Dire Warnings From Columbia Economist
Jeffrey Sachs, Columbia University economist and author of the best-selling "The End Of Poverty," just finished his testimony before the House Financial Services committee, which is considering $34 billion in emergency loans to struggling U.S. automakers.
Sachs opposes Chapter 11 bankruptcy for the companies, calling it "extraordinarily unpredictable," noting that the bankruptcy of Lehman Bros. was the "single largest financial shock in modern history."
If the Big Three go into bankruptcy, Sachs predicted "the possibility of cascading disasters that we would do best to avoid right now."
The automakers need and deserve government help, Sachs said. He would prefer it not to come from additional congressional action, which the Big Three are seeking.
Instead, Sachs first advocates loans from the Fed; second, the use of the bailout/rescue money already approved and finally, rewriting the rules of the energy bill that already authorizes $25 billion in loans to Detroit to help them modernize their factories.
Sachs said: "This is our largest industry. Are we going to watch it melt down by Christmastime? Because that's what we're facing."
He concluded his plea by urging lawmakers to stay in Washington over the weekend to work out a relief bill.
"If you go home," Sachs said, "I do not want to see how the markets open up on Monday."
December 5, 2008; 1:43 PM ET
Categories: The Ticker | Tags: Chrysler, Ford, GM, General Motors, automakers, bailout
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Posted by: kondrek | December 5, 2008 2:59 PM | Report abuse
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