Wednesday, December 10, 2008

The Bailout Bill: Worse Than You Could Imagine; Who's Tesla?

Here's the analysis from RedState.

The Democrats are intent on safeguarding the United Auto Workers, while forcing the Big Three to stop making SUVs and start making electric cars.

And the Bush people want only to make sure that General Motors doesn’t declare bankruptcy while they’re still in office.

The result is a cowardly, business-as-usual bailout that will guarantee the ultimate demise of the Big Three, while wasting an open-ended amount of taxpayer money in the process.

...What Congress wants to do is to “protect and preserve” the jobs of everyone who currently works for an automaker, one of their suppliers, or one of their dealers.

"Protect and preserve the jobs of EVERYONE in the business"(!!!)

The second core objective is to transition the domestic industry to “aggressively” design, build and market vehicles with unspecified “new technology” that will be… something different from today

Oh, yah. As a result:

So as things stand today, this legislation wouldn’t be much different if it had been written by the UAW and the Sierra Club

Or, just as accurate, FOR the UAW, the Sierra Club, the Execs, Managers, and Dealers of the Big 2.000000000000000000121.

...the preference has emerged for a “Presidential designee,” or Car Czar, who will be exempt from confirmation by the Senate, but will have God-like control over the industry. The Car Czar will have the power to reverse essentially every substantive business decision made by any automaker which accepts government assistance under this bailout plan

One Paulson isn't enough?

What is the US taxpayer getting in return for what could easily turn into a $100 billion-plus bailout? We get warrants convertible to common stock worth 20% (at today’s market valuation) of the bailout amount.

If you recognize as I do that profitability will never return to the GM, Chrysler and Tesla Motors once they’re nationalized, you know that the value of the warrants is somewhere between zero and the pus from a mosquito bite

(I'll take the zero, thanks. You keep the pus, and the change....)

Who's Tesla? They're the $500 Million LOTTERY WINNER!!

...If you look at Section 9(a)(2) of the draft, you’ll see a mysterious appropriation of $500 million to be spent under the provisions of Section 136 of the Energy Independence and Security Act of 2007.

Section 136 provides for government loans to companies that are developing vehicle technologies deemed desirable by… someone in the government. And isn’t it interesting that Tesla, which is nearly out of cash and its investors don’t want to put any more in, recently applied to the government for $400 million?

...have you noticed where Tesla is headquartered? Menlo Park, in the heart of Silicon Valley. Right in the backyard of House Speaker Pelosi’s Congressional district. And that some of Tesla’s investors were major contributors to the Obama campaign? Hmm, ya think? Naaaah, can’t be

Pelosi (and Feinstein, the (D)-Ca. Senatrix) have a good understanding of cash-flow. Not quite as acute as Blagojevich's--but close.

...what about Cerberus, the private equity firm that owns 80% of Chrysler LLC? They have billions of dollars. (And they’re politically connected up the wazoo, being run by former Treasury Secretary John Snow.) But they’re not going to put another penny into Chrysler. Instead, they want you, the taxpayer, to do it. Doesn’t that make you suspect that Chrysler isn’t that great an investment right now?

By the way, there is NO mention of re-negotiating UAW contracts. None. Zero. Zip. Nada.

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