OK, call me a genius, but I think I’ve figured it out. Here’s the situation: there is a small, but nevertheless quite large, car company called Chrysler. Their revenues can’t possibly keep pace with their operating costs and their contractual obligations to retirees and bondholders. They face imminent bankruptcy. This would be costly for many parties, so the government has been trying to find a way to avoid it. The UAW has agreed to substantial concessions, but the bondholders are holding out. Even though Chrysler’s debt is trading at 15 cents on the dollar, the bondholders are demanding 4+ times this. Unless an agreement with them can be hammered out, Chrysler is headed for the junkyard.
So who are these bondholders? Financial institutions primarily, most of whom are recipients of direct or indirect bailout support from the taxpayer. This suggests a solution: give the bondholders all they want, 100% if need be. Then deduct that money from the bailouts in some way that roughly distributes the cost across these same firms, and give it to Chrysler. You want shell games? We can do shell games.
Yes we can.
What will it cost to break Chrysler even with the Japanese in a decade, $100B or something like that? Just give them or GE the money to retool to wind turbines if possible. If not just give them the money to copy Honda's or MDS's palliative or surgical robots.
ReplyDeleteHas Obama even checked out who his high-speed rail manufacturers would be and their capital positions? Be a shame to have to use a Canadian manufacturer for USA taxpayer dollars.
There are American everywhere who do casual labour for less than $10/hr. Give them a pay boost in exchange for weekend job training classes. It isn't hard to find better employment uses of capital post K-car model series. Shell just put off some wind investments. Buy them and give the assets to Chrysler. Mercedes made airplanes before WWII y'know. Strategically invest in industries that will be around when you need to pay boomer healthcosts.