Less than 24 hours after Senator Barack Obama won the race for the U.S. presidency, Bloomberg reports that Motown’s mauled mavens will step-up their campaign to suckle on the milk of federal tax money. “GM, the biggest U.S. automaker, must get government aid because ‘time is very short,’ said Roger Altman, the former Treasury official advising the company in its merger talks with Chrysler LLC. ‘The consequences of a collapse by GM or all three could be very severe.'” (As opposed to slightly severe.) Step 1: change the terms of the Department of Energy’s $25b worth of no to low-interest loans. Retooling? Fuck that shit. “The industry’s agenda for the new president will be topped by intensified calls for an immediate disbursement of $25 billion in low-interest loans signed into law by President George W. Bush Sept. 30. While the money is supposed to be for the development of fuel-efficient vehicles, automakers argue it should be freed up to meet current capital needs.” Step 2: get a slice of the already-approved banking bailout bucks. “Sympathetic lawmakers also have been calling for auto lenders, if not the manufacturers themselves, to get some of the $700 billion bailout fund set aside for financial institutions.” Do you really have the stomach for this stuff? Read on…
Step 3: revisit the $10b in federal “assistance” for a GM – Chrysler merger. “The outcome of the merger talks between GM and Chrysler may hinge on whether the companies can get government aid. The negotiations may intensify this week after the election, according to people familiar with the matter.” Step 4: threaten the president-elect. “One or more automaker failures ‘would be a difficult way for a brand-new administration’ to take office, said Altman, an Obama supporter whose Treasury Department service included working as deputy secretary under President Bill Clinton.” Or is that step 1? Anyway, The Reckoning is postponed until further notice.
You may as well get prepared. It’s gonna happen. We’re talkin “New World Order” here, baby, and not the George Herbert Walker Bush variety either.
Lots of companies lookng to “spread” my dwindling wealth this morning, I’ll bet.
Yeah Obama is definitely going to take my money and make me poor. Dammit I saw this coming.
Get back to work, millions on welfare depend on you
You’ve got taxes to pay, start working harder.
When the UAW sends out thousands of foot soldiers to Ohio, Florida, and Pennsylvania to win you an election, they will expect something in return.
“We won you an election Mr. President, and you do want to run again in four years, right?”
How many special interest groups do these newly elected politicians owe? I mean, $700 billion for a campaign didn’t come from people sending 20 bucks at a time – not all of us are gullible enough to believe that. Who do you owe?
I still maintain that there is no way #3 is going to happen. No one (Bush, Paulson, Snow) appears to have the stomach for using taxpayer money to close plants and lose jobs.
I don’t see #4 as working either, especially if it takes place during Bush’s lame duck tenure. They can simply push the blame for any automaker failure back on to Bush and the previous administration.
Three quick notes…
1) The only way the ‘loans’ will be successful is if Congress and the President effectively remove the legal impediments that are in place. Pension and medical costs, excessive dealer networks and divisions, and from my perspective….. upper management. That’s just for starters.
I think a fellow who has the caliber of Warren Buffett would be highly valued at this point.
2) Why the hell is anyone here bitching about taxes when you have a $12 trillion deficit. If the current doofus hadn’t effectively drop kicked the American economy into the ditch with a ‘deficits don’t matter’ approach, Obama wouldn’t have become our new leader. As it is the tax rates will still be less than the overwhelming majority of Republican administrations over the past 60 years.
Like it or lump it, you have to pay your damn bills in order to have a sound currency and economy. Unfortunately Clinton and the fiscal conservatives of the 1990’s were the only ones of modern times with any credible level of success.
3) As companies, most here could care less about the Big 3. It’s the job base that really matters.
Related to that, the special interests that be should invest directly into these companies with their hallowed nest eggs if they expect Mr. Taxpayer to give them a loan. Unfortunately I don’t see that happening anytime soon.
Give red-ink Rick credit for having the right guy (Altman) on board to help tap the federal keg.
This could be pretty pervasive with a two pronged strategy.
American Leyland takes shape.
And import restrictions and unionization of the transplants via card check.
I wouldn’t buy the stock though, it’s still way to much of a wild card.
If the current doofus hadn’t effectively drop kicked the American economy into the ditch with a ‘deficits don’t matter’ approach, Obama wouldn’t have become our new leader.
I agree 100% with your comments on our deplorable fiscal condition, but I think this comment pushes the envelope a little. The overall condition of the economy is what ushered Mr. Obama into the White House, and that condition cannot be laid soley at the feet of our federal budget deficit. There were other factors at work.
After eight years of a largely rudderless state, it seems that the majority of Americans realized we needed leadership. And br549 is correct, there were many other factors at work in the financial collapse.
Yet in the end, if the leadership cannot understand that you can’t simply keep adding to your credit card bill as a means to “prosperity”, it doesn’t suggest responsibility to the citizens.
As to increased taxes, any increase in taxes today will be going to pay for the excesses of the past eight years. Whether we like it or not, the money was spent and voting the spendors out of office is not going to return it.
Steven Lang: The only way the ‘loans’ will be successful is if Congress and the President effectively remove the legal impediments that are in place. Pension and medical costs, excessive dealer networks and divisions, and from my perspective….. upper management. That’s just for starters.
The reason that the removal of the “legal impediments” is important is that their removal will allow the removal of a lot of jobs, too.
If GM shuts down Buick-Pontiac-GMC or Saturn, for example, all of the associated dealerships, and the jobs in those dealers, will evaporate. Not to mention the jobs in the factories that make Saturns, Pontiacs, Buicks and GMCs for those dealers.
So I doubt that Congress will allow this to happen.
Steven Lang: Like it or lump it, you have to pay your damn bills in order to have a sound currency and economy.
The problem is that if President Obama does what he promised to do on the campaign trail, the deficit will remain, even with his proposed tax increases.
Steven Lang: As companies, most here could care less about the Big 3. It’s the job base that really matters.
If those jobs aren’t producing products that people want to buy, there is no need for them.
One thing we have to realize is that these companies exist to make money for shareholders by producing products that people want to buy.
They are not social welfare organizations designed to ensure that union members never lose a job.
Companies come and go. That’s life in the business world.
So, instead of pouring money into less-than-useful wars that benefit, er, who, and tax cuts for the rich, we might instead stimulate the fundamentals of the American economy?
We can’t do that! That’s un-American! What we need is _more_ tax cuts for the rich and _more_ untenable, badly-planned offensives!
Look, I’m not American, but I can’t see Obama being worse than Bush unless you belong to a certain set of, wait for it, special interest groups that happened to benefit from Bush’s particular leaning.
This kind of thing is going to keep happening until:
a) the presidential election system stops being dependent on swing states, resulting in a “What’s Good for the Rust Belt is Good for America” at the expense of the midwest and coasts.
b) the Democratic and Republican parties are split in such a way that their conflicting wings can get their own message out.
psarhjinian :
Would you then agree with the august and erudite fellers over at the NYT who note that
Obama’s “triumph was decisive and sweeping, because he saw what is wrong with this country: the utter failure of government to protect its citizens.”?
br549:
Would you then agree with the august and erudite fellers over at the NYT who note that
Obama’s “triumph was decisive and sweeping, because he saw what is wrong with this country: the utter failure of government to protect its citizens.”?
I wonder if the NYT will take that back if the Big O guts the military and Intel services and we have another terrorist attack? Oh hell, what I am saying? Of course they won’t take it back. But maybe by then the NYT will be out of business. One can hope for change.
“The reason that the removal of the “legal impediments” is important is that their removal will allow the removal of a lot of jobs, too.
If GM shuts down Buick-Pontiac-GMC or Saturn, for example, all of the associated dealerships, and the jobs in those dealers, will evaporate. Not to mention the jobs in the factories that make Saturns, Pontiacs, Buicks and GMCs for those dealers.
So I doubt that Congress will allow this to happen.”
I agree…
“Steven Lang: Like it or lump it, you have to pay your damn bills in order to have a sound currency and economy.
The problem is that if President Obama does what he promised to do on the campaign trail, the deficit will remain, even with his proposed tax increases. ”
That’s like saying you shouldn’t put ointment and band-aid on a wound. It takes time to heal. It will get far, far worse if you ignore it.
“If those jobs aren’t producing products that people want to buy, there is no need for them.”
Have to respectfully disagree here. The bare product line was true for Chrysler in the early-80’s. Virtually everything they were selling was garbage. They ended up laying off lots of people, getting help from the government, and created hundreds of thousands of jobs over 25+ years that generated hundreds of billions in revenues.
Coincidentally, they also were able to develop products that people wanted to buy. At least that was the case before Daimler took them over.
Why can’t GM, etc. just apply for a few thousand of those credit cards and use them to get by on until things improve.
If my one simple humble shanty receives so many credit card offers imagine how many all those GM plants and offices receive!!!
windswords :
I suppose I would agree with the NYT to the extent that, for the most part, the citizenry is fearful and looking for any old port in the economic storm. That’s what humans (the world over) tend to do. The gov’t is big, has many resources, and seems to offer the quickest route towards a little relief. The kicker, though, is how one defines “protection.” Physical protection against malevolent foreign powers is one thing; subsidized industry and free health care is quite another. I do find it ironic, however, that a Republican administration which was willing to head down the socialist path a good bit farther than the Clinton admin. ever went, got turned out in favor of Obama. I mean, in terms of federal aid, how do you top what we’ve seen in the last 2 months or so? And no, it’s not in the NYT’s DNA to take anything back. They’re smart remember?
I have seriously decided to ‘help’ in the same way that ALL my liberal friends have been ‘helping’ for years. Not a single one of them drives an American car. I’m talking dozens of vehicles here. One guy does have a ’65 Mercury Park Lane convertible, but only because I sold it to him cause I needed money after I got laid off due to 911.
Now they have their reasons – mostly “American cars suck” is what they say. I have my own. With 2 Lincolns and an econoline van in my driveway, all made at American plants, I have always been out to keep the money in USA. Help the American worker. Etc etc. What kind of fool was I, eh? I now finally realize I have been helping the dumb-ass lazy communists at the UAW keep their overpaid jobs and super funded pensions and health care – while I and my family have none of that. My mind started changing when Getttlefinger and the UAW kicked US Marines out of their parking lot 4 years ago, Now this fool finally sees how hard they work to elect democrat commies every time and this time have really done us in. Michigan went overwhelmingly for the mystery man and so I say to all Michiganers:
“Get your money from obama. You’ll not get any more from this American. I have more in common with the Japanese hard working capitalists than I have with any of you people.”
Besides, with the commies like obi-wan and pelosi in charge, soon the adverts will be thus:
“We have two models available for your driving pleasure. Will you take the Lada or the Yugo, sir?”
Steven Lang :
Why the hell is anyone here bitching about taxes when you have a $12 trillion deficit.
Deficits aren’t the issue. Deficits as a percentage of GDP are an issue. In that regard, we’re far from being Italy.
Taxes will, of course, go up. However, the safety net that’s been turned into a hammock needs some trimming – and that’s not gonna happen.
psharjinian: Look, I’m not American, but I can’t see Obama being worse than Bush unless you belong to a certain set of, wait for it, special interest groups that happened to benefit from Bush’s particular leaning.
Not everyone who opposes either a cause or a candidate you support does so because of a connection to special interest. Just as not everyone who questions nationalized health care (and the bogus or distorted statistics used to “prove” its superiority) works for the insurance industry, and not everyone who questions manmade global warming works for Exxon or Sunoco.
To say that Obama came into office without owing anyone anything, or that his policies are all driven by what is good for the greatest number of Americans, is naive at best.
Steven Lang: That’s like saying you shouldn’t put ointment and band-aid on a wound. It takes time to heal. It will get far, far worse if you ignore it.
The problem is that reputable sources have already forecast that his proposals will not lessen the deficit. If anything, given that the cost of new or expanded government social programs have repeatedly been UNDERestimated by virtually all parties, his proposals will make things worse. And I saw nothing in his platform that would really address the strains that baby boomers are going to place on Medicare and Social Security in the coming years.
Steven Lang: Have to respectfully disagree here. The bare product line was true for Chrysler in the early-80’s. Virtually everything they were selling was garbage. They ended up laying off lots of people, getting help from the government, and created hundreds of thousands of jobs over 25+ years that generated hundreds of billions in revenues.
The government just delayed the inevitable. If Chrysler had collapsed in the early 1980s, it would have sent a strong message to both management of the remaining companies and the UAW that things need to change, and fast, or there won’t be a domestic auto industry.
And I would argue that, with precious few exceptions, Chrysler continued to sell garbage well into the 1980s and 1990s. Granted, some of it was innovative (minivans), some of it was good looking (Neon, LH cars, Dodge Ram and Dakota), but from a mechanical and build quality standpoint, it was somewhere between awful and mediocre.
The new proposals being bandied about today are, if anything, even worse. At least the 1980 bailout came with some strong conditions attached, and Chrysler had cleaned house in the management suite. Iacocca fired virtually everyone he could, cut his pay to $1 a year, and told UAW members that they either took a pay cut or faced permanent unemployment. Cutting his own pay gave him credibility with both Washington and Douglas Fraser.
Unlike 1980, the domestic auto industry is not limited to GM, Ford and Chrysler. Honda, Toyota, Nissan, Hyundai, Mercedes and BWM all build vehicles here. They employ thousands of workers (at good wages) and support communities.
If anything, their presence in the U.S. will grow over the coming years.
The North American operations of the Japanese and Korean companies, at least, are evolving along the same lines of the European operations of GM and Ford. They are becoming fully contained, locally based companies that design, engineer and build vehicles for a very specific (and large) market.
The “problem” is that those operations are non-union, except for the Toyota plant in California (the NUMMI venture with GM).
There will still be a domestic auto industry if Chrysler collapses. Jeep will find a new buyer, so that the Jeep Curse can continue. Nissan will probably pick up the Dodge Ram line, and some auto maker will want the minivans.
Dodge and Chrysler cars and SUVs will go away, but only the purchasing managers of Hertz, Alamo and Budget will really care, along with the UAW. The former can buy cars from someone else. The latter can ponder the importance of not pricing your members out of the job market.
The reason that the removal of the “legal impediments” is important is that their removal will allow the removal of a lot of jobs, too.
If GM shuts down Buick-Pontiac-GMC or Saturn, for example, all of the associated dealerships, and the jobs in those dealers, will evaporate. Not to mention the jobs in the factories that make Saturns, Pontiacs, Buicks and GMCs for those dealers.
As the economy recovers people will buy cars. Why doesn’t the government support the expansion of American built cars that people seem to want. Namely Toyota, Honda, Hyundai and to a lesser extent Nissan and Subaru.
The majority of Toyonda vehicles are assembled in the US with mostly parts sourced from US subcontractors. I don’t have the numbers but I imagine that the US content of all Toyonda products is greater at this point in time than the US content of GM/Ford/Cerberus products.
The expanded Toyota and Honda plants would have plenty of work for ex Detroit employees who come without “attitude”. Probably less use for ex Detroit management types.
And the profit back to the homeland argument is a straw man. A greater percent of the profits go to shareholders (less management overhead). These are publicly traded companies and you can become a shareholder in less than a couple of hours.
The Federal support will go to the existing big 2.5 however since this is a political process not an economic one.
what did I tell you all? Get back to work, taxes have to be paid!
volvo: Why doesn’t the government support the expansion of American built cars that people seem to want.,/i>
Until very recently, Republicans preferred not to get involved in the auto industry.
Democrats pretend those cars don’t exist because the vast majority of them are built with non-union labor.
@Volvo
+ 1
If the core issue is ‘jobs’, then support of companies that are shaving jobs due to lack of demand for their product will not save jobs.
Moreover, the last time I checked, the D3 continue to look for offshore mfg to lower costs. It’s the foreign automakers opening plants in the US.
If anyone from the Obama administration is reading this, please pass this along to him.
geeber, great points. But I’ll pick a nit with respect to “The government just delayed the inevitable. If Chrysler had collapsed in the early 1980s, it would have sent a strong message to both management of the remaining companies and the UAW that things need to change, and fast, or there won’t be a domestic auto industry.”
Yes, it just delayed the inevitable. But Chrysler’s collapse wouldn’t have made GM, Ford and UAW accept change. GM and Ford would have picked up most of the business that once went to Chrysler, and that would have reinforced their self-image of being smart guys. The UAW’s membership would have dropped, but the damage would have been somewhat offset by sweeter contracts with GM and Ford, probably including
something to help former Chrysler workers.
And I’ll expand on this: “The “problem” is that those operations [the Transplants] are non-union, except for the Toyota plant in California (the NUMMI venture with GM).” Barring some unexpected development, the new Democratic Troika (White House, Senate and House) will deliver on their pledge to the UAW of enacting Card Check. That will bring the Transplants under UAW control. There will be little change in wages–the pay is already comparable–but tribute will be extracted to shore up VEBA funds and other assistance to former and remaining D3 workers.
GM and Ford will applaud the Troika’s enactment of “universal health insurance” as a way of “leveling the playing field,” but their UAW workers will be unhappy that the formerly “free” health insurance has become a $300 to $500 per month deduction from their pay. GM and Ford, by then in Chapter 11, will not raise wage scales to cover the new deduction.
Another thought: protectionism will be very tempting to the Troika. But that’s another can of worms.
Obama ran on a very clear platform of giving handouts to as many people whose vote he could buy. He plans on turning the tax system into even more of a secondary welfare system.
Why should the UAW, whom went to bat for him, expect anything less?
I will throw one bone his way – it was Bush, Pelosi, and Reid that came up with the mother of all welfare bailouts, so now everyone else believes they are entitled to the same thing.
I’m looking for the U.S. dollar to collapse as the Fed Reserve (crooks as well) fire up the printing presses – it is about the only choice left they have.
The tax increases won’t raise government revenue except if they make them retroactive. The IRS will then be directed to crack down. Hope you can afford a lawyer, because those guys aren’t going to go after the powerful, they are going after us in the middle (that’s the real middle, not the “middle class” which is a mixture of the poor, the formerly rich, and the likely to be rich).
I think it’s great that Obama won. As an accountant and lawyer, I’ll have a flood of new clients paying me to help them reduce their tax liabilities.
I anticipate a flock of married filing jointly people whose combined income exceeds the $153,000 (top 5% of taxpayers) threshold, the people who will get really hosed under Obama.
‘Tis a great time to be me…
@Adub …the people who will get really hosed under Obama.
Very funny! The sad thing is that the hosing already took place over the last eight years as money was spent that we did not have. And it didn’t matter whether Obama or McCain won, the taxpayer was left holding the bag and either would have to generate a revenue stream to buy down the deficit.
But it’s probably still a great time to be you…
Adub: Yep. Already the baseball players (many are black!!) are trying to find ways around obi-wans taxes.