GM goes nuclear

So GM wants $18 billion just for itself.  Words fail.  Or rather, I don't think I can print the words that immediately come to mind. This is a family blog. 

Somewhat to my surprise, the political types tell me this polls very badly outside of Michigan--indeed, the New York Times seems to have found some people IN Michigan who think it's not so hot.  So overall, the political prospects for a bailout aren't looking so great.  Republicans don't carry Michigan, or autoworkers, anyway.  They are not going to help out the UAW out of any sense of self-preservation, their base in right-to-work states is going to be livid if they ship tax dollars up to Detroit, and ideologically, few of them think the auto industry should be kept on indefinite life support.  I doubt the Senate can move any bailout past a filibuster by outgoing Republicans who are not feeling kind towards the labor movement, and I'm positive they don't have the numbers to override a presidential veto.

GM says it needs $4 billion this month, or it goes into bankruptcy, and the same again in January.  Given the electoral math, that puts a pretty high probability on bankruptcy.  The White House and Pelosi are engaged in some sort of strange game of chicken, where the White House , says to take the loans from the $25 billion already committed to help the automakers retool for higher CAFE standards, and Pelosi insists on taking it from TARP.  Since the White House is probably actively rooting for the crash, this is just posturing.  But it seems like pointless posturing; two years from now, no one is going to be able to run, or even fundraise, on the question of CAFE v. TARP.

The real question is whether creditors are willing to ride out uncertainty until the Democrats can craft something.  If GM and Chrysler need to draw down more than half of that $25 billion in the next two months, how much float will their creditors be willing to give them until the Democrats can bail them out?  And If their burn rate is $4 billion a month, how long will even a Democratic congress be politically able to carry them?  I think it's safe to say that their sales are not going to turn around in the next year, and the union's idea of a giveback so far seems to be "just barely enough to stave off bankruptcy for another two months".  No one's going to finance them on those terms.