Tim Geithner Top Tick Op-Ed #2: "A Rescue Worth Fueling"

Tyler Durden's picture

About a year after Tim Geithner literally top-ticked the economy with his first Op-Ed, "Welcome to the Recovery", which came days ahead of the QE 2 announcement, he has just released his Op-Ed #2 "A Rescue Worth Fueling" in the WaPo, in which he praises the administration for using billions in taxpayer capital to save a few hundred thousand union jobs. His bottom line: "The domestic automakers are getting stronger. For the first time since 2004, each has achieved positive quarterly net income." Perfect release timing: just as both GM and Ford announce a drop in monthly sales, and GM discloses record channel stuffing. If there is one call to fade and short all the US automakers, this is it.

A rescue worth fueling, published in the Washington Post

On June 1, 2009, General Motors filed for bankruptcy,
backed by $30 billion in support from the federal government. The same
day, in the same New York courthouse, a judge approved Chrysler’s plan
to forge an alliance with Fiat and emerge from bankruptcy as a
restructured business with an uncertain future.

Two years later, all three American automakers have returned to
profitability, the industry has added new shifts and 115,000 jobs, and
GM and Chrysler have returned more than 50 percent of the government’s
investment. The industry is mounting one of the most improbable
turnarounds in recent history.

This outcome was anything but
assured. In December 2008, the industry faced the prospect of
uncontrolled liquidations just as our financial system was reeling from
the worst financial crisis since the Great Depression. President George
W. Bush provided more than $17 billion in temporary loans to GM and
Chrysler to avert that disaster, but those efforts, while important,
were not enough. President Obama took office faced with an industry that
was burning and had to determine whether additional government support
made sense.

In a series of meetings in early 2009, the
administration’s autos team sought to examine an interwoven web of
options and to highlight the risks each entailed. The companies needed
to make dramatic changes. Years of bad decisions had caused them to
progressively lose market share to foreign competitors, and the
financial crisis had dried up financing for almost everything,
compounding the collapse in demand for vehicles. It was not clear
whether there was a responsible way to put taxpayer dollars on the line
in a way that helped ensure the companies emerged stronger, not weaker.

challenges extended beyond GM and Chrysler. The restructuring of these
automakers could affect companies throughout the supply chain that
employed nearly 400,000 American workers. Ford and other automakers
depended on those suppliers, increasing the risk of damage if they
liquidated or moved overseas. With the credit markets frozen and no
major sources of private financing available, government inaction meant
devastating liquidations. Nonetheless, even a federally supported
bankruptcy could aggravate the situation by causing car buyers to lose
confidence. And the automakers realistically could have taken a long
time to emerge from bankruptcy. In the balance hung thousands of auto
dealerships nationwide and small businesses in communities with
concentrations of auto workers.

It was the uniquely deep linkages
between the auto companies and suppliers, dealers and communities that
led some experts to estimate that at least 1 million jobs could have
been lost if GM and Chrysler went under.

Ultimately, the most
difficult decisions centered on Chrysler, which was ailing even more
than its larger counterparts and was, we determined, no longer viable as
a stand-alone company. The choice was backing Chrysler’s effort to
partner with Fiat or letting the company fail. A rich internal debate
ensued. Our team presented the president with a range of stark options,
including the fact that standing behind Chrysler’s restructuring still
gave only a slightly higher than 50 percent chance of long-term success.

Nothing about the president’s call was popular. It may have been
more politically expedient to let Chrysler fail. But the president knew
that if Chrysler collapsed, tens of thousands of jobs would have been
shed in the near term — a body blow to an economy already on the ropes.

return for government support, we demanded tough concessions from
Chrysler and from GM — substantially tougher than had been proposed
before. They were forced to go through bankruptcy, clean their balance
sheets and adopt stringent plans to move toward profitability. We gave
the companies enough space to make sound business decisions and push
ahead as they would in a private restructuring. That meant sacrifices
across the board — from managers, unions, stockholders, creditors and
dealers. These investments offered Chrysler and GM a second chance but
also helped the workers, communities and suppliers depending on them.

six years earlier than planned, Chrysler has repaid its outstanding
government loans. While it has a long way to go, Chrysler has made
enormous strides. Tough decisions, stemming from the restructuring, have
helped Chrysler post five consecutive quarters of operating profit.
It has announced more than $3 billion in investments in plants and
technology since emerging from bankruptcy and is poised to hire back

The story has been similar for GM — and the industry as a
whole. The domestic automakers are getting stronger. For the first time
since 2004, each has achieved positive quarterly net income.

it remains unacceptably high, Detroit’s unemployment has fallen nearly
one-third over the past two years. The car companies are leading a
comeback in American manufacturing. And while we will not get back all
of our investments in the industry, we will recover much more than most
predicted, and far sooner.

What happens next for Chrysler and GM
is up to their executives, managers and workers — just as with any other
company. We cannot guarantee their success, and at some point they may
stumble. But we’ve given them a better shot. The choice to stop the
American automobile industry from unraveling was the right one.

The writer is secretary of the Treasury.




Apparently, the secretary of the Treasury is not only familiar with the US tax code, but with the definition of Channel Stuffing.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
John McCloy's picture

I dont understand. If we are already in the recovery and it was not just the result of dollar devaluation and 2.5 QEs than why do we need more fake recovery for a false economy? Wont that only put us in an even more dire situation next year?

 The real answer is that YES..they know this but if they can use magical printed dollars to pass the responsibility on to another group of officials or elected than that is all they are concerned about.

ParaZite's picture

The banks simply haven't finished their looting. They got caught in foreclosure fraud, etc... all extending the time line until they could own all residential property in the USA via worthless fiat, while the worker drones and slaves paid for it all with the sweat of their brow. 

QE3 will pass, the market will collapse, and the US Taxpayer will be stuck with the repayment of a debt they DID NOT WANT. 

max2205's picture

Funny, auto's are like, what, 5% of gdp...and they are zombies to boot

Mr Lennon Hendrix's picture

Timmah writes garbage.  Where did he pull his stats from?  Unemployment in Detroit has improved?  GM has turned profit?  Unbelievable propaganda.

flacon's picture

Reminds me of: [The recovery is] "too young to die" mantra from a few days ago. 

redpill's picture

The deflationary movement in stocks today is going to make Timmay and Uncle Ben extremely cranky.


At this point they might as well just outlaw selling.  Essentially that is the underlying message of their policies anyway.


Poor Grogman's picture

Why not?

In late Roman times it was made illegal to abandon your farmland or turn yourself into a slave.

You were forced to continue supporting the kleptocrats, under threat of state sanctioned violence.

That's what it usually comes to in the end...

knukles's picture

And those who flaunted and befouled Caesar were crucified along the Appian highway, for only Caesar was annointed to accomplish Caesar's Works.

DaveyJones's picture

Ah, fraudclosure. The third branch of government has completely fallen to the same folks.  

Noah Vail's picture

Yeah, screw it, we don't need no stinkin' auto industry. That's what we got China for. Can't wait for the new 2012 Xingtrang to come out. I can buy it with my worth less dollars. Don't get much, but whatdaya expect?

Urban Redneck's picture

Actually the US doesn't need an auto industry- the prevention of adopting all that "super secret super high efficiency" engine technology isn't a conspiracy by big oil it is a conspiracy between the DNC and UAW.  Between the Chinese (Volvo V60) and the Germans (Volkswagen X1) Comrade Obama could have licensed the technology for a 150mpg 4 door and 300mpg 2 door diesel electric hybrid, inaugurated an Effiency for Clunkers program...but instead he chose to spend billions of US taxpayer dollars replenishing the coffers of the UAW which worked so hard to get to him elected, and condemning Americans to a future of Zaz Volts.



Smiddywesson's picture

Rather than explaining their actions as an effort to kick the can down the road and blame the other side, I believe they are giving the bankers the time they need to put their plan into action.  That plan is a gold standard that will really stick it to anyone who is a saver.  they don't care if these savers are angry, because they are outnumbered by the non savers.  Politicians only care about numbers and votes.

Your explanation does not take into account the near global participation in playing for time.  Do you think the Chinese, the EU, even the solvent countries would play ball is these actions were just to pass blame between the Republicans and Democrats?  Are all the central banks of the world buying gold because they like the Dems and not the Republicans?  This is about money.  They are straining to keep everything stumbling forward until a new system is ready to be instituted.  They can't stop the world's economy while a new system is devised.  The shift has to be seemless.

Spastica Rex's picture

I think emergent behavior explains the weirdenss. Two simple imperatives: 1) maintain the status quo 2) retain capitalism (however it's defined). All the complexity boils down to these two rules.

macholatte's picture

There's another angle, Smiddy. The concept that all the problems were orchestrated needs a bit of modification. How about this: They fucked up.

The orchastra played the wrong song and bottoms up! Scramble for the life boats.

So now, as you said, they need to reboot, buy time, configure a solution and not get killed, both literally and figuratively, during the process, which can take years. The idea that all the central banks, in a global economy, work independently and not in concert may not be the fact of the matter. There is a great deal of collusion.


People go where they want to be led.

-- Edward Bernays



LRC Fan's picture

BTFD-just avoid LNKD, AIG, GM, MSFT, RMBS.....

I think I need to buy a gun's picture

when is gold revaluation?

Crummy's picture

A revolt worth fueling.


Hedgetard55's picture

I would like to see, as a result of that revolt, Timmah and Uncle Ben as cellies in Sing Sing for the rest of their lives.

Real Estate Geek's picture

Those two; together?  I think you're forgetting to celebrate and encourage diversity.


JR's picture

Geithner of NYFed cum USTreasury’s lasting legacy will be bailouts. And the only reputation he has off Wall Street is to try to find people who’ll believe they have worked. These are lies; Geithner is using the big lie and WaPo to protect his decisions of taking taxpayer money and bailing out his people - i.e., I’m doing a responsible job.

CPL's picture

I just knew they would be caught doing this nonsense again.  it made zero sense that the recovery of GM was all about SUV's.


Well at least if they are going to broker a scam, it might as well be one born out of the Nortel nonsense.

Temporalist's picture

I thank Salvidor Dali for making the dream world I wake up to daily.

Russiamerica's picture

Banksters, where do you want it?

Politicians, same place as last time.

Banksters, wont that hurt!

Politicians, no it wont hurt me, only future generations.

Banksters wont they notice?

Politicians, nope they think its normal.

Banksters, excellent I will prepare my family and friends then.

Politicians, what will you do?

Banksters, We are going to adjust gold and silver to a lower price then buy as much as we can but only physical.

Politicians, What should I do?

Banksters, Duh.......... you have already done it! Thanks




Mercury's picture

Yes folks,  from one of the great champions of...

* Too big to fail
* Too important to prosecute
* Too rich to be wrong


** Too expensive and counterproductive not too buy again !!

Timaaaaaaahhhhhhhhhh !!!!

tickhound's picture

Re-dedicated to the man who brought us the above...


Elton John, Tiny Dancer (Tiny Tim-mah)


Blue skies, Bennay

Debt pimp, Timmay

Schem-sters for the man.


Prices high,

Debt to the sky,

Print is the ponzi plan.


Larry Summers,

massage the numbers,

marking market to a sham.


Now it hits me,

the fraud economy,

toilet paper in my hand...


Barry freaks, out in the street

Another ticket sent by God

No turning back, we just laugh

The price for Ipad's not that bad.


Awoken man, he makes a stand

In an internet forum

Speaking on, right and wrong

The story's old news for some


But oh how it feels so true

Lying here, in IOU's

Cursing you, but you can't hear me

When I say slowly, but LOUDLY


F' me harder, tiny Tim-mah

Countless hedge-funds hit the highway

Wash the world in worthless pap-ah

Another busy day, today...



LaLiLuLeLo's picture

The writer is secretary of the Treasury.


noooo...The writer is SATAN

Missiondweller's picture

As I said yesterday, the new mantra will be "more stimulus, we're almost there"

(Just one last "hit" and I'll go cold turkey, I swear!)

Shell Game's picture

Geithner needs to become lampost decor.


orangedrinkandchips's picture

Billions for a few thousand jobs. Wonderful. Let the stupid fuckers fail. Period. The market has spoken. IF they made shit that was half-way decent, then the fucking govt wouldnt have to deal with it. Ignore the market at your own risk, not ours fuck-wad Tim.


It is so easy to understand. Survial of the fittest. GM and Cry-slayer are shit companies. They are like the Do-Do bird. Obsolete. Bottom line, people would lend without a problem if they thought these companies can make a car that can run.

Your playing favorites and you get fucked bigtime.

Besides, Tim G. will go down in history as the worst civil servant ever!

Cdad's picture

Sheesh Tyler,

In China, they build a hotel, implode it, then rebuild it.  It's a perfect solution for a falling GDP.  Timmay is just learning from China, stacking one GM car on top of another GM car.  All that is left is to put them in a car crusher and recycle the materials....and rebuild them.  Presto.

And anyway...what is all this chatter about no jobs in America.  According to Wall Street just:

1.  Buy Netflix shares

2  ?

3.  Jobs

Simple.  Who knew being an economist [or a treasury secretary] was so easy?

Cdad's picture

Hmmmm?  I must be wrong.  The NASDAQ is shaping up to be a complete, one day, simple moving average wipe out.  Pick your flavor, 10, 20, or 50.

What am I and Timmay missing?

plocequ1's picture

Im locked and loaded on NFLX. Im very happy to be here today.

Cdad's picture

You are a true American, sir, doing your part for job creation.  However, word to the wise...you might want to monitor the ravenous put buying beneath your feet there.  You know...just monitor it.

But anyway, everyone knows that streaming movies feeds a hungry nation.

citta vritti's picture

cheaper than iPads? plus, great taste, less filling?

Spastica Rex's picture

Netflix is responsible for the single greatest innovation in modern history, namely, the ability to watch any episode of the Black Adder at any moment on any day. My life is complete. I am simply waiting for an approved device to help me quietly end my life as I fall to sleep watching Rowan Atkinson make penis jokes. You can grind up my remains and feed them to the poor.

Cdad's picture


This just in....


Not to worry...that's only a ten fold increase in expenses...for Starz alone.  No problem here.  I'm sure that is NOT why folks are buying NFLX puts.

Cindy_Dies_In_The_End's picture

Boobus Americanus will take it up the ass like they always do. As long as they don't have to think, they'll rubber stamp everything.


Ps--Hey feds, you do realize this is only going to work until it doesn't. I suppose this is a bad time to point out, as Robert Reich has on numerous occassions (not a fan of him either) that at some point, the great unwashed is going to come knocking at your gated communities. Cardio people....cardio.


Thankfully, I only have to run faster than some of you.

scatterbrains's picture

"only have to run faster than some of you"  takes me back to my unemployed youth when we would drink beer and play *hot beans* around dusk.. sort of hide&seek except you hide a leather belt then send everyone out searching for it.  Who ever finds it yells "hot beans" and starts whipping who's ever closest to him before or unless (sometimes peeps slip and fall) they reach base.  I only had to run faster then the slowest player..  one time while fleeing for base and hearing a friend get whipped, I laughed so hard a sharted...  memories!

Mr Lennon Hendrix's picture

He didn't save any union jobs!  He allowed GM to destroy the union when they filed bankruptcy before the fascist government bailed them out, which negated their pensions.  Policy has destroyed the unions with NAFTA and propaganda that a union is a bad thing.  I will admit, most unions are horseshit organisations, but the union is like a tribe of people with like minded ideals.  It is the idea of the union that is America.  The United States of America is essentially a union in and of itself.

citta vritti's picture

and 600,000+ dead in the Civil War to prove States couldn’t leave and, oh yes, you can’t enslave people except by debt