THE PLANK DECEMBER 15, 2008
Far be it from me to rain on Eliot Spitzer’s turn as Henry Blodget over at Slate
(seriously, what’s with disgraced public figures becoming Slate columnists?). His inaugural article was pretty good, to be fair, but his
article Friday made no sense at all. Spitzer is all hot and bothered over
the fact that “the Big Three will receive an initial payout of billions.”
Problem is, the Big Three won’t receive
an initial payout of billions. Two of the Big Three will; Ford is sufficiently
solvent to eschew funding for the near term. That distinction may sound like nit-picking, but it matters greatly
to Spitzer's BIG IDEA: “Why don't we tell the current Big Three that $25 billion
in capital is available—but only to two of them? The surviving two will be
those that submit the best, and final, binding bids.”
True, just because Ford is relatively better off doesn’t
mean it would turn in a better restructuring plan. But given how,
at this point, all three have a fairly good idea about what needs to be done—and
what outsiders want them to do—the differences between the plans are likely to
be pretty slim. Which means that by a narrow margin, Ford, which doesn’t need
the money as badly as either Chrysler or GM, could nevertheless get one of the
two slots, condemning one of the others—which will probably have a viable plan,
and a real shot at sufficient restructuring—to bankruptcy, and probably dissolution.
In other words, what sounds like a market-friendly, efficient solution—competition!
accountability! auctions!—is anything but.