is made by companies with few, if any, direct links to the auto industry.” Furthermore, some of the minor linkage that does exist comes courtesy of Michigan senator Carl Levin, who has exaggerated crafted the Pentagon-Detroit relationship as a mechanism to subsidize The Big 2.8’s civilian alternative fuels programs, such as the fuel cell version of the not-ready-for-combat Chevrolet Equinox sport utility vehicle.  As chairman of the Armed Services Committee, Levin spearheaded the diversion of more than over $40 million of the federal budget to Detroit’s alt-fuel projects, experience that makes the good senator eminently qualified to ask for more. A lot more.

From the “with friends like these” department… The Detroit News reports that Michigan Senator Carl Levin met the press and announced his willingness to sacrifice GM CEO Rick Wagoner to get The General the bailout billions it needs thanks to Red Ink Rick’s myopia, intransigence and incompetence. “I’d be happy to tell (GM CEO) Rick Wagoner that he ought to consider resigning if that is the difference between getting this kind of support and not,” Levin said. So far, so good. And then… “The Detroit Democrat said the government ‘should have more than a say’ in management through an oversight board that would oversee the $25 billion in loans…” That’s just what GM needs to be more competitive: an oversight board beholden to politicians. Imagine what Toyota could do with one of those! Meanwhile, GM spokesman Greg Martin “declined to comment directly” on Levin’s remarks. “The global economic crisis that has put this industry in its current precarious position far exceeds any one individual.” Uh. Greg, you missed a few words there. Anyone care to help him out?

And now, a few decades and several tens of billions of dollars later, we have southern politicians with automotive manufacturing facilities in their backyards. And, for some reason, they’re not feeling a particularly strong desire to spend federal taxpayers’ money on bailing out Detroit. As The Atlanta Journal Constitution puts it, “For behind the philosophical back-and-forth over government intervention, scheduled to begin Monday in the U.S. Senate, is a cut-throat, economic reality: the South has ambitions of becoming Detroit’s rival. And a federal dollar that artificially props up manufacturing on the northern end of I-75 is a dollar that hinders the creation of new economic models downstream, some Southern politicians maintain.” Par example? “Georgia’s Kia plant is scheduled to open next November, employing as many as 2,500 workers. The site is located within U.S. Rep. Lynn Westmoreland’s 3rd District. Westmoreland, like other House Republicans, voted against the $700 Wall Street bailout. He’ll vote against a Detroit rescue as well – on the grounds that it would create a slanted field of play for the workers he’ll soon represent. ‘One of the things we have constantly said is we can’t compete with some of these foreign businesses because the government has intervened in those businesses, and it makes an unfair advantage,’ Westmoreland said. ‘What we’re doing here with the auto industry is basically the same thing.'” Fine words. And the way the AJC takes him to task is classic…

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The weekend talkers are going all-Motown all the time, as Dems talk up their bailout plans and Republicans show off some freshly-developed backbone. And if you talk about Detroit long enough, some nasty things are going to be said. “They’re not building the right products,” Alabama Senator Richard Shelby told Meet The Press (via AP). “They’ve got good workers but I don’t believe they’ve got good management. They don’t innovate. They’re a dinosaur in a sense.” And Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee, doesn’t give money to dinosaurs. “Companies fail every day and others take their place. I think this is a road we should not go down,” he said. The second ranking Republican in the Senate, Jon Kyl (R-AZ), agrees. “Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning,” Kyl told Fox News. Isn’t it amazing what losing a few elections will do to a party’s sense of principle? Of course, the Rs are running downhill on this issue too. All they have to do is delay bridge loans until Obama is sworn in, and the question will become moot as the automakers run out of cash. And they’ll be scoring populist points (at least with us) every step of the way.

Back in the day, I wrote one General Motors Death Watch a week and that was pretty much that. Now that GM’s hit the buffers, begging for bailout billions with loquacious (if louche) lobbying, you can’t click on a news source without encountering an editorial or news piece on Motown’s meltdown. And it IS an important and fascinating story, the first real litmus test of politics-as-usual versus America’s bedrock belief system. [NB: I’ve promised some of our Best and Brightest that I’d alternate bailout articles with car stuff.] One of the most amazing aspects of these revolting developments: how GM’s lobbying campaign has unleashed a wave of anti-bailout pistonheads. Normally, the GM FastLane blog is home to home team boosterism of the most sycophantic “Top of the morning Guv’nor!” variety. But now, after Christopher “You Guys Hate Us” Barger (a.k.a. Director, GM Global Communications Technology) posted the Peter Hart study claiming America supports a GM bailout (debunked here), the shit has hit the fans. While there are still GM gadflies flitting about, there are a LOT of pissed-off posters. If anti-bailout posters have stormed this bastion of BS, GM’s claim on the public purse is, shall we say, “challenged.” I suggest you head over there before Barger tidies it up.

It pains me to write this. The Dallas Morning News scribe Terry Box has long been one of my favorite automotive journalists. He may not return my phone calls, but, unlike a number of reporters, he doesn’t hang up when he hears my voice. He’s been known to take automakers behind the woodshed for their failures, both administrative and vehicular. And I’m told he’s armed (as in fire-armed). But mine is not to question why; it’s to ask WTF? When I read the headline of Terry’s piece, I nearly ejected Clover coffee on my keyboard: “Enclave could ride to GM’s rescue.” Surely Box means an Enclave in the foil hat wearing sense of the word; you know, like Dan Qualye, John Snow, Nancy Pelosi, Rick Wagoner and some Rothschild or another. Nope. Buick. “I don’t know that the Enclave can save GM, which as you know is in deep, deep, uh, distress. But the Enclave and its jeans-wearing cousin, the ’09 Chevrolet Traverse, may be two of GM’s best shots at driving out of the ditch it’s in.” Uh, I think we’ve already past that point, Terry. A loooooong time ago. Anyway, his rational: the Buick Enclave and its twin-under-the-skin Chevy Traverse are better than the GMC Yukon. It’s this automotive relativism that’s got GM where it isn’t today. I’m surprised to see Mr. Box living in same.

Washington Post automotive reviewer and Detroit apologist Warren Brown is black. While I couldn’t care less about Warren’s skin color, his latest appeal on behalf of his benefactors’ bailout billions is beyond the pale. It focuses exclusively on his ethnicity, suggesting that The Big 2.8 deserve federal money because they’ve put Warren’s “people” on the “road to success.” “I am a black child of the Deep South who watched legions of neighbors and relatives flee economic apartheid in pursuit of opportunity in the automobile factories of Michigan and Ohio and in the steel plants of Pennsylvania and Indiana… The American Three — General Motors, Ford and Chrysler — largely have been responsible for the development of a black middle class in this country. Many children of factory workers followed their parents onto automobile assembly lines. But many others went to colleges and universities, medical and technical schools, thanks to good UAW salaries and educational benefits.” His point being? “People make mistakes. But redemption is found in the good that they do, and the domestic automobile industry has done a lot of tangible good for this nation.” And now, the close: a suggestion that not bailing out Detroit would lead to class warfare (implied: a return to racism). “An America that manufactures nothing, or an America that owns nothing it manufactures, is an America with a frightfully vulnerable middle class — an America that threatens to become a society starkly divided between haves and have-nots, a throwback to the Deep South of my segregated youth. That is not the America I want.”

Did we miss something? After repeating the inherently suspicious Center for Automotive Research stats on the impact of a Motown meltdown, and sharing the history of the federally-sponsored Chrysler comeback, AutoLine Detroit apologist and Autoblog columnist John McElroy is ready to share the upside of another federal bailout for Detroit. “Most people seem to miss the fact that they are on the verge of a massive turnaround. If the Big Three get a government bailout this time, I see history repeating itself. Most people seem to miss the fact that they are on the verge of a massive turnaround. I’m not trying to be a rah-rah cheerleader here [as if!]. I’m persuaded simply by the facts.” McElroy is laboring under the impression that the eventual savings from the last United Auto Workers’ contract is The One. Less cost, less over-production– less means more! “That means they’ll be able to slash their incentives. Every $1,000 that General Motors cuts from incentives will drop roughly $4 billion to the bottom line. And GM has an average of $3,500 in incentives!” Huzzah! Where do I sign? “What this means is that when the economy finally starts to recover and the car market begins to grow again, GM, Ford and Chrysler will be in an extremely competitive position, one they haven’t been in for more than 40 years. And that’s why those who say giving them a bailout is just throwing good money after bad are dead wrong. The Big Three are not only on the verge of a roaring comeback, I predict that in the next decade they’ll go on to hit record profits.” I wonder if John’s a betting man?

We’ve already reported that the White House isn’t keen on Democratic plans for a Motown bailout. As Automotive News [sub] reminds us, George W. doesn’t want the dems to appropriate the $700b appropriation earmarked for bailing out America’s financial system. As an alternative, the Prez signaled Pelso, Reid & Co. that he’s OK with the idea of “diverting” some of the Department of Energy’s $25b no to low-interest retooling loan program to bailout Chrysler, Ford and GM. Only the Democrats do not, I repeat DO NOT, want to be seen to be watering-down their commitment to encouraging forcing The Big 2.8 to build fuel-efficient vehicles. So… Nancy Pelosi told the press today that the U.S. automobile manufacturers need to restructure “to ensure their long-term economic viability.” Huh? Sorry, I got distracted. I mean, WTF does she mean by “restructure” and do we really want a politician deciding how Motown goes about it business? Right. OK. Nancy is digging-in, sticking with her TARP usurpation strategy. Here’s the money shot [via Bloomberg]:

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