In George Orwell's Animal Farm, the farmyard creatures create seven commandments to ensure harmony and protect against human cruelty. The seventh commandment, "all animals are equal," eventually gets a rider: "but some animals are more equal than others." For most, it's satire. For others, it's a way of life. To wit: federal politicians, whose interest in special interests far outweighs their concern for the "average" voter– if only because taxpayers are too busy earning money to pay their taxes to notice how the cash is being wasted. Except when they're not. The plan to bailout Detroit's automakers looks set to be one of those times.
Today's Wall Street Journal gives the public its first glimpse of Detroit's planned assault on federal funds. Surprisingly, ALL THREE domestic automakers are banding together to hit-up Uncle Sam for a $25b loan. What's more, the automakers want the money at a 4.5 percent interest rate. AND they're seeking a proviso that the feds can defer ANY interest payments for five years. You know; if the automakers can lobby elected representatives hard enough.
This is not what most analysts expected– even the ones who didn't expect it (if you know what I mean).
Surprisingly, The Big 2.8 are asking for cash money. A loan is a far less politically palatable "request" than federal loan guarantees. There can only be one reason why Detroit went for the more dangerous, direct approach: the banks won't touch them even WITH federal backing. It's a sure indication that the money men have finally (and correctly) reached the conclusion that Detroit's current business model is well and truly dysfunctional. Dead, even. They are not going to throw good money after bad.
Which is, to Motown's way of thinking, beside the point. After all, the $25b loan will be spun as an investment in new technology, not a bailout per se. It's simply a way to help us "modernize" our old factories to build THE CAR OF THE FUTURE. In other words, if you really want those EVs, you gotta pay. Us.
But why so little money?
Seriously; $25b is not enough cash to sustain GM for a couple of years– never mind GM, Ford AND Chrysler. To put that number in perspective, when Ford doubled-down and mortgaged the farm (including their logo) in 2006, they raised $23b. GM's contribution to the United Auto Workers health care VEBA fund is (i.e. was) $29.9b. A $25b federal loan may be The Mother of All Band-Aids, but it's nowhere near enough cash for The Big 2.8 to reinvent themselves.
It is, however, a "doable" sum if you're dressing-up a bailout as an "investment." No doubt supporters of the domestically-owned automobile industry are already comparing the $25b figure to the cost of the war in Iraq, or the space shuttle, or tax breaks given to oil companies, or some such thing.
And anyway, it's a prelude to a kiss: the REAL bailout (in for $25b, in for another $25b). Truth is, it would extremely difficult for The Big 2.8 to ask for a "realistic" loan– or loan guarantee– to turn all their asses around. That number would be near-as-dammit a trillion dollars.
Of course, like all trillion dollar– or, I should say $25b federal expenditures, the vast majority of the money would disappear down a rathole, never to be seen again. American-owned automakers are not a cash-starved start-up looking for enough money to bring PC products to market. They're a motley crew of failed businessmen and women who've demonstrated an abject and ongoing inability to develop competitive products. Giving them more money to piss away would not solve anything.
The operative word here is "would." This is not a done deal. For one thing, as the failing financial industry hoovers-up federal funds, there is the very real prospect of "bailout (yes bailout) fatigue." For another, painting Motown as a "good investment" will be an extremely tough sell. The public currently sees The D2.8 as EV-killing gluttons who feasted on SUV profits when they should have been building small, fuel-efficient cars. The hundreds of millions of dollars pocketed by D2.8 executives will do them no favors in this regard.
The real deal killer: Detroit's irrelevance. The gas – electric hybrid Prius already exists. Fuel efficient small cars already exist (some of them sold by Detroit). As far as the general public is concerned, even the plug-in Volt is coming along nicely– without federal funds. The public can easily see this $25b "green loan" for what it is: an attempt to help Detroit do what should have been doing all along. A reward for incompetence.
Giving The Big 2.8 federal tax money to play with is also a bad idea for Detroit. Even if the operation is a success, without Chapter 11 reorganization, the patient will die.
I wonder if the government (esp. if Obama becomes Pres.) might offer to take the health care obligations of off the automakers books.
That would free up almost as much money as direct bailout loans and might jump-start the move to universal health care.
if the assistance is granted, the Fed should print the newly minted greenbacks with Red Ink.
More like $75 billion guaranteed. You can be sure McShame and Obammer will support it to the gills. Prepare to “assume the position”.
How is this any different then the government assistance Haliburton got ala rebuilding Iraq?
The health-care angle would be a big argument for the 2.8 when they go begging, at least with Barry as prez. I’ve already read some pieces from various morons on the NYTimes editorial board claiming something like this:
“Everyone in Europe and Japan kicks Detroit’s asses in cars because they have socialized national health care systems. Poor Detroit has to pay for their employee health benefits, and that’s what’s killing them.” The natural conclusion of course is that we need socialized medicine as well, to you know, compete.
I don’t know how Detroit can get a E-Z loan if McCain is president. Not because he’s such a great guy, but because there’s nothing in that endeavor that would sashay with a McCain pet-project, whereas it does with Obama. If Michigan and Ohio are battleground states though – and they most likely will be – the idiotic promises will be flying fast and heavy from the both of them.
ethermal: Iraq is showing signs of improvement and Hali turns a profit.
Seriously though, great editorial. There’s gonna be a huge political temptation to just do this, and it should be avoided. The weird irony though, is that if Detroit hadn’t played along with the ethanol scam for so long there might even be money for this. Not that fiscal responsibility or free market operation are concepts that DC even understands anymore.
How about giving the entire bail amount to Ford? I think it’s the only one of the 3 that would use it responsibly.
Cerberus would take the money and do whatever possible to keep it for themselves to cover their losses. Perhaps they even bought the company to wait it out for a bail out.
GM is too big and buried in debt to do anything with the cash. Too much interest from debt, cash fires, and black holes. They need Ch11, not more money to waste.
Worst case: Helps Ford get back to profitability, with better world cars that we actually get in America. GM doesn’t file Ch11, has to go Ch7. Chrysler gets bought out by Chinese.
Best case: Makes Ford the #1 profitable car maker in the world, with responsible spending of funds and resources. GM files Ch11, drops dead weight and rebuilds. Chrysler gets bought out by Chinese (sorry).
The health-care-funding-as-bail-out angle is a good one! Yes, many will complain about it. But honestly, the government ALREADY sweeps an awful lot of trouble out of the way of US business to keep them “competitive,” (at least compared to Europe) like: taxes, environmental regulations, accounting standards, legal accountability, and oh yeah let’s not forget the $1 trillion house-cleaning we are doing in Iraq to help our oil companies be more “competitive” there!
Seems like paying a few hundred billion in health care and retirement benefits to real live average American citizens might not be so bad, as far as government hand-outs / bail-outs / whatever-outs are concerned…..
Granted, I still think it’s rewarding Detroit for incompetence, and that’s not what the free market does, right?
Think about the money we’re spending in Iraq, then think about the bailout Detroit Auto is asking. I don’t see the problem.
25 Billion might not save the industry but it will nicely pad the pockets of the higher ups. 2 weeks after the bailout there will be bonuses. The press release will say something about the need to retain the “talent” that would otherwise leave a sinking ship.
They want a bailout then make them toe the line. No million dollar salaries, bonuses, executive jets, country clubs, etc etc.
Here’s the camel asking to put “just its nose” in the tent.
Once the politicians finish spreading $25B of taxpayer largesse on the Big 2.8, there’s no way that they can say no when the same Big 2.8 show up on the federal porch again, bowls in hand. Once the feds have forked out, to reject additional requests will be to guarantee a default on the initial loan. No politician will want to be the guy or gal who closed the door on GM, Ford and Chrysler and thereby caused any hope of repayment of $2.5 billion in taxpayer money to evaporate. It goes back to that saying that if you owe the bank $100,000, the bank calls all the shots. If you owe the bank $100 million, then you call all the shots.
The Big 2.8 earned their current plight through years of flagrant mismanagement. If they’re going to get back on their feet, they should have to do it without our hard-earned tax money.
# ferrarimanf355 :
August 22nd, 2008 at 4:14 pm Edit this comment (52 minutes left)
Think about the money we’re spending in Iraq, then think about the bailout Detroit Auto is asking. I don’t see the problem.
So compound one wrong with another?
ethermal :
August 22nd, 2008 at 3:26 pm
How is this any different then the government assistance Haliburton got ala rebuilding Iraq?
Not at all different if it were a $25b contract to supply the government with automobiles, but it isn’t. The government will get nothing in return for this money, only the poiticians will. How about if the government enters into a contract to buy the small fuel efficient vehicle of the day from each of the “domestic” automakers then gives these vehicles to “underprivileged” families? At least then the government would get soemthing for the $25b.
Great- The vast majority of taxpayers- who must pay a big part of their own health insurance- must now be forced under threat of imprisonment to pay for the (much better) health care of others? Isn’t enough they’re already being force to pay for the retiree health care of public sector employees?
One good hing about Pres W. is if Congress tries to pass this legislation without the super majority he’ll likely veto it. I’m hoping the fiscal conservatives will scoff at this and say learn to compete or die.
Retardedsparks:
Any money the U.S. Government spends outside of health-care checks, pension checks, defense, and interest payments from loans of yore, is basically borrowed from the Chinese Central Bank at this point. Any loan the government makes to the three amigos is actually a loan from the Bank of China, with Uncle Scam acting as incompetent middle-man co-signer.
Also, I really don’t think Dubya invaded Iraq to enrich our oil companies. I think the dude actually thinks God told him to transform the Biblical lands and bring freedom to them – by invading the Land of Abraham. I would actually feel better if Bush was more pragmatic that way instead of being a fatalistic religious fundie. However, it seems that the department of aggressive military operations outside your borders for profit and geo-strategic interest is a Russian thing.
“So compound one wrong with another?”
Your username is Honda_Lover, I’m taking that comment with a grain… no, a salt shaker.
Has Bush actually vetoed ANYTHING in 8 years? I mean that literally. I doubt he would veto the GM bailout.
Well the federal government has been complicit in the detroit fiasco. They failed to pass legislation for years that would have forced Detroit to make small fuel efficient cars. They have also failed to come up with a universal federal funded health care system. This causes us all kinds of problems since we are the only first world country that does no do this. It makes our industries ‘non competitive’.
On the other hand, detroit management and the UAW have pretty much picked the bones bare of all the detroit companies. These bad guys need to go away. Let’s hope a chapter 11 will happen and this will pave the way.
My concern is that with a federal bailout, nothing in detroit will change. The bottomless rat hole will still exist and managment/UAW will continue to enrich themselves this time at taxpayers expense. I surely hope this won’t happen, but congress is so corrupt/incompetent that they can’t even manage the federal deficit themselves. How are they going to ‘manage’ detroit, based upon our political system’s inherent problems. I am afraid this will be another subprime mess or worse. Government needs to stay out of private business…but this will probably not be the case here.
They failed to pass legislation for years that would have forced Detroit to make small fuel efficient cars.
Detroit should have done this on their own. That is, of course, if they planned on having a future. SUV’s weren’t going to last forever.
I think the best thing the U.S. Government could do right now for the American domestic car business would be to relax US DOT and EPA rules for low-volume domestic car manufacturers.
The U.S. regulations for legally selling a car in this country might be for a good purpose, but they are completely inane in the way they are implemented, and the time it takes to jump through those hoops are measured in years. It doesn’t make any sense that the BMW 335i I buy in Germany isn’t legal to sell in the United States – and vice-versa – just because of among other quibbles some bumper regulation that differs from the equally Byzantine EU regulations on page 3678 of the specification, for instance.
With a relaxed regulatory regime for a given volume, car companies I bet would start sprouting up selling their wares. Some of these companies would catch on, and grow into mainstream outfits that sell high volumes. At that point they would be under the full regulatory schedule, but they would be a big enough fish to accommodate all the lawyers and papershufflers to deal with the gov.
As it currently sits, the cost of meeting specification alone raises the bar beyond the reach of a start-up making anything else other than outrageous super-cars like a Saleen S7. With the current set-up that way, only large companies can get into this market, and all the large companies that are very competitive in this business are foreign.
We talk a lot about the Volt and the Camaro and the $100k Vette. What hot new product does Ford and Chrysler have lined up? I don’t think they have anything at all.
How do they expect their current product offerings to suddenly start selling better then before?
We talk a lot about the Volt and the Camaro and the $100k Vette. What hot new product does Ford and Chrysler have lined up? I don’t think they have anything at all.
How do they expect their current product offerings to suddenly start selling better then before?
Ford has the next gen Focus and Fiesta lined up, as well as a refreshed Fusion and Mustang, not to mention the Kuga. These mass market vehicles are much more important vehicles than a new Camaro and “Vette”. The sales of those sports cars will surely be dismal in comparison to the everyday cars that Ford is lining up. I won’t even mention the Volt, because that is already setting itself up to be a money losing proposition from the get-go.
As for Chrysler…. uh…
I’m wondering if the automakers’ approach is a savy political move–ask for something big, then “settle” for less.
“We need $25b in cash….No? Well then, how about just taking some of our liabilities, like health care (rolled into medicare/medicaid), or pension liabilities (a special arm of Social Security would do nicely), and then we can “get by” on a loan guarantee. Our bankers will then work with us, the market will stabilize (Please God, let SUV’s come back!), and well have great new models and everything back to normal in (wait for it…wait) 2010!”
LOL…..this is gonna be fun to watch….other than our tax bill.
Perhaps the feds should stick a proviso on the money stipulating that the executives of these “Global” companies go to their profit making overseas offshoots and learn how to do it right or import the overseas execs to run the companies here to show how it’s done?
I find it hard to imagine that support for a federal bailout would get much traction outside Detroit.
If the government wants to help, it’s easy. Freeze safety and emission regulations and repeal CAFE. You don’t need to impose 5x rollover standards for vehicles no one is going to buy, and the impact of $4 gas is demonstrating that market forces are way more effective at reducing oil usage than regulation.
Then, look Rick, Bob and Alan right in the eye, and use those immortal words of Wagoner’s: “shut up and play the game”
I’d suggest someone who’s in the industry and knows the game write a form letter so that those of us here can edit and send to our own representatives. They do not deserve a bailout as the old way of doing things lead by the those who only understand will not learn and only require more bailouts.
For another, painting Motown as a “good investment” will be an extremely tough sell.
I think that selling GM to private investors who are lured into the deal in part with federal loan guarantees is actually not an unlikely outcome.
Here are some recent market caps –
-Toyota – $140 billion
-Honda – $117 billion
-Daimler – $58 billion
-Nissan – $34 billion
And now, get ready for it –
-GM: $6 billion
By the time a deal actually goes down, GM might be worth half of that.
Now, imagine that you were a private equity company. You fancy that you could run a car company if you were in charge of it.
To make this easier to digest, we’ll create some hypothetical numbers for this exercise.
-You pay $3 billion for the stockholders to go away, and put up maybe $15 billion of your investor’s cash into working capital.
-Uncle Sam guarantees another $10 billion or so worth of loans, that you have in turn secured by a letter of credit or bond in order to induce the government to do it.
-In addition, by the time that you get in there, there’s maybe $5-10 billion in the company’s coffers leftover from the old regime.
-Of course, you won’t do all this before the union agrees to some concessions, so you’ll negotiate away some of those obligations and keep in the back of your head that you can always screw them later if things don’t work out.
So, with all that, you’ve put up $18 billion of your own cash and have $35 billion or so to play with, plus all of the other existing assets of the company. You have operations in Asia and Europe to support you while you fix North America. You’re competent and focused, so you presumably can turn GM into a smaller but profitable company with potential to grow again once you’ve fixed what’s broken.
This is a deal that people would do all day long if they could. If you win, your $18 billion will produce a company worth well in excess of $100 billion — you will make seven- or eight-fold gains on your investment. You would have recreated an industry powerhouse that would make for a terrific IPO.
If this sounds familiar, it’s just a bigger version of what motivated Cerberus to buy Chrysler. They, too, are dreaming of hitting it big, but their disadvantages are that their brands are even worse than GM’s, and they have zero product that is capable of saving them.
Despite the jokes, GM almost has some potential if it’s played right. It would take different people at the top and an aggressive plan to return to profitability.
My guess is that the federal government will find a way to put this together. The feds don’t want to put up their own money, but they wouldn’t mind finding a way to get someone else to do it. Since GM can’t borrow from the banks at reasonable prices and they have little left to sell, this is about the only thing left.
If you find Rick Wagoner making your next latte at Starbucks, you’ll know what will have happened. Hopefully, that will taste less bitter than what little the GM stockholders end up with.
… There can only be one reason why Detroit went for the more dangerous, direct approach: the banks won’t touch them even WITH federal backing. …
What? Are you saying the banking industry – which has already gotten bailouts- doesn’t think Uncle Sam will make good on the guarantees? Why would they be in any way hesitant to lend money when repayment is guaranteed? Unless the US is about to go bust. (USA deathwatch #1 coming up? )
I’m interested in exactly how this will be structured. I suspect banks will be involved in some way.
We can say two wrongs don’t make a right. We can also turn to John Maynard Keynes, the famous economist who once said “In the long run, we’re all dead”. In the short run, we need to salvage what is left of our economy.
I know it sounds crazy, but $25B just isn’t a hell of a lot of money in the grand scheme of things. As the article points out, it might not even be enough for the D3 to do a turn around. How can we bail out Bear Sturns, Fannie Mae, Freddie Mac, etc. and not the D3? Who employs more people?
The main problem is not the loan, but the real possibility that they won’t restructure – can’t restructure – w/o CH11.
Financial companies often get federal help to avoid starting bank runs (ala “It’s a Wonderful Life”) due to the fact that most of a banks assets aren’t held in cash. And usually they involve the Feds organizing a sale to another party at a discount (ala Bear Stearns or Countrywide). Financial assets are a lot easier to sell/transfer quickly. Even complex financial instruments can usually be wound down in a matter of weeks.
Industrial companies, on the other hand, are not so easy to disassemble. A factory making Corvettes takes time and more money to convert into making Camry’s and even more time to convert to making tractors. Plus, their ripple effect isn’t as instantaneous and widespread. A bank run can go international in a matter of hours. A GM collapse would take a lot longer to ripple through the economy and it would be a lot more regional based (with the exception of dealers, but most of them have connections to other manufacturers). And getting the govt. involved with an industrial company in trouble often turns, via political pressure, into an attempt to save the company. Too often that means trying to make an outdated and failing business venture work anyway.
A factory making Corvettes takes time and more money to convert into making Camry’s and even more time to convert to making tractors.
Thank God this is the case. A world with no Corvettes makes me a sad car nut…
Detroit is going for the politically riskier strategy of getting cash instead of a loan because it’s better to ask for too much. Besides, Uncle Sugar is very vulnerable to pressure in an election year. And an Obama/Reid/Pelosi govt. would be highly likely to give them what they want simply to appease the UAW.
Sure, if it was a one off loan, one step to prosperty, I’d probably swallow my objections – and my burning bile – and go along with it. But as was pointed out, not a chance. This is the first instalment. They know once a government lends money it becomes a partner. They can’t let the business fail, they’ll keep on handing over money to avoid political embarassment.
I am also reluctant to encourage the sense of security that autoworkers seem to bath in; now they’ll regard themselves as even more bulletproof.
As for the references to iraq; this is a silly way to voice a political opinion. If you disagree with the iraq war, that’s still no reason to compound one mistake with another. Or is it one more example of Bush derangment syndrome?
Raising CAFE standards would not have saved the Detroit 3, in my opinion. The current economic climate is the kind that weeds out terrible companies from good ones (and personally I think it should be allowed to do its work on the Detroit 3, even though I like Detroit iron better than Japanese iron). If CAFE were heightened earlier and the Detroit 3 were currently able to sell fuel-efficient cars Americans want, it would only mask Detroit’s inability to strategize and make a full lineup of competitive vehicles. Could Toyota and Honda foresee today’s oil prices? Maybe, but the real reason they’re still alive while the Detroit 3 are foundering is because they were prepared for anything that could happen–including an oil crisis–because their corporate culture and attitude demands such foresight. The Detroit 3 weren’t prepared, and that’s more because of poor decision-making skills than anything else.
If the government wants to help, it’s easy. Freeze safety and emission regulations and repeal CAFE. You don’t need to impose 5x rollover standards for vehicles no one is going to buy, and the impact of $4 gas is demonstrating that market forces are way more effective at reducing oil usage than regulation.…
Really? Well, 4 dollar gas has been helpful in that regard, but what about before? I shudder to think about how much worse Detroit’s fuel economy would have been had there been no mandated minimum standard. The “free market” is wonderful in many ways, but when it comes to the best interest of society as a whole, the free market is often not the best vehicle. And yes, safety and emission standards are very much in society’s best interest.
Poor Detroit has to pay for their employee health benefits, and that’s what’s killing them. The natural conclusion of course is that we need socialized medicine as well, to you know, compete.
Yes, we do. There are many versions of socialized medicine in other countries. Are any perfect? Of course not but as far as I know none of them leave out 40% of the population or allow insurance companies to siphon off 1 out of every 3 dollars like we pay for health care.
And don’t waste your time telling me the government is inefficient. The US Government only siphons off 2% for Medicare. How many civil servants do you know who earn the million dollar salaries of insurance executive?
With Freddie Mac & Fannie Mae about to hit the fan, chances of the Detroit 2.8 getting all of that money look slim…
OK, Cliff Notes version time.
1) The franchise laws as it pertains to car dealers have to be changed if any of the big three are going to survive. At least half of the brands the Big 3 will continue to be liabilities in every sense of the word if this doesn’t take place.
2) Socialized medicine is the de facto answer to any industry with high legacy costs related to health care and low profit margins. Like it or not, it’s really the only way these types of firms are going to survive given that the ‘health big 3’ (HMO’s, insurance, pharmaceuticals) have the consumers by their balls.
3) We should adopt a policy of fair trade and equivalence. If the Koreans and Japanese decide to block access to critical distribution networks in their own country then the U.S. needs to do the same. If their government subsidizes health care and other related costs then we should make them pay a surcharge on their products that can go directly to the health care of our citizens. There’s no sense in the Big 3 even trying to compete when they in essence have a cost disadvantage of nearly $2000 per vehicle.
4) OK, if I still have you with me… here’s the Big One. The ‘Big 3’ need to be broken up. For all the knowledge and talent within these three companies, there are tons of dead men walking that need to be heaved off the mothership if the damned things are going to stay afloat.
5) Finally, related to number four, we need to get the Ford family out of the daily affairs of the Ford Motor Company. In fact, let’s ban anyone with the names Ford, Smith, Red, or Iacocca from managing anything remotely related to an automobile. No divisions, no dealerships, not even checking the dipstick at a gas station in New Jersey. These guys shouldn’t even be managing bike companies (sorry Lee).
6) All domestic trucks should be sold at Hooters (jk).
7) Any product with too many Chinese parts should be required to have a skull and bones on the window sticker. Either that or the face of a 14 year old gymnast.
8) We need to give some helpful hints for folks buying gas guzzlers. Perhaps something in the lines of, “This car will contribute $2371 per year to the following countries.” Then break it number down by current oil production percentage figures. The one for Saudi Arabia should have a picture of the twin towers next to it, the one for Venezuela should have maracas (they do have nice music), and the one for America should have a picture of Alaska with a big ? in the middle of it.
5) Finally, related to number four, we need to get the Ford family out of the daily affairs of the Ford Motor Company.
I think, to be fair, a guy named Jacques Nasser kind of pushed FoMoCo off the cliff. He went on a spending spree, buying Think, Kwik-Fit, even a chain of junkyards, yet ironically spent next to nothing on cars, devoting every penny to the truck side of the business.
Bill Ford may have done no favors for his family company, but he did wake up and hire Alan Mulally.
There is nothing the federal government can do now to keep unsuccessful, poorly managed, idea-deprived commercial enterprises afloat. Nor is there anything it should do.
The Fed and the Treasury have been throwing money at investment banks for some reason, and we’ll never see that money back as those banks go over.
The automakers say, hey, those companies get free money, what about us?
Where does it stop? How about the video store on the corner? The pizza shop? Let’s just write everyone 5 trillion dollar checks.
It will still do no good, and will only send the gov deeper into debt and dump it on our kids.
Because no matter how much money you throw at decades of bad management, it will only keep them afloat for another few months at best.
And why should poor businesses be rewarded, while good ones are ignored? Who exactly does this benefit?
It is the job of the management of companies to do their own investment in new technologies, just like their competition. It is not their job to survive simply as welfare queens. I have sad thoughts of the propped-up British auto industry of the 1970s.
In this thought, there is no longer any incentive for excellence from the US automakers. Quality is unnecessary, since they no longer have to make money from consumers or competition. They just have to offer Potemkin products and await the free giveaways courtesy of the working stiffs of America.
Interesting, but is the reluctance of big money to assist in the bail-out of Detroit because they feel that Detroit is a bad debt waiting to happen or because they can’t get their hands on $25B easily because of the losses as a result of the sub-prime mortgage debacle. One set if badly run companies asking for money from another set of badly run companies.
And The Fed won’t let a badly run bank fail. Why should they let a badly run car company fail?
Can hardly wait for China to buy-out Bank of America? Or maybe they already have……
Read on CNN Money that the amount starts at 25 billion, but they could be looking for 50 billion. Oh dear, the number keeps growing.
7) Any product with too many Chinese parts should be required to have a skull and bones on the window sticker. Either that or the face of a 14 year old gymnast.
Or a list extinct species…
Steve Lang: If one compares the performance of Ford to its Detroit rivals since WWII, family management hasn’t done all that badly. Sure, there have been ups and downs, but not nearly as many as with Chrysler. During some periods Ford’s management was arguably superior to GM’s.
Ford’s crucial mistake was succumbing to “GM envy” in the 1990s by going on a premium brand buying spree. If Ford hadn’t bought Jaguar, Land Rover and Volvo it could have navigated the post-9/11 era much more easily than GM — which probably would have snapped up at least one of those brands. Imagine how that would have worked out.
“5) Finally, related to number four, we need to get the Ford family out of the daily affairs of the Ford Motor Company.
I think, to be fair, a guy named Jacques Nasser kind of pushed FoMoCo off the cliff. He went on a spending spree, buying Think, Kwik-Fit, even a chain of junkyards, yet ironically spent next to nothing on cars, devoting every penny to the truck side of the business.
Bill Ford may have done no favors for his family company, but he did wake up and hire Alan Mulally.”
No, what enabled Nasser to get into power in the first place was the Ford’s family feud with Alex Trotman who actually did a very good job of managing the company.
If it weren’t for the Ford family, Billy Ford and his crew of associates would have never been within seven rankings of the CEO position. Nasser would have likely been passed over as well.
All those complaining that their tax dollars are going to bailout Detroit should recognize that it is funny money that is being used. There are no tax dollars in the U.S. treasury, only deficits.
The federal government is more bankrupt than Detroit. The only difference is that it owns the electronic printing press and has a big but very inadequate cash flow.
Any Detroit bailout will be with funds conjured up out of thin air; just as Iraq war funding and the other bailouts were.
The result of this nonsense is that we are following in the steps of Zimbabwe and will end up at the same place.
The economy is already straining because of the drain of wealth to pay for high priced imported oil. Moreover the Iraq war which is well into its sixth year of sucking wealth down a rat hole seems unstoppable. Add in the ever increasing interest on the mountain of national debt, much of which is paid to foreigners, and there is little hope of economic recovery. And mortgage interest, credit card debt interest along with car payments taken on in recent years don’t help.
Without wealth to buy the products of Detroit, even if they are competitive, it is not likely that any bailouts will work. Demand for cars will shrink due to unemployment, falling home values and the rising costs of paying for energy and food.
It is all delaying tactics to put off the day of reckoning until someone else has to make the tough decisions that politicians and business leaders of today refuse to make.
Too bad the little people of America will suffer the most from this incompetence. Maybe they deserve to suffer for not kicking out these leaders, buying gas guzzling SUV’s and believing that business as usual can continue in a Post Peak Oil world.
They will get bailed out. To be a cynic, Michigan has lots of votes.
Forget about the execs of GM think of the line workers, healthcare, pensions etc. We pay 10 times what a GI makes for the same service from Blackwater – so don’t start with the inefficiancies of government. So I agree that Seems like paying a few hundred billion in health care and retirement benefits to real live average American citizens might not be so bad, as far as government hand-outs / bail-outs / whatever-outs are concerned…..
Ask what your country can do for you, not what you can do for your country.
I still think we need to keep a few of their factories. We’ll need to make the following things in the coming decade:
Onshore and offshore oil exploration, drilling, and refinery equipment. Pipelines, too, so that we don’t have to truck as much.
Ships for oil exploration.
Defense equipment for preparation for war with China, North Korea, Russia, and possibly Venesuela and Cuba.
Trucking is very costly and inefficient, so we’ll need more barges and trains.
For military defense, we’re gonna need more helicopters, jets, battleships, carriers, tanks, and the ordinance to load them all up, plus equipment and ordinance for the missle shield.
And the most important thing: Some sort of umbrella defense against an EMP strike. Each of the aforementioned countries is already capable of detonating a nuclear device ten miles above nearly any coastal US city.
Nuclear fallout would probably be minimal, but a strong device is not necessary to have a devastating impact to our electronics and infrastructure. Even a weak high altitude strike would set that city (and much of the country) back 50 to 100 years in time.
Congress is asleep at the wheel, reneging on their #1 responsibility: Ensure the welfare of the homeland, and protect it from enemies both foreign and domestic.
ZoomZoom, don’t forget Kazakhstan, Azerbaijan and Turkmenistan. And while we’re in the neighborhood we may as well liberate Armenia too.
3) We should adopt a policy of fair trade and equivalence. If the Koreans and Japanese decide to block access to critical distribution networks in their own country then the U.S. needs to do the same. If their government subsidizes health care and other related costs then we should make them pay a surcharge on their products that can go directly to the health care of our citizens.
I have no problem with making other countries hold up their end of a bargain. I do have a problem with what is essentially a socialized medicine consumption tax. You want to punish American consumers with even higher prices as we’re fighting inflation just because another country punishes their own constituents with an unneeded tax? That makes no sense whatsoever.
Once again, another step in the slow descent into socialism that America seems bound and determined to continue. People need to realize that free market capitalism is STILL a good thing, even in a downturn.
I am going to assume that all of you that think socialized medicine is the answer to all that ails the 2.8, and the US as a whole, have no experience with the medical systems in nations with socialized medicine. I have lived nearly 4 years total in Argentina and Germany, both of which have national health care systems. Without even talking about the enormous tax burden on Joe and Jane Citizen, let me tell you how socialized medicine (doesn’t) work.
RF quoted Animal Farm that “all animals are equal, but some animals are more equal than others.” This applies perfectly to socialized medicine. Case in point: Argentina. In Argentina, anyone can go to the hospital/doctor anytime they want, and their care is paid for by the state. And go the masses do, in droves. For every little ache, pain, and headache. Head hurts? Go to the ER. Splinter in your finger? Go to the ER. Toothache? Go to the ER. Etc, etc. Everybody goes for anything as it’s all free. However, if an American ever set foot in a hospital there, they would never go back. I’m talking 4+ people to a room, cockroaches running around, flies everywhere, etc. That is where “all animals are equal.”
“But some are more equal than others” comes in to play at the private clinics. The major insurance companies have clinics set up around the country, and if you do not have that company’s insurance, you do not enter the clinic. Period. If you want good care, in the type of hospital environment we Americans expect, you better have private insurance or it’s not going to happen.
Germany is similar. My family has private insurance here, so when we go to the hospital or doctor, we get special treatment (“but some are more equal than others”). As I understand it, if you aren’t the best doctor, the hospital and our insurance say that you aren’t seeing us. Meanwhile, the masses stay 3+ to a room with no curtains between patients. Better bring your own towel, toiletries and phone card, ’cause none of that is supplied. If you have private insurance, you get better rooms, the best doctors, etc. When they find out you have private insurance, they fall all over themselves trying to help you and get a piece of the pie. (Martin Schwoerer, correct me if I am wrong, but that has been our experience).
I realize, if you are still even reading, this was somewhat off topic, but I can guarantee you that if a universal health care system comes about in the US, the “some are more equal than others” adage will be here in full force. This may be a more palatable option to Americans than a 2.8 palm-greasing, but don’t be so misguided as to think it will be the long term cure.
“The real deal killer: Detroit’s irrelevance.”
Michigan, Indiana, and Ohio are not irrelevant in an election year…The fed-level political terrorists are trying to buy votes in ‘swing’ states with money they steal from all of us using threats of jails and death…Other than votes, the political parasites in Moscow-on-the-potomac do not care if 2.801 lives, or dies.
“Defense equipment for preparation for war with China, North Korea, Russia, and possibly Venesuela and Cuba.”
I’m sorry… but this is the danger of a neo-conservative agenda.
China is interested in money first and foremost. They have already learned the historical lesson which is that if you want to take over a country, you either…
A) Put your people there and give them preference in all forms of trade. They are already doing this throughout the world.
B) Buy out their currency and/or assets so that they in essence work for you. Again, this is already happening.
China’s not interested in losing trillions of US dollars that it already holds because without it, they can’t satisfy their own social security obligations. The ‘one child’ policy effectively made their entire pension and health care system unsustainable without a strong influx of foreign currencies to pay for it. They also have a lot of challenges with managing their own country, not to mention the relationships with their neighbors who are far more bellicose than the US.
Venezuela and Cuba are glorified banana republics with tinpot dictators who are far more fearful of the US than we are of them. A war with either of these countries would be an absolute suicide for both these countries. Somehow I don’t see either country being able to mobilize a military that is worth a spit compared to the American armed forces.
Russia wants us to simply stay the hell away from their neighboring countries. The fact that we have our soldiers literally at their borders training their enemies is not a very smart decision by the powers that be. The fact that we’ve also been trying to push our missiles eastward, well into Central Europe, for years now makes our foreign policy a very incomprehensible one. We ought to have our military well outside of the neighboring countries unless we truly do want a war with Russia, which would be pointless and all too brief.
Personally, I see an India/Pakistan or Israel/Iran conflict far more likely in the times to come. Pakistan is rapidly becoming an unmanageable country with nuclear weapons while Iran’s theocracy is literally provoking Israel into a conflict. If the power vacuum becomes too extreme in Pakistan, India may need to act to remove the nuclear weapons which would be far from easy and probably cost the lives of millions. Likewise, the theocrats in Iran seem to believe in their religious dogma enough to make Israel consider a pre-emptive strike, as they already have done with Syria.
These are definitely dangerous times. But the greatest dangers between countries lie well beyond our own doors.
There are 2 stupid things that can be done to preserve local economy. Set import tariffs and do that faltering Detroit bailout. And both solutions suck big time. Here is why.
Setting import tariffs to China is impossible because China is lending appprox. 3bn a day to US, And China holds over 1tn dollars in US stock bonds which can be and sold toiletflushed in a single day.Import tariffs never help, that big actor, Reagan in mid eighties also prohibited certain displacement of bike engines to stop Davidson from continuous flanking. Did it help? DId HD start cranking out competetive high quality products? No , the money was poured in ads, not products. Sure imports can become more expensive because of tariffs, but not less competetive. Imagine electronics becoming twice as expensive as local made. Would people flock to american products then? No , because they rather pay doublefold for a Sony VAIO or Marantz amplifier, than a local product whicjh almost doesn`t exist.
I have been 4 times to US. Last was in 1999. Nothing has changed , even deteriorated. The same products. I checked then the Bose, dell, among some other miniscule american companies that seem to manufacture something. and always the same conclusion after a closer checking. Gaps. gaps and gaps. YOu can literrary take any american made product and check it for torsional rigidity and it will always screech, crack and wobble those subpar plastics. I wanted to buy an american made electronics for my boyfriend, but couldn`t find one. All of the quality products were made by japanese or Korean companies.All camera that had a meaningful size of lenses were japanese, all quality computers- the same, quality audio devices, the same. Should i fake my conscience and by a RCA, which is nothing but a name left, and has no relations to US engineering whatsoever?No. And no is the answer from most of consumers.
Bailout. How on earth is bailout going to help them? Make a law that compells the companies to pour all bailout money into R%D and new products, not just give them the money which will be wasted on ads, factory closings and brand shutterings.If a company is unable to get rid of gaps between headlights and hood, or doesn`t see sense in using their own engineering potential, then how on earth is bailout going to make big 3 more competetive.
Isn`t it time America to wake up, to look at your size challenged asses and get up from sofas, get up from those comfy offices of paper shuffling , time to spank your kids hell out of their little wastelands of playstation and get the hell out the teachers from schools that are just democratic pieces of wusses that drag day to day and enjoy nonsense of their easyness of life, instead of building muscles and potential in kids. Damn you pay taxes, and send your offsprings to schools, then be in charge, shout out loud, why the hell my son is so dumb whenever he needs to concentrate at calibrating robots or carving stamping moulds or soldering chips. why are we a nation of having fun that knows everything about Britneys rehab, but know nothing about your car standing in your own driveway. Demand. Stand up, I am with you.Even from my little fucked up Baltic state.
Steven Lang, your points about neo-conservatism are well taken. However, it should be quickly added that war’s always been good to the American automakers. Thus, the prospect of an Orwellian permanent war against the world could be seen by the Not So Big 2.8 as manna from heaven. After all, landing massive government contracts may very well be a lot easier than restoring the trust of the American car buying public in Detroit iron.
The picking should be particularly good if a McCain administration carries on the “cash and carry” mentality of the Bush years, where everything in sight has been privatized and fiscal controls on contractors have been remarkably negligent — particularly for big donors to the Republican party. You’d have to go all the way back to the McKinley administration, which historians have dubbed “the era of good stealing,” to find such systemic and flagrant corruption as can be found in the Iraq occupation.
I don’t say all of this to incite an argument about the Bush administration but to merely suggest that Detroit has much to gain from the election of either candidate. Obama may be more inclined to offer some type of bailout package, but McCain’s aggressive foreign policy could be equally lucrative. The only question: Guns or butter?
RetardedSparks: But honestly, the government ALREADY sweeps an awful lot of trouble out of the way of US business to keep them “competitive,” (at least compared to Europe) like: taxes, environmental regulations, accounting standards, legal accountability, and oh yeah let’s not forget the $1 trillion house-cleaning we are doing in Iraq to help our oil companies be more “competitive” there!
The U.S. has provided less help and marketplace intervention to its home-based companies than European countries (especially France and Italy) have provided to theirs.
Steven Lang: If their government subsidizes health care and other related costs then we should make them pay a surcharge on their products that can go directly to the health care of our citizens. There’s no sense in the Big 3 even trying to compete when they in essence have a cost disadvantage of nearly $2000 per vehicle.
Detroit is getting its butt kicked by the transplant operations, all of which must offer health insurance coverage to employees on their own.
The Japanese government isn’t paying for the health insurance coverage of Honda workers in Ohio.
The advantage that the transplant operations of the Japanese and Koreans enjoy is more realistic health care coverage for employees, and limited health care coverage for retirees. The domestics signed contracts with the UAW decades ago that provided virtually unlimited health care coverage for retirees, at a time when there wasn’t much that could be done for the problems the Social Security crowd routinely face. Now we CAN correct those problems but at a huge cost. And the UAW knows that nationalized care isn’t going be nearly as generous as what members enjoy under the current plan. (The U.S. already has nationalized care for senior citizens – Medicare.)
Not once has the UAW agreed to allow retirees to be shifted from the company plans to Medicare, even though this would bring about huge cost savings to the automakers.
Why?
Because the UAW knows that its members will receive less generous coverage under Medicare than they do under their current plans. UAW leadership isn’t stupid.
Steven Lang: No, what enabled Nasser to get into power in the first place was the Ford’s family feud with Alex Trotman who actually did a very good job of managing the company.
I would have to disagree here…Trotman’s Ford 2000 plan disrupted the company. The automobiles (not the trucks) developed during his watch were not great success – at least, not in North America.
Ford’s problems have been structural, starting with the inordinate amount of power enjoyed by Finance – led by the late Ed Lundy – within the company. Lundy was the only one of the original Whiz Kids to make a career at the Ford Motor Company, and in many ways, he was as powerful as any member of the Ford family or any Ford CEO.
The Finance mentality had a death grip on the company. (This thinking is one reason that Ford has been too slow to update its passenger cars – the company wasn’t making money on them, so the case for their updates was difficult to make, so the cars were left to rot, and then the updates that were approved were done on the cheap, which meant that Ford kept losing money on the cars, which only increased the reluctance to spend money on them…)
The company was also wracked by constant infighting and turf wars among department heads.
Billy Ford, whatever his faults, did begin the drive for better quality that is now showing up in independent consumer surveys (i.e., Consumer Reports and Mr. Karesh’s site). Alan Mullaly hasn’t been at Ford long enough to have had an impact on these results.
Second, he was smart enough to recognize the ROOT of Ford’s problems – its culture of corporate infighting and unwillingness to think outside the Detroit box – and bring in an outsider who would shock Ford into changing. Compare this to the actions of GM’s Rick Wagoner, who hired Bob Lutz to reform the vehicle development processes and improve styling, but hasn’t let him really reform the corporate culture.
Mr. Ford’s greatest strength is his willingness to step aside and let someone else do what he has not been able to do, and support him all the way. Having his “name on the building” certainly hasn’t hurt him in this effort. He deserves credit for having the humility to recognize his limitations and step aside for someone who can get the job done. At the same time, only someone with the last name of “Ford” could recruit an Alan Mullaly and then signal that this guy better be supported or else.
This alone may have saved the Ford Motor Company.
Compare this to GM, where no one wants to make any real structural changes, and the Board (the entity that is supposed to force change, and would do so at Ford if there were no Ford family around) appears to be living up to Ross Perot’s description of them as “Pet Rocks” (which may be an insult to Pet Rocks everywhere).
Dr. Lemming: Thus, the prospect of an Orwellian permanent war against the world could be seen by the Not So Big 2.8 as manna from heaven. After all, landing massive government contracts may very well be a lot easier than restoring the trust of the American car buying public in Detroit iron.
It’s not 1941 anymore. Military hardware is so specialized and high tech that Detroit cannot simply shift production from F-150s or Corvettes to military equipment.
Note that the current Iraq war has hardly fattened the coffers of Ford, GM and Chrysler.
If anything, war HURTS the Detroit auto makers by increasing volatility of oil prices, which makes their prime profit center – light trucks – a lot less attractive to most consumers.
/If their government subsidizes health care and other related costs then we should make them pay a surcharge on their products that can go directly to the health care of our citizens. There’s no sense in the Big 3 even trying to compete when they in essence have a cost disadvantage of nearly $2000 per vehicle/
So, its okay if the USA federal goverment bails out Mega mortgage companies and multinational car companies? Not to mention the oil company incentives.
But by god don’t give me socialized medicine so Joe Average. They might be a healthy workforce..
Sounds like a two tier Free Enterprise to me.
geeber :
… Billy Ford, whatever his faults, did begin the drive for better quality that is now showing up in independent consumer surveys (i.e., Consumer Reports and Mr. Karesh’s site). Alan Mullaly hasn’t been at Ford long enough to have had an impact on these results.
Second, he was smart enough to recognize the ROOT of Ford’s problems – its culture of corporate infighting and unwillingness to think outside the Detroit box – and bring in an outsider who would shock Ford into changing. Compare this to the actions of GM’s Rick Wagoner, who hired Bob Lutz to reform the vehicle development processes and improve styling, but hasn’t let him really reform the corporate culture. …
Let us not forget that Bill Ford named Jacques Nasser President and CEO of the Ford Motor Company. Nasser arguably did much more to damage Ford’s market position and corporate culture than Alex Trotman did with his Ford 2000 re-org. Recruiting Alan Mulally was a masterstroke, but IMO it doesn’t compensate fully for Bill Ford’s role in saddling the company with Nasser and sitting idly by while Nasser drove Ford into the ditch.
The federal gov is complicit in the fall of Detroit by allowing cars to come into the country without a significant tariff. Washington free trade is a one way street bought by the lobbyists of foreign companies. If you want to export a Chev or Ford to Russia you pay 100% duty, to China 50%, to India 100%, etc. I wonder if the Toyotas, Nissans, BMWs et al would be as attractive to the customer if they cost twice as much. Sure Detroit mismanged their business but so did the government. Along with the bailout there needs to be a serious look at imposing import duties on products from other nations. A quid-pro-quo where if you send $100 million worth of goods to the US you must buy $100 million from the US.
Steven Lang,
You got it right with most of your points, except this one:
3) We should adopt a policy of fair trade and equivalence.
So, if they do something stupid, we respond by doing something even more stupid? Yeah! That will show them.
And what happens if they respond with something even dumber?
Ohio’s tanking, reflexive railing about bailouts, Mercury waning, Warren Michigan’s grovel for jobs, Chrysler troubles….and Frank Williams wants our blessing to buy a Korean car. But wait — he buys a Lexus instead. It’s a bleak day on TTAC.
During the middle peak years of the Vietnam War, when GM was selling a million Impalas per year, that operation was costing us ~$29B annually. In 2008 dollars, that’s about $191B annually today. We got to the moon on a total expenditure of ~$26B in 1965 dollars, or about $171B if all things were equal today. We tabbed a $1 Trillion economy for the first time early in the first Nixon administration, and now have an over $14 Trillion dollar economy, about 3X the size of our 1970 economy in 2008 dollars. We have less than twice as many people in the country than we had when crossing that milestone. So we’re much richer today, current economic uncertainties notwithstanding, although we were the world’s largest creditor nation then. Even $75 Billion for Detroit is minor money if it is combined with the operating and managerial corrections to reinvigorate and preserve the huge manufacturing foundation of domestic automaking. So let’s stop carping about the money. Money isn’t the issue.
What happened to the successful communitarian elements of American society that were staple to our culture in the middle 50 years of the 20th Century? Well, that’s a book-and-a-half all by itself. But really, if we as a country can’t accept the problems of Ohio, Michigan, and half a dozen other states as our own, we will be lost in a continuing wave of disposable human capital and corrosive political disenchantment. The purists making the economic arguments are always blind to the politics of human endeavor. Like the hard-liners who rail against federal aid to cities to stabilize neighborhoods ruined by foreclosure, the Calvinists here would rather see at least fifteen years of direct misery for perhaps 40 million people than pitch in to mitigate and repair. The economics of letting the housing bust cut deep and wide are theoretically sound, but the politics and sociology of that vortex are disastrous. No one gains from viable neighborhoods undermined by graffiti, criminal squatters and blight. Well, simillarly, no American gains from the willful destruction of the domestic auto industry. $25, 50, 75 Billion are cheap compared to the consequences of allowing the industry to crater.
So sure, of course let’s give Detroit a hand. Just not absent strings. With the possible exception of Mullaly, the CEOs have to go. But that’s not the government’s job, it’s the BoD’s. So the money coming in accompanies the exit of every sitting Director in all three companies. We don’t want the cozy boards nor Congress hiring new management. The Feds have to recruit and appoint new boards, who in turn will have to hire new CEOs immediately, who will in turn bring in new teams along with choosing whom among the incumbent executives stay or go. They’ll have to get creative, to expand the talent pool and entice in able leaders. Have at it.
The new CEOs, and the teams they bring with them, will have to commit to measurable goals, with target objectives beginning the first quarter. Strategic objectives on 1 – 3 year timetables; tactical quarterly objectives that move the companies forward and toward strategic goals. Each company will need a leader who will elevate performers and stifle or eject poseurs, pretty much in real time.
Meanwhile, Americans must find their communitarian tradition, at least to the extent of abandoning unreasoned resentment of domestic car companies in favor of giving preference to competitive Detroit products. Even in a recession market, the aggregate automotive purchases of the American people can reflate the Detroit 3 through purchasing. Today, there are enough competitive products so that most buyers have to make no practical compromise to find quality-comparable D3 machinery. Example: Genesis or CTS? With a car as good as the Cadillac, it’s nearly unbelievable that anyone could question where their self interest lies. For that matter, what Williams describes he likes about the Genesis can be had in a Buick. Do you want to avoid a loan, loan guarantees, a Federal handout? The best way to stave that off is to buy one of the genuinely good D3 automobiles next time you’re in the market.
The past few weeks, I’ve toured the mass market import auto sector, partly out of periodic interest and partly as a result of travel and rental cars. It would be so much easier to come to a different conclusion, but nothing about the Toyota Camry boosts my confidence in the objectivity of the American automotive consumer, when the Taurus, Fusion, Malibu and Aura exist. Even the Impala. The Toyota can’t match any of them on handling and confident dynamic behavior. Depending on the point of perspective, the Camry’s aesthetic contribution to the American road ranges from bland to baffling to bizarre. The interior is not worth a competitor emulating. The drivetrain has no specific trait to recommend it other than being generically acceptable. And that’s just one model that they happen to sell about half-a-million of. The Corolla’s appeal is mystifying at a product level adjacent to even the Cobalt and certainly juxtaposed to Focus. The Tundra pickup shudders and wallows where an F150 or Silverado are damped, stiff, and sure-footed. Every Toyota I’ve seen over six months old, with silver-painted plastics in the cabin, has scratched or flaking silver paint. If a Detroit automaker fielded a penalty box interior like the Prius’, it would be reviled here. And I use Toyota merely as the most prominent example. The Honda Accord, while clearly the Camry’s superior, suffers from increasingly generic traits, generation over generation bloat, and once-bland styling that’s heading in the direction of untethered. The powertrain redeems it. Perhaps the Civic alone warrants claim to setting a standard in its category. Certainly there are desirable cars made elsewhere that are preferable to comparable products from the Detroit 3, but the volume sellers aren’t making the case that Detroit can’t build exceptional cars. They’re suggesting that no one can.
If you are an American not willing to buy a car from GM, Ford or Chrysler *and* you’re unwilling to have a relative few of your tax dollars peeled off to assist the recovery and preservation of American automaking, that’s your prerogative, and certainly you’re within your rights to oppose assistance. But you’d be wrong to assume that avoiding Detroit’s cars and denying them capital assistance means you won’t be paying for their demise.
Phil
Atlas is clearly shrugging. Ayn Rand is being proved right that is for sure.
Phil Ressler: The Feds have to recruit and appoint new boards…
Aye, there’s the rub. Who says they can do a credible job of this? Does anyone believe the process won’t be filled with cronyism and political favoritism? Why not just go whole hog and have the Federal government buy and run GM, afterall $6 billion will take the whole thing. It could be part of the Department of Transportation.