Typically the water covering up the rocks is a metaphor for excessive inventory or any sort of slack in the system which covers up systemic problems. Easy sales, cheap money, a ponzified stock market are all good examples of the water covering the rocks.

In the case of the recent economic problems we might say that it was the easy money banks were giving to unqualified loan applicants. When this led to speculative building, house-flipping and other unsustainable activity, the result was a bubble. Those companies that built their business models around bubbly conditions are now in trouble, including the automotive companies.

I’m no critic of discreet economic stimulus packages by the government especially when it comes to infrastructure, education and technology. But propping up businesses that have failed is only adding water and covering up the rocks. When the rocks keep knocking holes in the bottom of the boat, there is never enough buckets to a bail out failing businesses. Bailing out = adding water to cover up the rocks.