Bailout falls flat, and Wall Street shrugs

A funny thing happened Friday. After the U.S. Senate killed a bailout for the Big Three automakers, the Dow Jones Industrial Average rose. Advocates of a bailout had made the consequences of letting Chrysler and/or GM go bankrupt sound calamitous. Investors on Friday didn't seem to think so.

You can't read too much into the wacky stock market these days, but you would think if investors really thought the bailout was the absolute necessity it was being sold as, they would have scurried for the bomb shelters. Now, maybe automotive stocks are so low that they can't really go much lower, and that's what kept the Dow rising Friday, but Wall Street must not have been too freaked out by the Senate's decision.

Among those urging the Senate to approve a bailout was UAW president Ron Gettilfinger. The UAW is worried about retaining American jobs, but the union balked at Republican senators' insistence that the union accept date-certain sharp cuts in pay and benefits. The proposed bailout is a floatation device for the industrial giants, but it's also aimed at keeping the UAW afloat. The UAW turned down a requirement to have the union accept $14 an hour reductions in pay and benefits, from about $62 an hour ($30 of that in wages) the Big Three pay to $48 an hour paid by non-union foreign auto manufacturers in this country. The UAW will take its chances with the new Congress, which will have many more Democrats who owe favors to the unions.

Now the White House says things are so desperate that the administration will try to scrape together enough money to tide the automakers over until the new Congress arrives. But skepticism about the Detroit bailout seems to be growing. The companies got themselves into this sorry state through mismanagement.

Here's a telling point: Detroit has spent millions of dollars paying celebrities to pitch their vehicles. Tiger Woods recently released GM from a multi-million dollar deal that had him endorsing Buicks. Country singer Toby Keith pitched Ford trucks. Paris Hilton did a Chrysler commercial. Rock singer Bob Seger sold his lyrics and voice to Chevrolet. Years ago, crooner Jack Jones sang about the Chrysler New Yorker. Altogether, Detroit spent untold millions on celebrity endorsements. Ever seen a celebrity endorsement for a Toyota, Honda or Nissan? These manufacturers realize they're selling vehicles, not vanity.

Letting an automaker or two slide into bankruptcy would be painful. But plenty of people in this country are in financial pain already, and they aren't begin bailed out.