Son of Chrysler: The Stealth Bail-Out
By Bryan Caplan
When’s the best time to beg for a bail-out? When everyone’s talking about another, bigger bail-out, of course! Via James Hamilton:
The US Senate Saturday approved 25 billion dollars in loan guarantees for the financially strapped US auto industry…
The bill, which was approved by the House of Representatives on Wednesday, are the first loan guarantees for U.S. carmakers since Congress approved a similar 675 million dollar measure for Chrysler Corp. in 1980. Chrysler Chairman Robert Nardelli, however, said this week the loan guarantees should not be considered a rescue package for struggling carmakers. “This is not a bailout,” he said.
Hamilton’s got the sarcasm you crave:
Well, if the loans are repaid, you might argue that it’s not a bailout because no federal outlays were involved. And you might argue the same for the $1.7 trillion in Fannie and Freddie’s debt that the U.S. Treasury now seems to be guaranteeing, and for the $3.1 trillion in guarantees on agency MBS, and for the $600 billion or so in loans that the Federal Reserve seems to have extended. Not to mention the $700 billion Treasury plan still under debate.
On the other hand, what’s another measly $25 billion among friends?
This reminds me of the old joke about the world as seen through Congressmen’s eyes: “A billion here, a billion there, pretty soon, you’re talking real money.”