Meltdown

It's been clear for the last two weeks that the votes for a bridge loan to the U.S. car companies weren't there. The fallout, unfortunately, is going to be phenomenal. And I don't mean that in a good way. Even if the Bush administration finds some loophole to make the money available - an immensely bad precedent, though an understandable action given the circumstances - the car companies' situation, and thus the general economy, has worsened measurably.

The one thing I don't understand: all of the media reports following the collapse of the so-called Republican compromise focus on the timetable for the pay reductions that the UAW refused to accept. But the plan also called for the car companies to slash their outstanding debt by 2-3rds by March . . . which frankly is preposterous. It's not up to the car companies; it's up to the people who loaned them money (which means banks, bond holders, and a host of creditors).

What would your bank(s) say if you went to them and said - cut my mortgage, credit card debt, etc., etc. by two-thirds? And the oil guy, and the electric company and the grocer, the barber, the coffee shop lady . . .

What would you expect them to say?

That provision was much more ominous - assuming it was serious.

And I still want my Cadillac.