Earth Equity News

A GM Bailout? Here are My Terms for a Deal. Commentary by Dan Beucke, BusinessWeek, October 29, 2008. "Taxpayers are mad as hell about the looming bailout of General Motors (GM) and Chrysler. They just don't know it yet. That's because the fix isn't quite in. Auto executives and federal officials still have to figure out whether they'll pull this off by redefining GM as a bank and grandfathering it into the Treasury Dept.'s $700 billion financial industry rescue, or by carving off some of the $25 billion of federal loans that were supposed to encourage development of alternative-fuel vehicles. Details, details. What's important is that once it dawns on people that they're about to become major investors in the long-failing enterprise known as the U.S. car industry, they'll hit the roof... The argument, of course, is that if GM fails it will take a couple million jobs with it, including those in auto dealerships, parts factories, ad agencies, and so on. This is a variation on the Wall Street ransom note... If Motor City has us over a barrel, at least it owes us a similar discussion (maybe Senator John McCain will suspend his campaign again, too). In any event, here are my terms for handing a check to Detroit:.. 1) Build right into bailout legislation a 40-mpg average for cars by 2020... 2) Today, auto stocks are absurdly low: GM is trading at $6.25 a share, compared with almost $40 a year ago. The whole company is worth about $3.5 billion, roughly half the market cap for video game maker Electronic Arts... Forget a loan; let's get in on the ground floor. If the combined GM/Chrysler can survive until the market picks up and savings from a new auto-worker contract kick in, you have to think the shares will be worth more than $6 and change. And if not, we're probably not getting the money back anyway... 3) The last thing we need is Congress mandating protection for [specific] factories like it does for defense plants... 4) A moratorium on truck commercials. Yes, the next couple of years are going to be painful. But less so if I could be assured that my football games on TV won't be interrupted by ridiculous scenarios where a ton of rebar is dropped 20 feet into the bed of a pickup truck or a truck has to navigate a gauntlet of giant smashing hammers."