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December 10, 2008

Automaker Bailout Glossary

The auto bailout bill under consideration this week is fairly complex and includes some terms and concepts that might not be familiar to all our readers.  To further understanding of this important issue, we present our auto bailout glossary:

Bridge Loan:
Like a regular loan except it’s too small. This allows you to finance things you can’t afford.

Car Czar: 
Someone who knows nothing about cars.

Chapter 11 Bankruptcy Protection:
A set of laws and procedures that have for decades worked successfully allowing struggling companies to continue operating while they work out their obligations with equity and debt holders but in the case of automakers, may only be employed after $15 billion in taxpayer money has been lost (see Bridge Loan).

Limits on Executive Compensation:
A program by which it is ensured that the management team leading the proposed turnarounds of the automakers consist of low-cost bidders, like that time you went with the plumber who said he’d only charge you ten bucks and a case of beer to put in that new sink and vanity. That worked out great, right?


Stakeholders consist of two groups:

1) People who own the company.
2) People who do not.

For instance, let’s say you wanted to refinance the mortgage on your house.  Your “stakeholders” would include, in addition to you and your spouse, your mortgage company, all your neighbors, the guy who mows your lawn, the county government, the local school district and your dogs.

All you need to do to refinance is to get all these stakeholders, who will at times have opposing interests, to come to an agreement on the specific terms.  (Hint: Your dogs’ demand for more squeaky toys is non-negotiable. "I can't go back to my people with this," Rex will say.)

Taxpayer Protections:

A set of terms and provisions that are put in place to ensure that politicians voting for the plan are protected from the taxpayers.


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December 10, 2008 at 01:53 PM in Current Affairs | Permalink


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Paul Volcker has a unique qualification to be the car czar: I met him once. (Me: thatwasagreattalkthankyouforcominghereitsanhonororwordstothateffect. Him: Thank you.)

So I'd get to point at the TV and say "hey, I shook that guy's hand". I therefore fully support Volcker or that NECN weather guy who used to live near me.

Posted by: Michael | Dec 10, 2008 8:06:26 PM

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