The Detroit News reports that Senator Harry Reid has thrown in the proverbial towel for the Detroit bailout bill– at least for this week. Thanks to less-than-stellar Congressional testimony by Ford, Chrysler and GM CEOs, their plan to carve-out and carve-up $25b from the fed’s existing $700b bailout fund seems to have, as the Brits put it, come a cropper. “Senate Majority Leader Harry Reid said that he wanted to figure out some way to help Detroit’s struggling Big Three but that efforts to do so had stalled.” That’s a Gulfstream’s gas tanks’ worth of not good for Motown’s mismanagers. Taken literally, it means Reid won’t be following President Bush’s suggestion and perverting the intent of the existing $25b Department of Energy loans– for a quick-fix capital injection. Still, the federal trough is never totally closed to those who spend ten million plus on lobbying. “A bipartisan group from auto industry states is working to cut a deal on a scaled-down aid package. If agreement can be reached, Reid said the Senate could still vote on it as part of a measure to extend jobless benefits.” As the hearings over the last two days established, even $25b isn’t enough to see the D2.8 through next year. Which means that anything less is… a death sentence. Will GM CEO Rick Wagoner sleep well tonight, knowing that it’s game over? “It’s completely due to the credit crisis,” Wagoner said at today’s Senate hearing. So, yes, Tempurpedic bliss for the bailout boys. How messed-up is THAT?
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Let the layoffs BEGIN !! Happy Holidays everyone, here’s your severa…Oops, we don’t have any money for a severance package now…Sorry and good luck!
Wow, can you at least make an effort of saying that without the smirk?
I feel for those who will be affected by this. I grew up in Toledo and actually am heading that way tomorrow for the Thanksgiving holiday. So I guess I might be around to see some of the aftermath firsthand, if things happen that quickly.
Nonetheless, as has been argued countless times, it’s absolutely necessary for Detroit to clean house. Hopefully the boards of GM and Chrysler will now wake up to the reality that they’re out of options and do the right thing–bring in new management. Ford will have to step up its game as well, although they have the advantage of having realized this a bit sooner.
It’s unfortunate that the mismanagement has gone on this long, causing as much “collateral damage” as it has. Regardless of whether these companies try to turn themselves around, there’s going to be carnage. It’s going to be a rough number of months/years. But we’ll emerge at the other end with a stronger industry, one way or another.
Ford could actually be strengthened if GM and/or Chrysler were to go down before 2008 ends by picking up a dead cat bounce from Detroit 3 loyalists to carry them beyond their current stash of cash. As for the predicted supplier apocalypse, remaining car makers would all have to step up to fill a void in the market from the loss of GM or Chrysler. There would no doubt be pain, but it would likely be short term pain until the supplier and retail markets reached a new equilibrium around the same 10-12 million unit market.
Oh God, that movie made Uwe Boll’s horrible video game-based movies look like something from Goddard. Take it down, it’s bringing back bad memories…
I loved it when the senator said:
“All you who have flown commercial today, raise your hands.”
“Let the record show no hands were raised.”
Rick Wagoner is a scumbag piece of sh*t cleptocrat. To watch him say “GM is a different company now” made me want for vomit. This from a man who paid himself $14.4 million last year.
Any federal funds should be predicated on Wagoner’s resignation.
(with respect, Soundgarden predicted all of this back in 1991)
And I quote the poet Chris, of Cornell:
“A new damage comes
It’s a faceless poison
A new world order
It’s new damage done
The wreck is going down
Get out before you drown
The wreck is going down
Get out before you drown
A new damage comes
It’s a new word for plague
A new world order
A new word for hate
The wreck is going down
Get out before you drown
The wreck is going down
Get out before you drown
Get out, yeah, before you drown
Get out, get out, oh yeah
New damage comes
It’s a new word for plague
A new world order
A new word for hate
The wreck is going down
Get out before you drown
The wreck is going down
Get out before you drown
Get out, get out, get out
Before you drown, before you drown
Get out, get out, get out, get out
Get out, get out, get out
Before you drown, get out
Get out before you drown
Before you drown
Before, before you drown”
willman, that reminds me, Soundgarden needs to get back together, if only so EA can get working on a new Road Rash game…
Not only are the bailout/loans in jeopardy in the US, but in Canada as well.
An interview with Michael Burt, senior economist with the Conference Board of Canada, on BNN last night shows a clear lack of concern.
He downplays the significance of the auto industry and job losses and supports this with stats;
Only 1.6% of Canada economy is from vehicle and parts manufacturing, 150,000 jobs are at risk, “much less than other sectors of the workforce”.
He also speculates the the job losses resulting from a collapse of the auto industry would be replaced by other markets. ie. service jobs making up the most, followed by technology and aerospace, and natural resources as in oil and gas (fewer jobs because of the large capital expense to create few jobs)
The conclusion is that at best there is a mixed response from government over GM, Ford, and Chrysler’s plea for monetary help.
Thank God Congress saved themselves from looking more untrustworthy. I wonder if the Republicans did not step up how much money the D2.8 might have gotten without a reasonable explanation. I do not want to see people suffering and starving, but id feel worse if it was me on the streets. I think this has a lot to do with letting money hungry folk have their way and ignorant and childish Americans steering the ship. I fucking get so angry about my future being so potentially fragile. Its fucking hard to accept how life works and what I cannot change (others and life). I’m glad I can change my behavior and attitudes. Also happy and grateful for the abundance that is the clarity and wisdom to now the difference for me.
I watched part of the fiasco this morning and can’t believe how incredibly stupid these Detroit people are. I mean didn’t anyone in their companies attend Public Relations 101? Even that moron leader of the UAW flew to the damn hearings on a private jet and this was revealed after he gave the canned spill on how his “brothers and sisters” are “sacrificing”, it would make a maggot throw up. Ford still maintains a fleet of seven private jets? Did everyone notice Waggoner’s assertion GM is burning through $5 billion a month? At that rate they are out of business, in…a few days. I watched several different newscasts tonight on several different channels just to get a perspective of the hearings, every single newscast played the private jet exchange and also heard it on the radio newscasts. That is what is going to stick with the U.S. taxpayers. (Just like it stuck with the WWII soldiers who complained about the Red Cross charging them for donuts – my father was one of them and to the day he died he hated the Red Cross). As Greta Van Sustren (sp??) said tonight on her show “All those guys need to be fired tomorrow, along with the Board of Directors of the companies.” Agreed
Mark my words: GM will stop paying every supplier, sub-tier, employee, benefit, electric bill, etc. to make their money last until late January. After Obama takes his oath, RW and his cronies will be on the steps of the White House with a bill for $25B with the notation “for services rendered” in the memo line……..
Losing $5 billion a month now, holy sh*t. What happen to Rick’s big plan to reduce the losses from last quarters $2.3B to $1B or less, maybe that was reliant on the bailout money to make the losses look better. Guess Rick’s plan to cut cut cut to profits isn’t working AGAIN.
Rick is going to stay the course, restructuring my a$$, this isn’t going to be a wake up call for anything. If that was going to ever happen to this guy it would have happened months or years ago. He is going to do what he has to do to hold out for Obama if they can make it, which I think is going to be very close. They will probably stop development on the Volt. Idle just about anything that isn’t selling, which is just about everything. The Camaro will get pushed back if not temporarily shelved, fall of ’09 will probably be the new release date if they don’t totally collapse. Development on everything will stop. They will start shorting suppliers on materials even more than they do now. I wonder if there is anything left to sell.
This guy simply does not know how to save this company and will not make those hard choices(it’s too late for them anyway) they will just continue to make the same stupid decisions that do way more damage than good. Expect the Red Tag sale to get some added “please give us some money any money for our cars” incentives on the hoods. Maybe an extra $2000 off on any model for the month of December on top of all the other stuff and the Red Tag sale.
Nice pic. I’ll take Devon Aoki on the right.
It just staggers the imagination that they could take private jets to the hearings. We are talking about the stupidity and hubris that used to be reserved for the Dubya administration. Just unfucking believable. It’s like something you would find in a satire.
I caught the part of the hearings yesterday where the CEOs were asked about cutting their salaries to $1. The questioner stressed how important it was that no AIG-like extravagances occur. It was not until today that I found out that those morons sitting before him had already pulled a boner just getting to the hearings.
This private jet thing has the feeling of something that could have long term resonance in the public imagination.
The private jet discussion at the hearing is a complete red herring. No one can run a multinational corporation without one, it’s impossible given the time demands on key executives. (Whether or not the executives are the right folks to run these companies is a different matter.)
Second, they all couldn’t get on one jet. The risk is just too great in case of an accident. In fact, most big corporations aren’t allowed to have all four or five of their top executives travel on the same plane. (Many years ago, a corporate jet crashed on approach into White Plains killing the top eight execs.) In the US, the President and Vice President cannot travel together on the same plane either.
Third, would you take Northwest from Detroit to Washington if you didn’t have to?
Ken Elias is spot on here. Yeah, it look kinda bad. But otherwise not worth focusing on. Would it make any sense for these guys to spend time getting to Metro, waiting, getting delayed, etc.
If we go a step further, should they have taken greyhound? Maybe taken the bus or subway from Dulles? Maybe they shouldn’t have worn suits or had a Starbucks this morning?
Way to miss the point. Yeah, PR wise it looks bad. They should have realized that. On the other hand, I can’t really see them all flying on Northwest or putting all these of these guys on one plane in the event of an accident.
And to hear them claim that all three of them should go, again way to make broad demands with no knowledge (as is standard procedure for the government). Nardelli and Mulally did not create this mess (Nardelli may not be loved, but he can NOT be blamed for Chrysler’s current situation). Mulally is making the right moves. Ok, Rick I’ll give you. He should go. But to just call for heads would be a boneheaded move. Excellent auto executives don’t just grow on trees. Even media darling Carlos Ghosn is getting completely owned (so much for savior of the auto universe). Tesla run by auto guys. Who else? Dieter? Yeah, he did a great job in his years at Chrysler. Ferdinand Piech? Good job nearly killing VW. Um, Jurgen Schrempf (did I spell that right?)? DCX debacle.
Come to think of it, maybe there aren’t any successful auto executives….or at least ones that would be available and willing to take over a GM/Chrysler/Ford mess. And if you want to cut executive compensation to zero, how would you attract them? Hey, we want you to come lead GM, but we’re not gonna pay you anything and you have this giant mess to get us out of. So, what do you say?
I wish people would stop and think, even if for just a few seconds. Focusing on jets and calling for heads sounds great, but just a bit under the surface you can see why certain things do or don’t make sense.
Oh, as an aside, how did the bank executives get to DC? I didn’t hear any complaining about them. Did they fly? If not, did they take the train? If they took Acela, why didn’t they take regular Amtrak and save some money? Or did they drive down from NYC in their Kias?
Its ridiculous. All show and fluff. No real substance or decisions. Just sound bites to tell your idiot constitutients you were doing something in Washington.
Nardelli just had his street-cred upgraded by offering to roll Iacocca style.
Ok, while it makes for a good class-war sound bite I can begrudge the aircraft for the 3 CEOs, it SOP for any large corporation.
Its not just big companies that have the limit on officers on the same place. In the mid 90s my father was the CFO of a smallish food packaging manufacturer with ~100 employees and 2 plants. No more than 2 of the 3 top people could be on the same plane.
“It’s completely due to the credit crisis,”
So what’s Toyota’s excuse, then?
No Rick, it was exacerbated by the credit crisis. You were headed down this tunnel anyway, the oncoming train just showed up ahead of schedule.
If they want a bail-out, Wagoner and his peers (at GM, that is; Mullaly is safe and Nardelli irrelevant) have to fall on their collective sword. He needs to admit that GM has serious structural, cultural and product-planning problems but still represents a significant chunk of the economy. In exchange for a bail-out to buy time for it, GM will accept a corporate brain transplant. And that includes Rick a) accepting blame and b) running somewhere that shareholder lawsuits can’t touch him.
Interesting piece in today’s WaPo by Dana Milbank. This is the hometown paper for the people who will decide on the bailout. This might not even pass when Obama is in the White House.
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/19/AR2008111903669.html?hpid=topnews
So we enter the engame…
BTW: DOA. Good video game. HORRIBLE movie.
These are Main Street not Wall Street jobs that are on the line.
By doing nothing, not only Detroit, but communities through out the Mid-West and Great Lakes Region will become a national symbol like New Orleans was or still is, post Katrina.
There was a time when Americans would rise up to the challenge and try to save what little is left of our “home-based” manufacturing. Not anymore.
Just remember – it is we who have thrown in the towel .
@Jerome10
I notice you didn’t mention any Japan execs
I am sure that Redink Rick Wagoner and his buddies could be brought up on some kind of criminal charges. He and his band of accomplices have overseen/managed the biggest loss in automotive industrial wealth in american automotive history. They have enriched themselves while watching the share prices of their company’s stock drop over 90%. We need to prosecute these guys for ‘misconduct’ and ‘corruption’. We will not see this wealth rebuilt in most of our life times. We are heading to a second world status as a nation. To let these guys walk off into the sunset with their golden parachutes and their ill-begotten wealth is just plain criminal.
For the last two days I just heard the CEO of my company say that unless we get money for the government quickly, we will face liquidation and all of us will be out of work…tells me I better get the resume cleaned up.
The fundamental disconnect is that no one believes them when they say 3M people will be out of work if they don’t get the money.
BTW, Mike Luckovich’s got a great cartoon about this today
As noted above, the corporate jet saga is pure symobolism over substance, the type of thing your average Washington politician salivates over. We need to realize something. Perhaps the last people in this country truly qualified to grill CEOs of giant corporations are congressmen. Unfortunately, that’s how our government works, and there’s nothing to be done about it. But, that doesn’t mean we have to take seriously every boneheaded moronic question they lob out in front of nationally televised hearings. Their primary objective is pure self-promotion, not necessarily the prudent stewardship of federal dollars. This latest display proves that quite effectively.
Jerome and Ken,
It’s you who completely miss the point. This is not about 25B dollars which is chicken feed compared to the the trillion $ Wall Street bailout. This is all about politics, PR, trust. This is exactly the same claim that it doesn’t matter how much Wagoner makes since his 15 million dollars doesn’t make difference to the 1-2 billion a month cash burn. In fact this is one of the few things that matter because they show that these people have a complete disregard for reality. Which is what brought them to this position and which guarantees that any money forthcoming will be wasted. In a real world you don’t pay 15 million for a failed CEO, you don’t travel on private jet while begging for a bailout. It’s not just bad PR, bad PR is paying 15 million while firing people before Christmas to increase you profit. Paying 15 million to someone who destroyed the once biggest company in the world and then go beg for a bailout shows you are living in a completely different reality than planet Earth.
And BTW if all the execs got on one plane and the plane crashed I believe Detroit would be a lot closer to Federal bailout than it is now.
ra_pro:
“And BTW if all the execs got on one plane and the plane crashed I believe Detroit would be a lot closer to Federal bailout than it is now.”
Hmmm.
@ra_pro: I agree. The Indicator is the thing.