Chrysler, GM Bailout is Both a Band-Aid and a Football

(MoneyWatch)  Despite all the drama, the auto industry bailout President Bush approved today still amounts to a quick fix, postponing for now a lot of heavy lifting to be done by the Obama Administration.

"This is a band-aid for the auto industry; the amount of money being loaned to the automakers is insufficient to see the automakers through what is shaping up to be a worst-case sales scenario in 2009," said an analysis from Aaron Bragman and Rebecca Lindland, analysts for IHS Global Insight.

They point out that the $17.4 billion approved on Dec. 19 is less than half of what the automakers asked for in business plans submitted earlier this month. Global Insight includes Ford in the total, despite Ford's repeated insistence that it doesn't expect to need a bailout unless business conditions get even worse.

Global Insight in fact predicts that business conditions will get a lot worse. The research and consulting firm said it lowered its U.S. light-vehicle sales forecast to only 10 million to 10.5 million, down from an earlier estimate of 11.3 million.

That's another huge drop from about 16.1 million in 2007, and about 13 million in 2008. Global Insight also cut its 2010 forecast to 12.5 million, from a previous estimate of 13 million.

"All automakers, including Ford, are going to need government money," the firm said.

Global Insight managed to call the bailout a band-aid and a football in nearly the same breath. "In essence, it is a $17.4-billion football that the Bush administration is punting to the incoming Obama administration, allowing Barack Obama and his team more time to formulate deeper plans that will loan much more money to the automakers," said Global Insight.

(I hasten to add for the benefit of Johnson & Johnson watchdogs that like all Journalism School alumni, I'm aware that the proper term is, "Band-Aid brand adhesive bandages.")