Thursday, November 20, 2008

What??!! Congress actually did manage to do something useful this week!?!!

Believe it or not, our lame-duck Congress actually managed to get something right this week. Today the Senate approved the extension of unemployment benefits. This is a relatively small thing, but at least it is a positive move forward on the economy.

As far as GM, it does now look as if Congress will pass at least some bandaid form of assistance for GM, et al after the Thanksgiving break, sufficient to assure people that the car companies can limp along until the big bailout in February after the new administration and Congress kick into gear.

Personally, I am fairly confident that GM, et al can limp to February without government aid, but with so many Wall Street vultures circling, a few extra billion dollars in cash with the promise of more to come will boost confidence that the companies are in fact going to survive.

I also continue believe that GM, et al need very radical restructuring, but Congress cannot dictate that in a few days. In fact, all Congress will really be able to do in February is slap a bunch of restrictions on the car companies and give them enough cash to make it through 2009, and then later in 2009 the companies will have to start the radical restructuring on their own.

So, this week is a week for Congress to rant and rave about every imaginable criticsim of Detroit. Next week they get to cool their heels and contemplate "The Abyss." And the following week they get to do the right thing, which they could have done this week if they had a commitment to progress rather than a commitment to partisan wrangling.

Incidentally, I do agree that they should not use the retooling loans for the bailout bridge funding. The retooling is all about the way forward after the big bailout. If anything, the February bailout should allocate even more dramatic retooling aid, coupled with agressive commitments to the environmental and energy agenda of the incoming administration. In fact, I would argue that we should offer Detroit as much retooling aid as it takes to completely revamp to a 100% plug-in hybrid product line within five years. Talk about being able to kill multiple birds with a single stone.

-- Jack Krupansky


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