I'm not sure what's scarier: a lobbyist who's a Hunter S. Thompson fan, or a lobbyist who's a Hunter S. Thompson fan who thinks that bumping into Sean Penn at the Democratic National Convention and saying "Oh, you're Sean Penn" is a "gonzo" moment. In any case, Greg Martin, Director, Policy and Washington Communications uses the FastLane blog to make one thing perfectly clear: "This [federal loan program] program is not a bailout but an incentive for the auto industry and its suppliers. Its purpose is to get advanced technology vehicles on the road as quickly as possible in order to help the country meet its energy goals–and that’s exactly what we’re going to use it for." As I've stated in the last GM Death Watch, that's a distinction without a difference. Anyway, Greg had a "compelling product story to tell" the Denver pols, swanning around in eco-friendly cars that no one's buying, listening to BS about cars they can't buy. "People were surprised at the variety of advanced technology vehicles we offer, and there’s a lot more of that where that comes from…from 20 hybrid models in 2012 to the Chevy Volt to hydrogen fuel cells, I wonder if our engineers and technical types ever sleep." In the spirit of Hunter, may I suggest Black Beauties? Or point out that Greg's rhetoric sounds a lot like Richard Nixon's defense of his Vietnam war policy? "Under ideal circumstances, we know what our challenge is. Unfortunately, factors that are external to the auto industry compound that challenge (in other words, the current economic climate is really ugly out there). That’s why this existing program can really help us to keep moving full speed ahead." Fear and Loathing Greg? Just so.
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“An incentive for the auto industry”?
The theory has always been that the market already has an incentive, for the auto industry and all others.
It’s called a “profit.” When you build a product people want, they buy it and you make a “profit.” When you don’t, you don’t.
Of course, the government has long had a disincentive, one that discourages making a profit, called an “income tax,” so one thing the government could do if it wanted to encourage business is lower taxes.
But, no, this isn’t an “incentive.”
It’s a “subsidy.” A “subsidy” is when the government gives a business money to produce a product that people won’t buy, but that the government wants the business to produce.
In other words, a product that cannot be made at a profit.
If GM put as much effort into selling a quality product as it puts into apologizing for not doing so, it wouldn’t need a subsidy.
Packard :
If GM put as much effort into selling a quality product as it puts into apologizing for not doing so, it wouldn’t need a subsidy.
What apology?
Fear and Loathing in Detroit. It makes sense to me that a Detroit lobbyinst would be a HST fan – how else to deal with Detroit than by using mind altering drugs?
…20 hybrid models by 2012…
Sure. Yukon, Suburban, Tahoe, Escalade, Sierra and Silverado. There’s six right there.
As usual GM is selling the sizzle or promise of sizzle not the steak. They want you to imagine how good it will be when, if, it gets here. People are coming to realize that there is no steak and even very little hamburger and no amount of cheerleading will change that.
Free or subsidized loans doesn’t change any incentives other than to borrow more money (and continue buying out the unions). Everything that would change the incentives to produce more fuel efficient cars, such as additional gas taxes or CAFE standards have been fought tooth and nail for 35 years. Wonderfully disingenuous.
Instead of a handout from the Feds, what the U.S. auto makers should be looking for is a standardization of U.S. safety and emissions standards with the rest of the world. That way they could either import or (better yet) build some of their good small European cars here without incurring all the re-engineering expense. Perhaps some of that engineering expertise they seem to have overseas will trickle into the product here, and beter yet the U.S. manufacturers can use the weak dollar to their advantage for a change. Instead of importing Saturn Astras from Belgium and losing money on every one, they could build Saturn Astras, export Opel Astras and make money on every one.
Of course this won’t help Chrysler, but then again I don’t think there is much that will.
Jimal,
They could have pushed for that some years ago but never did. Why? Perhaps to discourage competition from overseas? My cynical thought… to discourage competition from overseas.
The Dot.com money from the air cooled PC chip to the internet was created by government investment for military purposes.
So, the biggest explosion of I wants/needs by the people of the world was a U.S. government investment for military purposes.
Where does, those thoughts leave you?
Digital developed its own air cooled chips without government aid.
The Dot.com money from the air cooled PC chip to the internet was created by government investment for military purposes.
So, the biggest explosion of I wants/needs by the people of the world was a U.S. government investment for military purposes.
Where does, those thoughts leave you?
Toyota can make the exact same hybrids GM can, at a profit, without requiring American funding.
Witness: Upcoming Toyota Prius.
Kixstart:
That is probably part of it. Be that as it may, with the exchange rates and market being what they are it is now in their best interest to get those regs changed so they can leverage what they have overseas (product) and here (cheaper manufacturing).
For the curious, I wrote an article about a potential bailout for the financial website Seeking Alpha:
http://seekingalpha.com/article/88748-default-risk-of-u-s-automaker-debt-too-big-to-fail
I disagree with the general TTAC editorial line that a bailout of the automakers is a bad thing.
It could be if done wrong, but the fact is that the United States’ economic, energy, and military security requires a domestic auto industry, and we won’t have much of this left absent a bailout.
A bailout structured to induce the Big 3 (and any other takers with substantial US operations) to invest in building a clean and efficient fleet is exactly what we need.
What effect would a bailout loan guarantees have on GM’s ability (desire?) to go Chapter 11 in order to shed its dealer network and abandon renegotiate its labor contracts? And how about executive compensation? There are a lot of strings here.
shaker:
What effect would a bailout loan guarantees have on GM’s ability (desire?) to go Chapter 11 in order to shed its dealer network and abandon renegotiate its labor contracts? And how about executive compensation? There are a lot of strings here.
At the moment, there are no strings here. Nor are their likely to be the sort you’re thinking about.
Which is precisely the problem. Well, ONE of the problems. [See: Eddy’s editorial Aporkalypse Now: The Chrysler Comparison]