Tuesday, December 02, 2008

Automakers' Adaptation of "Oliver Twist" Now Playing in D.C.

The title character in one of Charles Dickens' classic novels, Oliver Twist, is famous for extending his dinner bowl to his masters. In a modern twist (pun intended), multibilliondollar beggars have arrived on Capitol Hill in a caravan of impoverished autos:

Humbled and fighting for survival, Detroit's once-mighty automakers appealed to Congress with a retooled case for a bailout as large as $34 billion Tuesday, pledging to slash workers, car lines and executive pay in return for a federal lifeline. GM and Chrysler said they needed an immediate cash infusion to last 'til New Year's, and warned they could drag the entire industry down if they fail.

Hold your iron horses there, fellas. Less than a month ago you said you needed a collective $25B to ensure survival, and now you've upped the request to $34B? An increase of 36% in a month? If their needs continue at that rate, the automakers will require a sum total bailout of exactly $1 trillion by this time next year. That's a ginormous extrapolation on my part, but it perfectly illustrates the stupidity of throwing more taxpayer money at failed business models.

If this $34B is approved, what assurance do we have that it will be used productively? The record so far with Washington's bank bailout is very discouraging:

The Treasury Department has no mechanism in place to track how institutions are using $150 billion in taxpayer money that the government injected into the banking system as of last month, the Government Accountability Office concluded in its report to Congress.

If recent history is any guide, the automaker bailout will proceed as requested. Too bad for us all. In a few months the same executives from Detroit will be back in D.C. mouthing Dickens' familiar line:

"Please, sir, I want some more."