AMERICAblog: TNR on why we can't afford to let the auto industry fail
Tony n SF
· 1 year ago
Some say that what is needed is a combination of Chapter 11 and Uncle Sam financing. Instead of turning to Wall Street and commercial banks for DIP financing -- the taxpayers become the DIP lenders. ("DIP" -- I don't like the way that sounds but anyway . . . .) In some ways, I trust a BK judge to sort a lot of the issues of reform more than I trust the Congress.
Bush Bites
· 1 year ago
Since car dealers are such big Republic donors I kind of wondered why they're not applying pressure from their end.
mcolley73
· 1 year ago
The one-two punch of a loan program followed closely by health care reform might make the former's effect much more resilient.
lucky hussein
· 1 year ago
From what I've read, no doubt GM would leave a big crater if it goes chpt 7. It would at least double the # of people who lost jobs this yr (~1 million so far) Why not go with Ravi Batra's suggestion, as I understand it: GM market cap is 1.7 billion. If a majority stake can be bought for 10-20 billion, have the gov't buy it, and lend it to the employees, let them run the co. No doubt, imo, the executives need to be cleared out, and new MPG standards need to be in place. The gov't should put together a team to suggest plans to the auto companies, and maybe even make them hold to some of it, based on financial help. Let's get some return for our $, and let's use this 'shock' opportunity to get some real democratic control over these companies. Public stock is not enough, let the employees vote on the direction of the company. Call it social democracy, whatever, but give it a try.
bish8
· 1 year ago
If Toyota pays their workers so much less, why are Toyota's so expensive?
Older_Wiser
· 1 year ago
Because the car includes paying off people like Sessions...
RitornaVincitor
· 1 year ago
But saving the auto industry is not the GOP thing to do. Saving the jobs of millions of workers.... saving their pensions..... that just "Big Government Socialism". Now, saving the rich auto execs who made all the wrong decisions and got the industry into this mess..... saving banks and rich investors...... THAT'S the GOP thing to do.
tallguy
· 1 year ago
Bailing out the Detroit Three is throwing good (taxpayer) money after bad. Creative destruction benefits everyone.
Jamie in Vegas
· 1 year ago
Did anyone see Michael Moore on Larry King the other night, discussing the auto bail-out? While I can barely stomach Larry King, I tuned in to watch Moore, who has a long history with the auto industry. Remember Roger and Me?
He proposed an interesting and intelligent solution - tie the bailout with an infrastructure upgrade to our country. Let them re-tool and help move our country forward, with the construction of mass transit vehicles, subways, monorails, and more. In previous times of war, many factories re-tooled to make what the government needed. Why can't one of the politicians who are working on this bail out bill think outside the box and work it out so the auto makers stay afloat, building things we NEED instead of crap we don't want.
AdmNaismith
· 1 year ago
I have yet to see the car companies start clearing stock. Where are the car sales and at-cost deals?
I'd think I would like to see everyone on the dole before throwing more money to company execs who are clearly incompetent. I mean, the economy as we know it will come crashing down around of heads sooner or later- it is simply unsustainable. Why wait, when we can clear the deadwood now? Building cars is the only material thing we do in the USA anymore (the rest of the economy is built on trading debt and other imaginary shit). But we clearly have enough cars to suit our needs. Time to think of something else.
Bostonian_Queer_in_Dallas
· 1 year ago
All fine and dandy...let's save them...and here are the terms. 1. CEO Salary for ten years = $45,000...take it or leave it. 2. Chevron and Texaco now release their criminal patent on NiMH battery technology (gives a car a huge electric range) 3. Not one single fucking SUV more on the road. 4. EVs for under $15,000 with on board charger ala Honda generator 5. Minimum MPG on ALL vehicles sold = 65 mpg (can already be done.)
If I have to pay for this shit, then I get the kind of car I want
Older_Wiser
· 1 year ago
I'll drink to that!
lucky hussein
· 1 year ago
OT, but I have been lamenting lately about Obama's selections for his team. I'm realizing the next batle with be with the Obama admin. Jeremy Scahil crystalizes it for me: http://www.truthout.org/112108D
ObamaLover
· 1 year ago
You people annoy me. Obama has so far done shat and you guys are already criticizing him. If he starts talking like a war monger then go ahead and criticize him, but he hasn't done that yet. Maybe you should help Obama instead of launch preemptive attacks on his administration.
lucky hussein
· 1 year ago
He has to be bush2 for me to criticize? That's the standard? i've been helping him get elected. Now, I'm helping him by criticizing what I don't like. Not questioning your leader is part of fasicsm.
pdxprobert
· 1 year ago
Give Obama time... the change we are going to see is a return to oversight and decisions that are for the greater good, not to line the pockets of their buds at the expense of the middle class... give him time... he's a smart man... but he's been handed one hell of mess.. and he can't solve every problem in the first 90 days, let alone the first 4 years...
I can't wait for all the whistleblowers that come out after Januray 20th...
lucky hussein
· 1 year ago
Whistleblowers: I don't care what it costs - I hope he hires as many investigators as needed to chase it all down. But, I would guess it won't ever happen. We'll just 'focus on the future' instead - same mistake as Clinton. I hope Obama doesn't make it. Might help the next guy too.
skeptic
· 1 year ago
This analysis has been pretty apparent from the git go as approximately 10% of the US workforce is involved directly or indirectly with the automotive industry. The fall out would be devastating to the economy generally and the worldwide economy as well.
That said, my knee jerk reaction, as it is for many others, is screw these jerks. They have run these companies into the ground with awful management and poor designs. When I see a 2008 Mustang that looks identical to a new Mustang I had in 1969 or a Dodge Charger throw back to another era then I can only surmise that the old farts running these companies are reliving their early years. They don't want to see any change or progress and wish to remain in the 1950's and early 1960's. From that I would deduce that they are all Republicans. Now they try to blame the Unions for their problems without talking about their outrageous salaries, bonuses and perks.
At the least should they get a bail out, they should all be fired immediately and not given any golden parachute or bonuses.
Disgusting!
lucky hussein
· 1 year ago
OK, you're right, they are not making what people want. But in no way does a new mustang look like the old. I don't think those cars are really the ones not holding up - are they?
PWAX
· 1 year ago
Is bailing them out or letting them fail the only two choices? The problem is: what to do with those companies. There execs are tone-deaf idiots, focused on the short term, as are many American companies .
ObamaLover
· 1 year ago
I've been hearing that what Obama may do is work out a prepackaged Chapter 11 deal with the auto companies to accelerate the process, and maybe give them some financial help because it will probably still take around six months to go through an accelerated bankruptcy.
Older_Wiser
· 1 year ago
I, too, like what Michael Moore said the other night. Big Auto retooled for WWII in 6 months and made plenty of money from the govt, turning out war products.
We're having a war on the economy and we need to think beyond the private auto which has gotten us to this point. More mass transportation, plenty of it.
I was struck this morning at the local chain supermarket how expensive the stuff of life is becoming. The same 15 lb turkey that cost $7 last year cost $10 this year (and they're raised here in NC). A gallon of bleach that cost $1.49 last week cost $1.69 this week (and that was the house brand). Produce is becoming so expensive, I no longer buy fresh but frozen of many items and avoid those I can't get frozen. Even the farmer's market at the local school (and this is a rural area) is not much better--last year I paid $3 for 2 very small organic tomatoes--and regretted it and didn't go back. That was only because my own garden failed (mine are organic).
Something is going on in the food industry and I don't mean inflation. I believe we may be on our way to scarcity.
Asterix
· 1 year ago
Wholesale prices are collapsing. Ask a farmer how feasible it is to sell a bushel of corn for under $4. No scarcity, just no profit it raising the food.
Older_Wiser
· 1 year ago
So, no corn, no beef, etc. The meat section was bereft of much...couldn't even find a small ribeye steak (at $11.49/lb!!!) for my son, who generally has one every Sat. No profit means scarcity, too. They're not gonna free range those cows and let them eat grass, you know.
Asterix
· 1 year ago
My response to "too big to fail" is "good, make it smaller".
In the case of GM, dispose of all of the foreign-based operations, including the plant in Brazil, the Opel, Saab and Vauxhall brands. Get rid of all of the secondary brands, Buick, Cadillac, Chevrolet, Saturn, Pontiac, Hummer, etc. Produce a line of fuel-efficient, safe vehicles under the GMC marque.
Simplyfy.
MikeinSanJo
· 1 year ago
Ya! Our Anti-Monopoly rules only seem to apply when the monopoly inconveniences our billionaires. There was once a time when the American Government realistically considered Americans when they made decisions. Now it's just who pays out to the Bush Cabal.
Fuck 'Em. Fuck 'Em ALL!!!
nicho
· 1 year ago
I'm not very bright -- so please explain this to me.
1. The automakers can't build cars in Chapter 11 because they need parts and the parts makers won't give them to the automakers if the automakers have no credit.
2. We can't allow the automakers to fail because the ones who would suffer the most would be the parts makers.
So, why don't the parts makers just relax their rules on who they'll sell parts to -- on credit -- rather than requiring the DIP loans. It seems to me it would be in their best interest to do that.
If the parts makers -- who will suffer the most -- won't take a chance to keep the auto makers alive, why should we, who have much less of a stake?
Eric
· 1 year ago
We need to let these companies fail. Everyone at those companies is overpaid, and they need a new set of management to make a car profitably. That will involve renegotiating contracts with the autoworkers. When companies like GM make cars efficiently enough to make a profit, then they can start ramping up the benefits again. When times are good, you get pay increases. No one seems to accept a pay cut when times are bad, so companies have to do layoffs instead.
These companies won't disappear, but their assets will become very cheap for someone to take over. If the next person in charge isn't bright, the company will fail again and someone else will have an opportunity to buy.
Why do we need to give money to the losers who can't run a business correctly? Why do you or I need to pay for a company whose cars we won't want to buy?
I know our schools have been dumbed down to the point of "nobody fails, and everyone gets a gold star" but when we apply that shit to business in America, we'll continue to extinguish our significance as China takes over.
nova
· 1 year ago
I still am amazed at the illogical reasoning that the auto industry collapse/financial meltdown can be solved by government. The 30+ years of US auto mismanagement cannot be solved by $25-50 billion in bailout cash. And according to CNN the US government through bailouts andFed "loans" to rescue banks is over $4 trillion. That's more money than was spent in the effort to defeat the Axis in WWII. At least we got a victory for the country + a lot of jobs and industries created.
All we have to show for the bailout are a continuation of fatcat corporate perks and a name on the Mets stadium. No stabilization of the markets. There is simply too much alphabet soup financial instruments created on computer screens for the world economic system to swallow. And there is too much monumental mismanagement in the auto industry to allow it so survive in its current form.
lynchie
· 1 year ago
I agree in part but what no one talks about is that this has been happening for 20 years. The slow drain of jobs overseas has increased the pressure on all companies, banks, etc. One big jump of 3,000,000 will push the country into the toilet once and for all. We truly are at the tipping point in a number of areas. First the take care of themselves politicians who portray themselves as being Americans and representing their constituents, as long as they are corporate constituents, next we have the corporations who only want increased profits, lower wages, no benefits for workers and perk after perk after bonus after perk for the top 8 or 10 executives who spend no time figuring out why the company is going belly up and all their time negotiating their parachutes for failing. We have to be the biggest fucking chumps in the world to reward people at the top for failing and allow ourselves to get fired for making a mistake or wanting a union. I am hopeful that Americans are finally seeing that they have been getting screwed and screwed again and the only ones now elibible for a helping hand are the richest mother fuckers in the country. If that doesn't wake up a few of us we are doomed.
Older_Wiser
· 1 year ago
What's that saying? No one ever went broke underestimating the ignorance of the American people? (Or something to that effect.)
zorbear
· 1 year ago
"No one ever went broke underestimating the intelligence of the American public" by Henry Mencken, one of my favorite curmudgeons.
chuin
· 1 year ago
he also said: “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”
Talk about apropos!
EdNSted
· 1 year ago
I'm not unsympathetic to the worst case scenario painted in the article. Fact is, if I honestly believed that fixing what's wrong in Detroit was as easy as handing them $25 billion of your money, I'd be happy to take the money directly from your wallet.
Or let's look at another way. If spending $25 billion now actually prevents us from have to pay $500 billion over the next 2-3 years - in unemployment benefits, food stamps, health care, increased crime, etc. etc. etc. then it also makes sense to spend it now. Prevention being far preferable to curing the disease. But is that really what we would be doing? I'm skeptical. It's likely that we are simply kicking the can a few yards down the road. I was also bothered by the final paragraph:
"Nothing can stop the revolution in auto-making and drivetrain technology; even under the best of circumstances, the Big Three need to become smaller, more efficient, and more environmentally conscious. But if the government manages that change and uses it as a springboard for discussion of broader economic reforms, everybody can benefit."
Our government can set goals, establish policy, throw money, provide incentives, regulate and monitor results. But what the government absolutely cannot do is manage the needed change at the Big 3 automakers. The government has no experience in running and managing a modern, profitable auto company.
There is a myth being prepetuated that the fundamentals of the Big 3 auto makers are strong and that they just need a little chump change to get them over this temporary hump. A 'bridge loan' - just a tiny $25 billion and the Big 3 can build the bridge to profitability. You see, there's no real problem here. Nothing fundamentally wrong. A little loan from the American taxpayer and all the jobs will be saved and Detroit will regain its former glory.
Honestly, I have no qualms about spending $25 billion of taxpayer money in order to prevent an economic disaster that clearly has the potential to be much larger than that. I have no wish to see an economic Katrina hit the automotive states. I'm just not convinced that handing $25 billion to Big 3 with relatively few strings attached accomplishes that goal. Through experience I've found that if you have an unprofitable business and you add some cash to it, you still have an unprofitable business.
Indigo
· 1 year ago
Lee Iacoca would have come before congress with a business plan. The private jet CEOs did not. The problem is with the board that allows those CEOs to keep on keeping on.
They need to go to the Grand Caymans now and stay put while sensible business people take on their roles. Otherwise, they will be shouted down, the companies will be forced to fold up, and altogether too many unemployed will be forced into their own bankruptcies. It's a mean scenario, worthy only of a Republican administration.
I hope that isn't how Obama has to start out but it's certainly looking like that's the likely direction. Too bad for him, too bad for us, too bad for America. We don't benefit by being left without an automotive industry.
Making Korean go-karts on plantations in the Deep South is not an industry, it's the 21st century variation on old-fashioned slavery.
zorbear
· 1 year ago
"If GM shut down, many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations."
Am I the only person that has a problem with this logic? Why not extend it to all the car makers in the world? Surely if the formula is: some US parts suppliers close=all US suppliers close, then: all US suppliers close=all world suppliers close must also be true. Because, lets face it, the other car makers couldn't POSSIBLY get their parts from anywhere but here, right? What's that? what do you mean a lot of the parts already come from Mexico, Japan, Korea, and China...how does that help this argument?
I don't doubt for a minute that the results of GM going under would be huge, but you're not going to convince anyone on the fence by going over the top. Using the most excessive examples doesn't make for a good argument for anyone except the already converted. It's called "preaching to the choir"...
MikeinSanJo
· 1 year ago
"If GM shut down, many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations."
Ummm... Bullshit?
If chocolate chip cookie makers couldn't find a market for chocolate chip cookies, they would drop the chocolate chips and just make cookies.
It's not a surprise that the auto big wigs would say "If we crash, everyone crashes." Truth is, if the "Big 3" crash, their suppliers would re-tool and find other markets for their goods.
Remember back when all the execs thought it was such a great idea to start shipping their jobs over seas and the American Workers said it was a bad idea. What happened? The American workers ttrained the people who were stealing the food out of their children's mouths and the execs STILL thought it was a fabulous idea.
What's changed? Well, now the execs are losing their $100 million bonuses and their billion dollar jobs. Strange how republicans think it's a great idea to kick you in the nuts, but when they get kicked in the nuts, not so much...
MikeinSanJo
· 1 year ago
I just watched "Who Killed the Electric Car" last night. While I understand that it would have incredibly far-reaching consequences, I can't help but say "Fuck the Auto Industry". They have had opportunity after opportunity to do the right thing, and repeatedly fought against everything that tried to improve and protect us (including seatbelts, airbags, & CAFE standards) except putting more money in their (the CEOs) pockets, at the expense of the consumers, the economy, the environment and the future.
I think that if we do bail out GM, Ford, and Chrysler, we need to fire every level of management and put in some HUGE regulations. Hell, I'll run the place! I couldn't do any worse than the very well-paid losers that have been fucking up this industry and this country for all these years.
America had electric cars back in the 1920's and 30's, and beyond but the oil industry, the auto industry, and the government have repeatedly killed them. It's REALLY time to get the greedy elitist bastards out of government and let this country be run by people who actually suffer the consequences of their one-sided policy decisions.
Where's Erin Brokovich when we need her??
zorbear
· 1 year ago
[I just watched "Who Killed the Electric Car" last night. While I understand that it would have incredibly far-reaching consequences, I can't help but say "Fuck the Auto Industry".]
I agree completely. I saw this show some time back, and just sat open-mouthed in wonder. It's amazing to me that there's so much factual information available (I'm not talking theory, just facts) about the way our government keeps allowing Big Bidness to screw us at every turn. Then I watch a movie like "V" and wonder when the uprising will come...
KyleInMinn
· 1 year ago
Forget the big three. They've always claimed big disaster and it's never happened. Remember the big scare over new emissions rules in the Clean Air Act in the 70's and they said it'd kill them, cost them billions, they couldn't do it, but they shut up quick when Honda showed their CVCC engine that met emissions requirements without a cat? Chrysler covered up their Ultradrive fiasco in the late 80's and blamed all the problems on Consumer Reports. If they don't give a rat's arse about us, let 'em close their doors, and other companies that actually know how to make stuff we want (Honda, Toyota, Nissan) buy up the factories, re-employ the workers, and actually listen to the consumer.
profmarcus
· 1 year ago
did it ever occur to any of you numbskulls that letting the auto industry fail is a union-busting tactic, the very same strategy that was employed in letting the airlines fail...? have you ever asked yourselves WHY A.I.G. was declared "too big to fail" but the same super-rich elites that have handed out gazillions of dollars to banks, insurance companies and investment brokers are all too willing to abandon the automakers...?
I think AIG insures 90% of the airlines. If they fail, it's catastrophic to the economy. They should not be, but they are too big to fail. The economy cannot function without banking and insurance. Most importantly we should take this opportunity to set things right for the future, so it can't happen again, and so we can find a better way, imo.
mswsm
· 1 year ago
I was out to dinner with some wealthy Chicagoans from real estate, energy, and transportation. One man (CEO) \ bought a \ division of GM. He went off on the salary of the UAW so I said, " I find it hard to believe that workers make $70/hr, but setting this aside I have 2 questions-" 1) If the price of health care is breaking thei automotive backs, why do they oppose government health care? And 2) Henry Ford paid higher salaries because he believed that employees needed to make a living so they could buy his cars. If UAW workers are just making enough to pay for food, gas, and housing who will buy cars and go out in the evenings? He couldn't answer either question. As a matter of fact, he just blinked at me and said, "I can't speak the automotive industry or justify their business plan" Fact is, the CEOs just don't get it. Really, all the people at my table felt the market "hysteria" was "irrational". In short they felt that business was healthy and people where overacting. Go figure.
lucky hussein
· 1 year ago
'business is healthy' - and some are in real estate? hard to believe. if business is healthy, then how do they explain gm's dilema?
zorbear
· 1 year ago
"I find it hard to believe that workers make $70/hr"
The original post said the COST of SOME employees was $70/hr, and everyone has jumped on that figure and misquoted it. In case you don't know, the COST of an employee includes not only the salary, but also the employer paid portion of health care, social security, unemployment insurance, as well as a per employee portion of rent, desks, utilities, property taxes, etc. The Standard in industry is this: an employee's salary is generally one-third of the total cost of an employee. So, if an employee makes $25/hr, the total expected COST of that employee is $75/hr.
David Liao
· 1 year ago
I think the $70/hr cost of employment is familiar with people who free lance. I've been taking voice lessons and thinking about doing some art when I graduate. The going rate for work like that is $50-$100/hr for people with graduate degrees.
My first instinct is that a lot of lower-middle class and upper-middle class work costs in the neighborhood of $70/hr in combined labor and tools. Energy/effort is made valuable when expressed through a tool/machine.
Using wages to estimate employee cost might suggest a wide variation in employee cost? Why might dispersion in employee costs be narrower than at first might appear? Some kinds of tools are physical equipment with computers sitting on a manufacturing plant floor. The manufacturer pays for this equipment by paying a supplier, not the employee. Some "tools" are the expensive knowledge and experience certified by advanced degrees necessary for very-white-collar jobs. These tools are embodied within the employees themselves, so very-white-collar employees are paid directly for an employer's access to these "tools." A white-collar employee can see a larger fraction of the $70/hr. than a manufacturing employee.
David Liao PhD Candidate Department of Physics Princeton University, Princeton, NJ
P.S. In case this posts sounds Conservative in tone, I should say that I am a 25-year-old liberal who voted for Kerry and then Obama. I do have a significant complaint regarding Democratic rhetoric. One should not set up an economy where merely working hard provides physical survival and comfort. One should encourage an economy where it's clear to people how they can secure access to the tools (physical equipment or degrees) to turn their raw effort into a valuable result/product. I am very happy to use federal funds to subsidize college tuition for people with low incomes. I would be very open to considering tax increases, at least for myself, to make such subsidies more available. At a more basic level, I think it's important for people to learn reading, writing, arithmetic, and computer programming/scripting. There is a lot of wasted effort because people don't know how to program computers.
P.P.S. I'm willing to consider an auto bailout. I would prefer it be phrased more honestly: (1) Chapter 11 has often been a useful tool for reorganization (2) DIP money is not available now so (3) use $25 billion in public funds to prop up the big-three automakers until (4a) times improve so that Chapter 11 is a reasonable option or (4b) government can figure out a reorganization plan similar to Chapter 11. I think of the $25 billion as stop-gap money that will disappear, but I'm willing to consider it for the purpose of buying time until the big-three can undergo reorganization equivalent in scope and consequence to Chapter 11 bankrupty under a normal economy.
P.P.P.S. Sorry, I'm a misanthrope. I have 25 years of calendar age, but I've seen more life than I probably should have in that time.
David Liao
· 1 year ago
P.P.P.P.S. A couple years ago I worked in a laboratory where I thought I was going to die. The postdocs told me (1) to close the door when doing experiments so that the department manager would not witness violations of laser safety and (2) to keep quiet about my broken seat belt on a 9-hour trip to/from Cornell so as not to bother the professor. My 100-hour generals project turned into an 800-hour project, many of those hours spent during a few 36-hour days in a particularly bad 2-week period.
My house was broken into twice while I was a high-school student. I was home alone the second time.
I don't like people.
Buford
· 1 year ago
Isn't it clear that any industry that is considered 'too important to allow to fail' should be subjected to govt oversight and regulation? First it was Fannie/Freddie, then the banks, and now the Big 3... same story... Govt is told to stay outta their business, else competetiveness would be unfairly stifled, but then it's an absolute requirement that govt step in to keep them afloat when times get tough. I guess I'm just naive or something.
GaryG
· 1 year ago
The very first comment here had the solution. Let the $25billion be the DIP loan that GM et al says they won't be able to get. After that, the gov't could "guarantee" the auto warranty in some way.
Then it's have the gov't order things that GM et al can make. Maybe order 100,000 [1,000,000] fuel efficient autos at the "proper" cost -- even if they have to resell them at a later loss, I bet it wouldn't amout to $25billion!.
Or even better, let them put out bids to anyone who wants to build 100,000 fuel efficient autos. See if anyone other than GM et al are in a position to build them.... If Lockheed, Boeing, Tesla, ... are able to fulfill such a contract, let the GM executives look into the black hole and just go away.... Why do I think Honda or Toyota would be first in line to bid on that? The Chinese have already offered to buy the entire GM for its current stock value....
rphillips4165
· 1 year ago
Okay, let's say that they get the bailout. They keep producing cars. Who is going to buy these cars? Already over a million people have lost their jobs this year. They aren't going to buy new cars. And the majority of other families in this country are already in debt. They can't get loans to buy these new cars. I'm not stupid I know that if the automakers close down it will make the economy worse. But you don't get that they are going to go out of business anyway. It's just sooner or later. For the last few decades the U.S. has rewarded companies for incompetence. We are going into a depression regardless of what the government does. The time of living on credit and loans is over.
All Comments
Why not go with Ravi Batra's suggestion, as I understand it: GM market cap is 1.7 billion. If a majority stake can be bought for 10-20 billion, have the gov't buy it, and lend it to the employees, let them run the co.
No doubt, imo, the executives need to be cleared out, and new MPG standards need to be in place.
The gov't should put together a team to suggest plans to the auto companies, and maybe even make them hold to some of it, based on financial help. Let's get some return for our $, and let's use this 'shock' opportunity to get some real democratic control over these companies. Public stock is not enough, let the employees vote on the direction of the company. Call it social democracy, whatever, but give it a try.
He proposed an interesting and intelligent solution - tie the bailout with an infrastructure upgrade to our country. Let them re-tool and help move our country forward, with the construction of mass transit vehicles, subways, monorails, and more. In previous times of war, many factories re-tooled to make what the government needed. Why can't one of the politicians who are working on this bail out bill think outside the box and work it out so the auto makers stay afloat, building things we NEED instead of crap we don't want.
I'd think I would like to see everyone on the dole before throwing more money to company execs who are clearly incompetent.
I mean, the economy as we know it will come crashing down around of heads sooner or later- it is simply unsustainable. Why wait, when we can clear the deadwood now?
Building cars is the only material thing we do in the USA anymore (the rest of the economy is built on trading debt and other imaginary shit). But we clearly have enough cars to suit our needs. Time to think of something else.
1. CEO Salary for ten years = $45,000...take it or leave it.
2. Chevron and Texaco now release their criminal patent on NiMH battery technology (gives a car a huge electric range)
3. Not one single fucking SUV more on the road.
4. EVs for under $15,000 with on board charger ala Honda generator
5. Minimum MPG on ALL vehicles sold = 65 mpg (can already be done.)
If I have to pay for this shit, then I get the kind of car I want
http://www.truthout.org/112108D
I can't wait for all the whistleblowers that come out after Januray 20th...
That said, my knee jerk reaction, as it is for many others, is screw these jerks. They have run these companies into the ground with awful management and poor designs. When I see a 2008 Mustang that looks identical to a new Mustang I had in 1969 or a Dodge Charger throw back to another era then I can only surmise that the old farts running these companies are reliving their early years. They don't want to see any change or progress and wish to remain in the 1950's and early 1960's. From that I would deduce that they are all Republicans. Now they try to blame the Unions for their problems without talking about their outrageous salaries, bonuses and perks.
At the least should they get a bail out, they should all be fired immediately and not given any golden parachute or bonuses.
Disgusting!
We're having a war on the economy and we need to think beyond the private auto which has gotten us to this point. More mass transportation, plenty of it.
I was struck this morning at the local chain supermarket how expensive the stuff of life is becoming. The same 15 lb turkey that cost $7 last year cost $10 this year (and they're raised here in NC). A gallon of bleach that cost $1.49 last week cost $1.69 this week (and that was the house brand). Produce is becoming so expensive, I no longer buy fresh but frozen of many items and avoid those I can't get frozen. Even the farmer's market at the local school (and this is a rural area) is not much better--last year I paid $3 for 2 very small organic tomatoes--and regretted it and didn't go back. That was only because my own garden failed (mine are organic).
Something is going on in the food industry and I don't mean inflation. I believe we may be on our way to scarcity.
In the case of GM, dispose of all of the foreign-based operations, including the plant in Brazil, the Opel, Saab and Vauxhall brands. Get rid of all of the secondary brands, Buick, Cadillac, Chevrolet, Saturn, Pontiac, Hummer, etc. Produce a line of fuel-efficient, safe vehicles under the GMC marque.
Simplyfy.
Fuck 'Em. Fuck 'Em ALL!!!
1. The automakers can't build cars in Chapter 11 because they need parts and the parts makers won't give them to the automakers if the automakers have no credit.
2. We can't allow the automakers to fail because the ones who would suffer the most would be the parts makers.
So, why don't the parts makers just relax their rules on who they'll sell parts to -- on credit -- rather than requiring the DIP loans. It seems to me it would be in their best interest to do that.
If the parts makers -- who will suffer the most -- won't take a chance to keep the auto makers alive, why should we, who have much less of a stake?
These companies won't disappear, but their assets will become very cheap for someone to take over. If the next person in charge isn't bright, the company will fail again and someone else will have an opportunity to buy.
Why do we need to give money to the losers who can't run a business correctly? Why do you or I need to pay for a company whose cars we won't want to buy?
I know our schools have been dumbed down to the point of "nobody fails, and everyone gets a gold star" but when we apply that shit to business in America, we'll continue to extinguish our significance as China takes over.
All we have to show for the bailout are a continuation of fatcat corporate perks and a name on the Mets stadium. No stabilization of the markets. There is simply too much alphabet soup financial instruments created on computer screens for the world economic system to swallow. And there is too much monumental mismanagement in the auto industry to allow it so survive in its current form.
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”
Talk about apropos!
Or let's look at another way. If spending $25 billion now actually prevents us from have to pay $500 billion over the next 2-3 years - in unemployment benefits, food stamps, health care, increased crime, etc. etc. etc. then it also makes sense to spend it now. Prevention being far preferable to curing the disease. But is that really what we would be doing? I'm skeptical. It's likely that we are simply kicking the can a few yards down the road. I was also bothered by the final paragraph:
"Nothing can stop the revolution in auto-making and drivetrain technology; even under the best of circumstances, the Big Three need to become smaller, more efficient, and more environmentally conscious. But if the government manages that change and uses it as a springboard for discussion of broader economic reforms, everybody can benefit."
Our government can set goals, establish policy, throw money, provide incentives, regulate and monitor results. But what the government absolutely cannot do is manage the needed change at the Big 3 automakers. The government has no experience in running and managing a modern, profitable auto company.
There is a myth being prepetuated that the fundamentals of the Big 3 auto makers are strong and that they just need a little chump change to get them over this temporary hump. A 'bridge loan' - just a tiny $25 billion and the Big 3 can build the bridge to profitability. You see, there's no real problem here. Nothing fundamentally wrong. A little loan from the American taxpayer and all the jobs will be saved and Detroit will regain its former glory.
Honestly, I have no qualms about spending $25 billion of taxpayer money in order to prevent an economic disaster that clearly has the potential to be much larger than that. I have no wish to see an economic Katrina hit the automotive states. I'm just not convinced that handing $25 billion to Big 3 with relatively few strings attached accomplishes that goal. Through experience I've found that if you have an unprofitable business and you add some cash to it, you still have an unprofitable business.
They need to go to the Grand Caymans now and stay put while sensible business people take on their roles. Otherwise, they will be shouted down, the companies will be forced to fold up, and altogether too many unemployed will be forced into their own bankruptcies. It's a mean scenario, worthy only of a Republican administration.
I hope that isn't how Obama has to start out but it's certainly looking like that's the likely direction. Too bad for him, too bad for us, too bad for America. We don't benefit by being left without an automotive industry.
Making Korean go-karts on plantations in the Deep South is not an industry, it's the 21st century variation on old-fashioned slavery.
Am I the only person that has a problem with this logic? Why not extend it to all the car makers in the world? Surely if the formula is: some US parts suppliers close=all US suppliers close, then: all US suppliers close=all world suppliers close must also be true. Because, lets face it, the other car makers couldn't POSSIBLY get their parts from anywhere but here, right? What's that? what do you mean a lot of the parts already come from Mexico, Japan, Korea, and China...how does that help this argument?
I don't doubt for a minute that the results of GM going under would be huge, but you're not going to convince anyone on the fence by going over the top. Using the most excessive examples doesn't make for a good argument for anyone except the already converted. It's called "preaching to the choir"...
Ummm... Bullshit?
If chocolate chip cookie makers couldn't find a market for chocolate chip cookies, they would drop the chocolate chips and just make cookies.
It's not a surprise that the auto big wigs would say "If we crash, everyone crashes." Truth is, if the "Big 3" crash, their suppliers would re-tool and find other markets for their goods.
Remember back when all the execs thought it was such a great idea to start shipping their jobs over seas and the American Workers said it was a bad idea. What happened? The American workers ttrained the people who were stealing the food out of their children's mouths and the execs STILL thought it was a fabulous idea.
What's changed? Well, now the execs are losing their $100 million bonuses and their billion dollar jobs. Strange how republicans think it's a great idea to kick you in the nuts, but when they get kicked in the nuts, not so much...
I think that if we do bail out GM, Ford, and Chrysler, we need to fire every level of management and put in some HUGE regulations. Hell, I'll run the place! I couldn't do any worse than the very well-paid losers that have been fucking up this industry and this country for all these years.
America had electric cars back in the 1920's and 30's, and beyond but the oil industry, the auto industry, and the government have repeatedly killed them. It's REALLY time to get the greedy elitist bastards out of government and let this country be run by people who actually suffer the consequences of their one-sided policy decisions.
Where's Erin Brokovich when we need her??
I agree completely. I saw this show some time back, and just sat open-mouthed in wonder. It's amazing to me that there's so much factual information available (I'm not talking theory, just facts) about the way our government keeps allowing Big Bidness to screw us at every turn. Then I watch a movie like "V" and wonder when the uprising will come...
just sayin'...
http://takeitpersonally.blogspot.com/
The original post said the COST of SOME employees was $70/hr, and everyone has jumped on that figure and misquoted it. In case you don't know, the COST of an employee includes not only the salary, but also the employer paid portion of health care, social security, unemployment insurance, as well as a per employee portion of rent, desks, utilities, property taxes, etc. The Standard in industry is this: an employee's salary is generally one-third of the total cost of an employee. So, if an employee makes $25/hr, the total expected COST of that employee is $75/hr.
My first instinct is that a lot of lower-middle class and upper-middle class work costs in the neighborhood of $70/hr in combined labor and tools. Energy/effort is made valuable when expressed through a tool/machine.
Using wages to estimate employee cost might suggest a wide variation in employee cost? Why might dispersion in employee costs be narrower than at first might appear? Some kinds of tools are physical equipment with computers sitting on a manufacturing plant floor. The manufacturer pays for this equipment by paying a supplier, not the employee. Some "tools" are the expensive knowledge and experience certified by advanced degrees necessary for very-white-collar jobs. These tools are embodied within the employees themselves, so very-white-collar employees are paid directly for an employer's access to these "tools." A white-collar employee can see a larger fraction of the $70/hr. than a manufacturing employee.
David Liao
PhD Candidate
Department of Physics
Princeton University, Princeton, NJ
P.S. In case this posts sounds Conservative in tone, I should say that I am a 25-year-old liberal who voted for Kerry and then Obama. I do have a significant complaint regarding Democratic rhetoric. One should not set up an economy where merely working hard provides physical survival and comfort. One should encourage an economy where it's clear to people how they can secure access to the tools (physical equipment or degrees) to turn their raw effort into a valuable result/product. I am very happy to use federal funds to subsidize college tuition for people with low incomes. I would be very open to considering tax increases, at least for myself, to make such subsidies more available. At a more basic level, I think it's important for people to learn reading, writing, arithmetic, and computer programming/scripting. There is a lot of wasted effort because people don't know how to program computers.
P.P.S. I'm willing to consider an auto bailout. I would prefer it be phrased more honestly: (1) Chapter 11 has often been a useful tool for reorganization (2) DIP money is not available now so (3) use $25 billion in public funds to prop up the big-three automakers until (4a) times improve so that Chapter 11 is a reasonable option or (4b) government can figure out a reorganization plan similar to Chapter 11. I think of the $25 billion as stop-gap money that will disappear, but I'm willing to consider it for the purpose of buying time until the big-three can undergo reorganization equivalent in scope and consequence to Chapter 11 bankrupty under a normal economy.
P.P.P.S. Sorry, I'm a misanthrope. I have 25 years of calendar age, but I've seen more life than I probably should have in that time.
My house was broken into twice while I was a high-school student. I was home alone the second time.
I don't like people.
Then it's have the gov't order things that GM et al can make. Maybe order 100,000 [1,000,000] fuel efficient autos at the "proper" cost -- even if they have to resell them at a later loss, I bet it wouldn't amout to $25billion!.
Or even better, let them put out bids to anyone who wants to build 100,000 fuel efficient autos. See if anyone other than GM et al are in a position to build them.... If Lockheed, Boeing, Tesla, ... are able to fulfill such a contract, let the GM executives look into the black hole and just go away....
Why do I think Honda or Toyota would be first in line to bid on that?
The Chinese have already offered to buy the entire GM for its current stock value....