Find Reviews by Make:
42 Comments on “Bailout Watch 234: “In your heart, you know he is right…. I hope you will post this… Please?”...”
Read all comments
Latest Car Reviews view all
Latest Product Reviews view all
Recent Comments
- Lou_BC: @Carlson Fan – My ’68 has 2.75:1 rear end. It buries the speedo needle. It came stock with the...
- theflyersfan: Inside the Chicago Loop and up Lakeshore Drive rivals any great city in the world. The beauty of the...
- A Scientist: When I was a teenager in the mid 90’s you could have one of these rolling s-boxes for a case of...
- Mike Beranek: You should expand your knowledge base, clearly it’s insufficient. The race isn’t in...
- Mike Beranek: ^^THIS^^ Chicago is FOX’s whipping boy because it makes Illinois a progressive bastion in the...
Car Reviews By Make view all
New Car Research
Who We Are
- Tim Healey
Managing Editor - Matt Posky
News and Social Media Contributor - Timothy Cain
Sales Analyst - Murilee Martin
Junkyard Finds Author - Matthew Guy
Contributor - Chris Tonn
Contributor
- Adam Tonge
- Bozi Tatarevic
- Corey Lewis
- Jo Borras
- Mark Baruth
- Ronnie Schreiber
One violin over here please! I got through about a minute of this crying commentary before I turned it off. Spread it thin, Senator, it’s a big farm.
What makes this Senator think his district is so different from mine?
Pensioners in my district had to contribute to their own pension plans, and they receive health benefits through this thing called Medicare…which does NOT cover Viagra, as the UAW-mandated health plans do.
Another strange thing about my district: We have this thing called diversification that allows us to support multiple industries.
Massive apologist. So who is he blaming anyway? Lets get real here and quit pretending they are victims already. Ask this bozo why ToyoHondNissHyundai are making it?
In the last 2 seconds you can hear that expert of the auto industry Barney Frank bang his gavel and say “it went long enough without any of that” when the crowd started to applaud. That alone speaks volumes about what is going on here.
Representative McCotter presents a cogent, eloquent, inspired defense of the Big-3 loans.
Listen to it all the way through-twice perhaps and you will soon realize that he makes a supremely salient point and that is that your money is already spent-Congress has already approved the $700 Billion…it’s simply a matter of whether it all goes to AIG, Wall Street and the robber barons who screwed up the credit markets or whether 4% of the $700 Billion goes towards helping to preserve the domestic auto industry. Either way-the money is already spent.
You can either have all of your money given to Wall Street, or you can use a small part of it to help save 1-3 Million U.S. jobs. Representative McCotter’s testimony does not absolve the Big-3’s mistakes and mismanagement; I think most of us here are calling for the CEO’s and some of the Board Members to step down, but in the end, the golden parachute crowd will not suffer. No, no no…the mistakes of a few at the top will only punish millions in the middle and at the bottom so the idea of allowing Wall Street to have all the money and not use some of it to help millions of Americans stay employed to me is no argument at all and Representative McCotter expresses it better than anyone else I’ve heard yet.
The shocker for me is the complete lack of logic to this line of reasoning. “Either we give them money, or they’ll *POOF* vanish overnight!”
Last I checked Chapter 11 is NOT Chapter 7.
The auto makers of Detroit are NOT going to disappear tomorrow, or even 10 years from now if they don’t get a cash infusion of OUR money. The ability of the Army to buy Humvees isn’t going to disappear because Rick Waggoner doesn’t get his ass bailed out. Quite the contrary! If GM declares C.11 they can shed all the stuff (worthless brands, stupid contracts, etc) that is hurting them and focus on what makes them money and has a hope for saving their asses.
No amount of crying by a legislator, speaking from a GM-prepared list of talking points will change this situation. Detroit got themselves into this problem, they can get themselves out. CAFE legislation would not have even happened if they had put even a modicum of effort into shoring up the compact end of their product range. As it is they completely ceded that sector to the Japanese & Korean automakers, while Detroit cranked out trucks… fat dumb and happy. So don’t blame Congress for your troubles!
Bottom Line: In my heart I know he’s lying – THEY DON’T NEED OUR MONEY.
–chuck
I have not been in favor of a bailout before hearing this speech. I felt as though the UAW was corrupt and was placing demands on the big three that were too protective and too restrictive that ultimately caused the downfall of the big three.
After listening to this AMAZING speech I have a more open mind to this issue. I still feel that major change needs to take place for the American Auto industry, and a bankruptcy restructuring is still probably the best method to achieve this.
My hope is that afterwards we have an auto industry that uses the most modern manufacturing processes which allow them to be flexible and nimble in the vehicles that they manufacture and are no longer tied down and restricted on how they operate by the over protective UAW.
That’s just my outsider opinion – I don’t know how valid it is as I’m not in the trenches in the auto world to really understand the dynamics.
Would love to hear opinions from people who are in the trenches to understand the real deal.
Yes, the CAFE standards brought Detroit to its knees. Just like it did the transplants. Europe has even tougher guidelines on both mileage and emissions.
In this country Detriot has benefitted from indirect subsidies for decades, such as the Federal Highway Program, land planning policies, foreign and domestic policies to keep gas cheap to name a few. And in that environment, they still managed to mess it up.
Sorry. I dont feel too sorry for them. Dont give them any more of my tax money, please.
Many of you are missing the points he is making. Try listening again-your money is already spent.
Bear in mind that he is a Representative from an automotive district so of course he will defend the industry that employs his constituents-that’s what they would EXPECT him to do…if only royal pompous A-holes like Dick Shelby from Alabama who arranged for nearly a billion in tax subsidies for the transplant automakers in his home state of Alabama would realize that many of the Suppliers in his state get MOST of their profits (not revenue-profits) from the Big-3 even Senator Shelby might come around to Representative McCotter’s way of seeing things. Shelby is so stupid he thinks he’s helping his transplants by trying to wipe away the Big-3-he’s not…he is only going to wipe out most of their suppliers and then how you gonna build cars Dick?
Your money, your tax dollars are already spent folks…and if the Big-3 go down, you, me and whole bunch of people in the middle and at the bottom will suffer and suffer hard. Believe me, Wagoner, Nardelli and Mulally and those at the top with golden parachutes will not suffer one bit while the rest of us have our taxes raised to make up for the $100 Billion+ in lost in annual U.S. Tax Revenue that domestic industry, suppliers, raw material companies and the millions of employees pay into the IRS every year.
The question Mr. McCotter doesn’t answer is how much they need to not only survive, but thrive. Is it just $25B? Is it $50B? Is it $100B? How much is it?
GM alone likely needs in the neighborhood of $40B just to survive until the end of 2009 (given it’s cash burn rate of about $3B per month).
In 2010, GM likes to point that they will see some cash savings from the deal with the UAW. But what if these projections don’t meet their expectations? If I knew that all it was going to cost was $25B, I could at least justify it. But I don’t believe the $25B is close to what the final figure would be.
It’s almost as if they are keeping the figure low now so it’s easier to agree to a second, third, fourth, etc, amount. We would have already invested $XB, what’s another $YB especially since we have already invested so much and would lose it all if this new amount isn’t given?
It’s a slippery slope.
I think the loathing of the Big Three is so prevalent and deeply held by many who visit this site, that it sometimes makes for some lopsided thinking. While Detroit deserves much of the opprobrium it receives, I rarely detect the same degree of antipathy directed at the Lords of Wall Street. Who, after all, was more responsible for the dire situation we now find ourselves? So if you want to play the blame game (and who doesn’t?), might we at least spread it around in a bit more equitable way so as to include the Republican and Democratic Congresses, Alan Greenspan, the aforementioned Securitizers, and the rating agencies, among others? Please notice also that Citibank is on the edge, and expecting infusions, but where is that mentioned? Actually, Detroit has much more troubled company than many care to admit.
That same senator has helped the “imploding 3” to lobby hard against standards that would have made their offerings a lot more relevant and attractive.
Utter nonsense. CAFE didn’t bring the big three down. It hasn’t had any effect on them at all.
If the big three actually built more efficient cars instead of fighting it at every turn and exploiting every loophole, they would have been much better prepared for what really helped crush them. High gas prices.
The were crushed by a quality gap, a perception gap, a model gap (where are the Civic, Coroalla, Fit competitors). They were already declining when gas prices predictably shot up and found them unprepared, and crushed them.
The current credit crisis is only speeding up their fall. Thrown money may slow it, but won’t stop it.
Don’t forget the arrogant and entitlement culture of the executive leadership. 8 figure salaries, fleets of private jets (GM had seven). Meanwhile the toyota CEO has a 6 figure salary and almost certainly flies commercial.
I am against the bail out, but I am against all the bail outs and amnesties, (by whatever name) too.
Rep. McCotter makes as good a case as can be made. Carrying his theme farther maybe the bailed out banks should be asked if they want to participate in a “bridge” loan to the 2.5. If it such a good deal/idea for the US taxpayers, maybe it will sell to the bankers. I doubt it but if the plea is valid, you would think the banks would be lining up to loan to the 2.5, after all that is their business.
I still find it amazing that Detroit nameplates act as if items like CAFE, the credit crunch, superior vehicle nameplates from abroad, just appeared yesterday.
I am also dismayed by the apparent jealousy displayed by posters mad that some manufacturers located in southern states. We get many of your retirees, unemployables, social rejects, people adverse to 6 months of winter, well educated people happy to get transferred here or looking for gainful employment. Thanks. I sometimes wonder if there are any mobile people left in certain northern cities. The only unhappy transplants seem to be the guys waiting for a bus wearing a Pistons T-shirt.
Be glad the southern states are here. Otherwise the foreign nameplates might still be made offshore and the crowded northern cities would have even more unhappy people roaming about.
The “we need manufacturing capacity for national security’s sake” argument doesn’t totally swing with me. If they can’t switch production from an F-150 to a Focus without a year’s re-tooling, how long would it take them to start producing Abrams tanks or Apache helicopters ? In a time of war wouldn’t the government be better off requisitioning those modern flexible Toyondissan plants that were built using foreign money ?
I am left leaning, but a capitalist. The beautiful thing about capitalism (real, Adam Smith capitalism, not Bush Kleptocracy) is that it is objective, not subjective.
Has the big-3 restructured enough? We could have a long debate about that, using a lot of the statistics that Mark Twain spoke so well of, but luckily in this country it’s not that hard.
Can Ford, GM or Chrysler continue without government help? No? Well then they haven’t restructured enough.
The thing about the healthy banks that are getting money, in exchange for the government taking an ownership stake, is that they are healthy. The CEOs of the big-3, or at least 2 out of 3 of them, have admitted that the $25 Billion is most likely a bridge loan to nowhere.
The big-3 have too many dealers (state franchise law), too many employees (UAW) and too much debt (good old contract law). With those burdens there is only one way they can become viable (Chapter 11).
I recognize that the auto industry is unique, and that it is important to have a domestic auto industry, so I, as a taxpayer, I am willing to help make Chapter 11 smooth and quick with government, and to have the government set up an FDIC like self supporting government agency to insure warranties.
Now stop scaring the shit out of all your customers with the auto industry’s own biased surveys on buying from a bankrupt company.
When the dealerships are still open and the warranties are guaranteed people will buy.
Also, stop whining about the economic crisis that “Wall Street” created. A street in Manhattan did not create the crisis, sloppy, irresponsibile lending did. The sloppiest, most irresponsible lending in this country was done by the captive finance arms of your big-3 Congressman.
That’s right, the big-3 aren’t the victims of the economic crisis, they are co-conspirators in causing it.
Now that people are spending within their means and borrowing according to their ability to repay there will be a dramatic reduction in the number of new cars sold.
If the big-3 can take government money, with no end in sight, to keep more dealers and employees than the market can possibly support, then there is no line where the government can stop. They will just have to pay every business in the country to never let go any employee or close a store.
Giving them money doesn’t save jobs, it will just slow the bleeding. With the money, these companies can continue to “re-structure” which includes shedding thousands of jobs. These jobs are lost no matter what. Everyone in DC talks like this money will stop it. It won’t. They will borrow…shed…borrow…shed…borrow… shed until there is nothing left. That is my prediction for GM at least. There is nothing there to save. I question this guy’s loyalty. What if GM or Ford or Chrysler or any combination cannot show a clear plan of how they are going to use the money. Do we give it anyway? How is that fair to the taxpayers? He is angry and forceful because this is his jurisdiction. If the loans fail, it will fall on him come election time. He is no better than Wagoner, et al who are more concerned about saving themselves than anything else. Money loaned to GM will never be repaid. Ford…maybe. Chrysler…if they have a viable plan Cerberus would be more than willing to loan its own money. If they aren’t, why should we?
The question isn’t whether the execs for the Big 3 have failed for decades; they have. And it isn’t whether the stock holders have permitted this to happen and thus deserve to lose every last dime they haven’t already lost; they do. And the question isn’t whether SOME UAW workers have done sloppy work and haven’t even bothered to show up too much of the time; they have. Etc. The question is what’s good for the country if they go down suddenly and completely.
While I have no sympathy for the execs, and would love to see them lose their jobs, their retirement, have past income clawed back if possible, and see them jailed for any illegal activity that can be found, most of that won’t happen. But the loot they and their predecessors have carted off is a pittance compared to the riches given over the years to the financial types.
Wagoner has no excuse for pouring money into the likes of the SSR, Camaro, G8 and the Saturn line while letting Honda run away with the halo bestowed on the Civic while starving the Cobalt of money that would given GM some MPG creds.
But they built what we wanted to buy and did. While GM should have had a plan B for the inevitable gas price runup, even Honda and Toyota have seen their big stuff sit on the lots in the recent months. And eveybody is starving for lack of credit. IIRC Nissan made the highest profit per car a couple of years ago, and I think they announced no profit or a loss a few days ago for teh recent quarter.
And GM’s lack of planning for the certain eventual gas price increase is no worse than our entire society running full speed ahead into the brick wall of the subprime, then prime, and now everything crash. Wagoner knew gas would go up and we all knew we couldn’t keep making loans of inflated amounts to people with no income, no job and no assets (NINJA). So too many members of this society are just as guilty of foolish behavior as Wagoner, and it’s collapsing now. I spend most of the day reading financial stuff and listening to many people involved in all aspects of the business. While some have guesses and even very tentative predictions, many who’ve been in the business for lots of years say they’ve never seen anything like it. A month ago, the comparisons were to the dip of 2002, or 1987, but now increasingly the comparison is to 1929. Except worse, because we have a huge national debt to foreigners and huge personal debts and a depleted manufacturing base.
While we might have to hold our noses while we bail out the 2.8, we’re playing with fire or worse if we just let it collapse because we’re pissed off.
Thaddeus McCotter makes the best possible case for helping the Auto Industry survive. However, he limits his remarks to ‘one’ industry. If Congress chooses to provide any form of funding to this industry, McCotter’s ‘fairness doctrine’ should also apply to each and every ‘other’ industry.
Otherwise, it represents a ‘call to arms’ to each and every other American who does not have ‘Big Auto’ behind them: including ‘Sam the baker’s apprentice’ who was just laid off.
There must be a second video. The one in which McCotter is right wasn’t posted.
mel23:
It’s really not that people are pissed off. It is that the big-3 need Chapter 11 to be viable.
It really is that simple.
It is about using our brains, not holding our noses.
With post Bankruptcy assurances Chapter 11 will work, and the US auto industry will go on to thrive.
Another country tried to bail out its auto industry. The companies that it tried to bail out for 30+ years now belong entirely to India and China.
Without restructuring $25 Billion is just the tip of the ice burg, the big-3 will never be profitable again without a Chapter 11 restructuring.
When he got toward the end and began talking to his “conservative Friends from the South” (i.e. Shelby)(@ 7:23) I thought he would discuss all the industrial jobs in furniture making, textiles, and steel (Birmingham, Alabama) lost to foreign competition but he didn’t. If his district deserves a bail out to save real families, why didn’t real families in the Southern textile industry deserve the same?
It is nice political theatre (and shows how he got where he is) but it plowed no new ground in the bailout debate.
Also, notice he didn’t have a question as he himself remarks. Most commentators have focused on how the Detroit 3 CEOs did, but the real action is how the Congressmen try to score political points off each other. The CEOs are just there to provide a reason to debate, they are a side show to the politicking that is really going on. Washington observers watch the questioners (Congressmen) not the responders (witnesses).
Jeff Waingrow : Of late the postings about the broader financial meltdown have tended toward bumpersticker blame games, e.g., Barney Frank is the culprit. It’s entertaining pundit theater (a la Auto Extremist). Serious analysis? Not so much.
I’m not very informed when it comes to finances and bankruptcy, but i was under the impression that you have to have a certain amount of liquidity to file for Ch.11. Hasn’t GM passed that threshold and have to go right to Ch.7?
PCH101:
LOL!
The guy is representing his constituents. If he was my representative, I’d expect him to do the same for me. Too bad for him cherry picking data points tells only the reality the D3 want to hear, not what objective reality is.
This hearing would not be occurring if the D3 built competitive products from the consumer’s perspective. That’s why there are no bailout hearings for Honda or Toyota or Nissan or BMW or, etc, etc, etc.
Thought I’d get your take on the automobile Bailout and give you mine and feel free to pass it on if you like
First the Japanese people are smarter than us –They wouldn’t buy an American car if it was twice as good and half the cost.
But here is what I have noticed when it comes to cars –just about everybody I listen to is right—the auto execs have made mistakes—the union does have somewhat ridiculous wages and rules but here is what I would like to see get fixed—keep in mind these are not the first manufacturing jobs for the U.S. to lose just the latest—ok here goes
Consider this—
The domestics sell half –the foreign cars sell half
The loss revenue and expense to our government in lost tax revenues will be catastrophic if the domestics fail—the loss to the us if the other half fails is a small blip
Sounds to me like we hit the domestic half a lot harder in taxes than we hit the foreign half
Follow me on this—why don’t we, in the manufacturing segment, tax end products instead of workers—lets tax items as they come off the assembly line and into the ports –we have a tax system that apparently favors moving jobs offshore –good paying jobs that fund our federal and state governments, fund social security and provide health care. These taxes are imbedded in the cost of products made in America—let’s make them transparent and charge everybody the same—we would at this point be able to keep these automobile jobs and bring the ones that have already left back here. I am not saying protectionism but I am saying equal.
If we look at the way our Government collects taxes we begin to see that the tax system unfairly rides on the back of the American manufacture worker. Service industry does not have this problem except with illegal aliens were the illegal is not required to pay into the system but the American worker is. The answer with this one is easy make him a citizen with all the responsibility that includes. ( I would love to be making cell phones and computers with new citizens in new plants here in Texas than shipping them in from South Korea) To answer the manufacturing workers problems lets change the way we collect taxes and make it fair to all.
I think when compared to other countries it’s the income tax, social security tax, payroll tax, property tax etc that makes us fall behind not the actual wage—now is there waste in Detroit you betcha , but I think they realized this a while back and have been working on it for a while now.
And while we’re at it—why can I buy an item off the net with no sales tax –doesn’t this also run the guy down the street who is doing it the right way out of business. The same guy paying property taxes and sales tax that’s paying for the road I am driving on and the school my kids go to.
Washington needs to collect taxes in a way that is fair and keeps our jobs here not runs them offshore.
Off course I could be totally wrong –wouldn’t be the first time
Thanks for your time – let me know what you think
Stan Bryan
fragile fabric…rendered assunder niiiiice…
point 1. domestics haven’t done anything since the 70s to restructure is wrong because look at all the poor white and blue collar workers out of work and pensioners worried about their retirement in our district.
point 2. why is the big 3 here? workers and pensioners have not been begging and btw, CAFE hurt us. wait, wasn’t restructuring and innovation what you have been doing since the 70s, big3? and wall street screwed up our credit, and congress failed us by passing the bailout (btw, we still want some of that money, chairman congressperson).
ooo…”nebulous”. nice.
25B goes to healthy banks and wall street bad. give us money good.
while your bailout policy sucks, we will actually use our bailout loans properly. we promise.
if auto industry goes bankrupt people won’t be able to keep their homes. because they can SO keep their homes, now
finally: labor costs. one of the problems that michigan suffers is still operating under the industrial welfare model of governance we get a bad rap for this so please, give us money american government, you know, for our industry.
two pillars of americans’ finances, business and government, help undergird undergird! nice! american prosperity. if one of those go, where will americans go? to the government. you know, just like the big3 are.
finally (again) if no manufacturing base, the u.s. can’t defend itself. so it’s a security issue biatches! al qaida will reign down holy allah-fire if we don’t get $25b!
with no auto bailout, america will be a nation with no path to middleclass prosperity. because middleclass is SO prosperous the last few decades.
What do you guys think of this? I say if it is inevitable that the big three get their gov’t loans, a condition of the loans must be Chapter 11 bankruptcy. As in, you go through bankruptcy, restructure, THEN and only THEN you get your 25 billion. Maybe with that we might have a chance to actually see a healthy auto industry come out of the ashes.
Amazing speech. However he hasn’t addressed how the automakers intend on achieving profitability. He didn’t address why the domestic automakers are failing while the import brands are succeeding. He also hasn’t addressed the continued loss of market share that has rapidly occurred over the past twenty years or why there is a large, angry and vocal population of consumers who won’t ever consider another domestic vehicle. This absolutely is not the time for silver-tongued speeches, it’s a time for real forensic analysis into the obstacles that the domestic automakers need to overcome, and how they’ll do it.
Also, that “the automakers and the unions” are generally uttered in the same breath concerns me very much. The UAW needs to go away completely and forever and the automakers need to be able to operate without that anchor. If that means that an overpriced $140k line worker has to be to be replaced with one earning $60k, then that’s fine with me. The reality is that, while these guys can deliver a compelling argument, most of their vehicles just aren’t very good. It’s as simple as that, and it’s the only thing that matters really.
The domestics never made a serious effort to sell in Japan.
Japanese regulations and reality require smaller cars. There are large cramped urban areas where size is at a premium. Suburbans and Crown Vics are a no go. And America NEVER had a small car that was twice as good, much less half as expensive. As far as I know the domestics effort to sell cars there was limited to Saturn opening a dealership for about 9 months before giving up. The domestics never really tried to sell in Japan because they are uniquely unsuited to it and had the sense to realize it.
They never really tried to sell there, so the whole they wouldn’t let us sell in Japan thing is bull. You couldn’t import american cars over there any more than you could ship some Kei cars over here as anything but novelty items.
Arguing about the fate of the domestics as if it has anything to do with this bailout is kind of beside the point. This 25 billion will do nothing, NOTHING, to stop their failure. It will delay it for a few months. Even if you gave them enough cash to get them viable, it wouldn’t change the fact that to do so they would have to kill all the brands, fire a bunch of workers, and generally cause almost the same level of economic devastation as letting them fail totally will.
That is the raw fact of the matter. The situation is so far beyond a measly 25 billion that the bailout is a joke.
The only real justification to bail them out know is so they have time to beg for more money. Anything else is horseshit.
First of all Thadeus McCotter is a principled conservative. He was one of the House Republicans who initially opposed the $700 billion bank bailout (btw, Citicorp which has already received $25 billion (that figure sound familiar to the B&B?) from the TARP is now said to be considering bankruptcy). The fact that McCotter supports some kind of aid package to the Detroit 3 means that he believes the crisis is real and that there’s a time for ideology and a time for action.
As for those of you who don’t know the difference between a US Senator and a member of the House, well, maybe you should learn some civics before joining the debate.
Yes, the CAFE standards brought Detroit to its knees. Just like it did the transplants. Europe has even tougher guidelines on both mileage and emissions.
CAFE standards favor the Asian companies because it stands for Corporate Average Fuel Economy. The Asian companies don’t make big cars and until recently didn’t sell fullsize light trucks so the mpg avg of their entire lineup was better.
As for the Europeans, with the exception of M-B and their smart brand, nobody is importing their small A segment cars here. None of the Asians are bringing in the tiny kei cars. They know that Americans prefer larger vehicles. Now the Detroit 3 are suffering for selling the cars & trucks people wanted.
The domestics never made a serious effort to sell in Japan.
That’s because the Japanese protect their domestic markets. Tariffs and non-tariff barriers protect the JDM from foreign competition.
It’s debatable whether the US mfgs can design cars that would be accepted in the Japanese domestic market. What’s not debatable is, that we can make at least one thing better and cheaper than Japan and that’s rice. Japan’s farmers tend to have small plots of land and use inefficient farming methods. Growers in Texas and Louisiana, on the other hand, are pretty efficient and grow great rice. Japan, though, will not allow any US rice to be sold there because Japanese farmers are politically very strong.
The thing about the healthy banks that are getting money, in exchange for the government taking an ownership stake, is that they are healthy. The CEOs of the big-3, or at least 2 out of 3 of them, have admitted that the $25 Billion is most likely a bridge loan to nowhere.
Healthy? So Citigroup which already has gotten $25 billion (does that figure sound familiar?) from the TARP isn’t considering bankruptcy?
Will Citigroup Survive? Four Possible Scenarios
Citigroup may soon get all the sleep it needs. Investors are growing increasingly concerned that the global financial behemoth could go the way of Bear Stearns, Lehman Brothers and Merrill Lynch. Shares of the company, which was once the world’s largest bank, closed at $3.77 on Friday. The company’s board members reportedly met on Friday and will continue to talk over the weekend to discuss the firm’s options. There are a number of possible outcomes, not all of which conclude with the end of Citi. “Somehow they need to get the price of their stock up,” says James Ellman, a hedge fund manager at Seacliff Capital. “If they don’t they are in for a lot of big problems.”
The “we need manufacturing capacity for national security’s sake” argument doesn’t totally swing with me. If they can’t switch production from an F-150 to a Focus without a year’s re-tooling, how long would it take them to start producing Abrams tanks or Apache helicopters ? In a time of war wouldn’t the government be better off requisitioning those modern flexible Toyondissan plants that were built using foreign money ?
Nobody is saying that the Dearborn Truck Plant might have to switch from building F-150s to F-22s. We have a dedicated full time defense industry now.
The point is, though, that defense industry is dependent on a supply chain, including machine tool companies, that itself is dependent on the business of the Detroit 3. Had we not already let most of our manufacturing base wither, including steel and textiles mentioned above, we might not be so vulnerable to an implosion of the Detroit 3. That’s water under the bridge now, but what’s left of our industrial capacity may not be able to take a hit from a Detroit collapse, and that would indeed put our defense capabilities at risk.
As for those in the southern states concerned with the loss of the textile and furniture industries, you have my sympathy. Unfortunately for those of us in the industrial midwest, you also have close to a trillion dollars of our money that Washington extorted from us and sent to you. Some of that paid for military bases and defense plants. Some of it went to pay federal employees in Maryland and Virginia. And some of it paid for the roads and off ramps leading to the Mercedes and Hyundai plants in Alabama.
# Ronnie Schreiber :
CAFE standards favor the Asian companies because it stands for Corporate Average Fuel Economy. The Asian companies don’t make big cars and until recently didn’t sell fullsize light trucks so the mpg avg of their entire lineup was better.
As for the Europeans, with the exception of M-B and their smart brand, nobody is importing their small A segment cars here. None of the Asians are bringing in the tiny kei cars. They know that Americans prefer larger vehicles. Now the Detroit 3 are suffering for selling the cars & trucks people wanted.
This analysis is correct, but it doesn’t tell the entire story. The sordid, ineffective regulatory mess that we call CAFE was enacted because our elected officials didn’t have the guts to discourage fuel consumption by slapping a high tax on motor fuel. The European and Asian governments that taxed fuel found that hitting car buyers in the wallet made them choose smaller, more efficient vehicles and limit their driving to keep costs in check. Our regulatory approach did very little to change Americans’ preference for larger vehicles and nothing to reduce driving. In fact, it’s easy to make the case that the combination of cheap gas and fuel-stingy cars encouraged people to drive more.
McCotter is right to imply that CAFE burdens the Detroit 3 more than it does the import automakers. I found his entire argument in favor of the bailout to be compelling.
Perhaps the Detroit 3 should change their strategy. Liberating TARP funding for an auto bailout may be as simple as changing the company names from GM, Ford and Chrysler to AIG, Citicorp and Freddie Mac.
Ronnie Schreiber : As for those in the southern states concerned with the loss of the textile and furniture industries, you have my sympathy. Unfortunately for those of us in the industrial midwest, you also have close to a trillion dollars of our money that Washington extorted from us and sent to you. Some of that paid for military bases and defense plants. Some of it went to pay federal employees in Maryland and Virginia. And some of it paid for the roads and off ramps leading to the Mercedes and Hyundai plants in Alabama.
So, as a compromise, let the Detroit 3 go bankrupt and use the $50,000,000,000 to aid families in Michigan: built army bases, construct highway off ramps, and give grants to the University of Michigan.
“First of all Thadeus McCotter is a principled conservative” obviously, you know, believing in the free market system and 100% against socialist tendencies.
“The fact that McCotter supports some kind of aid package to the Detroit 3 means that he believes the crisis is real” gee, i wonder what finally got him around to this way of thinking, it couldn’t be because…“there’s a time for ideology and a time for action.” exactly, he’s perfectly willing to give up his conservative ideology if it means he’ll be gettin’ some money action.
“The Asian companies don’t make big cars and until recently didn’t sell fullsize light trucks so the mpg avg of their entire lineup was better.” darn those tricky asians and their inscrutable ways – making quality cars people like while obeying the CAFE standards. those bastards!
“Now the Detroit 3 are suffering for selling the cars & trucks people wanted.” nice use of past tense: “wanted” is pretty darn accurate these days. “overpriced” and “largely unneeded” and would be two other good terms to use.
“Japan, though, will not allow any US rice to be sold there because Japanese farmers are politically very strong.” if only the U.S. farmers had a strong farming lobby behind them. it must be so tough on companies like cargill.
“Healthy? So Citigroup which already has gotten $25 billion (does that figure sound familiar?) from the TARP isn’t considering bankruptcy?” according to your man from the video above yes, some healthy banks are getting the money. one large example: wells fargo.
“The point is, though, that defense industry is dependent on a supply chain, including machine tool companies, that itself is dependent on the business of the Detroit 3.” then perhaps, as a matter of national security we should bail out the supply chain folks instead. you know, get to the meat of the matter.
So, as a compromise, let the Detroit 3 go bankrupt and use the $50,000,000,000 to aid families in Michigan: built army bases, construct highway off ramps, and give grants to the University of Michigan.
How about just giving us back our fair share of tax revenues and let us decide how we want to spend it? After all, it is our money in the first place and the United States is, after all, a union of individual states that balances federalism with states’ rights.
“First of all Thadeus McCotter is a principled conservative”
obviously, you know, believing in the free market system and 100% against socialist tendencies.
Mock all you want, but, yeah, McCotter is pretty consistent in sticking to a conservative ideology, so if he decides to support government intervention in business, it’s obvious that it’s his opinion that this is a crisis and not a time for ideological orthodoxy. You know, the way the guy you voted for says he’s not going to repeal Bush’s tax cuts because raising taxes in a recession is a bad idea, notwithstanding his ideologies.
“The fact that McCotter supports some kind of aid package to the Detroit 3 means that he believes the crisis is real”
gee, i wonder what finally got him around to this way of thinking, it couldn’t be because…“there’s a time for ideology and a time for action.” exactly, he’s perfectly willing to give up his conservative ideology if it means he’ll be gettin’ some money action.
McCotter’s been consistent. He opposed the Wall Street bailout at the time, contrasting Wall Street to the real economy where people actually make things. He’s representing his constituents, not looking for cash in his own pocket. I know that it’s hard for a “progressive” like you (aren’t diseases progressive?) to understand that it’s not all about personal power, but some folks in Washington actually serve their districts. You’re welcome, as Rep. McCotter said, to come to western Oakland and Wayne counties and visit the shuttered Wixon assy plant and the people who worked there. Perhaps you’d be willing to tell them to their faces how you think they are lazy and greedy.
“The Asian companies don’t make big cars and until recently didn’t sell fullsize light trucks so the mpg avg of their entire lineup was better.”
darn those tricky asians and their inscrutable ways – making quality cars people like while obeying the CAFE standards. those bastards!
Apologize for imputing racist motives to me.
You’re eliding past my point that CAFE gives structural advantages to the imports, who for the most part don’t make large cars and light trucks.
“Now the Detroit 3 are suffering for selling the cars & trucks people wanted.” nice use of past tense:
I try, unlike some, to use precise descriptions when possible. The profits of the Detroit 3 in the 1990s shows that, yes, people did want their products.
“overpriced” and “largely unneeded” and would be two other good terms to use.
Largely? That’s a bit of a weasel word. Does a large segment of American consumers find that domestic cars don’t meet their needs? Sure, but a majority of Americans still, apparently, prefer the domestic brands. The Detroit 3 had a 55% market share in October and GM sold about 20,000 more cars than Toyota. Ford and Chrysler each sold more cars than Honda.
By your standard, Apple computers are “largely unneeded” because they only have 10% of the personal computer market. Maybe we’ll start hearing about how “nobody” wants an Apple computer, but I doubt it. Lefties love them their Apples, yum, yum.
As for overpriced, one of the reasons why the domestics are losing money is that they have to compete on price with mfgs who have lower costs. Hondas aren’t cheap, btw.
“Japan, though, will not allow any US rice to be sold there because Japanese farmers are politically very strong.”
if only the U.S. farmers had a strong farming lobby behind them. it must be so tough on companies like cargill.
Yep, another one of those mean, nasty, greedy American corporations. Toyota is run by living saints, I tell you, saints! One can debate who has more political power in their respective countries, Japanese farmers or US agribusinesses, but that’s a side issue to the indisputable fact that Japan keeps out US agricultural products. Why do you want Toyota and Honda to be able to sell products here but have no problem with Japan restricting imports of those things that we can produce competitively?
according to your man from the video above yes, some healthy banks are getting the money. one large example: wells fargo.
So, do you approve of giving healthy banks billions in giveaways? I gave an example of one less than healthy bank (though with $75 billion in cash on hand) that has already received as much as Detroit is requesting in a loan and most likely will request more. At least those loans will have to be repaid, unlike the direct injection of cash to the banks.
then perhaps, as a matter of national security we should bail out the supply chain folks instead. you know, get to the meat of the matter.
Perhaps, but had we had some kind of coherent industrial policy and recognized the true need to have a manufacturing base instead of buying cheap shit from China this wouldn’t be an issue. I’d rather some money went to prop up the US machine tool industry but unfortunately, there hardly is a machine tool industry left in the US.
Ronnie Schreiber : it is our money in the first place and the United States is, after all, a union of individual states that balances federalism with states’ rights.
Well, I supported Chuck Baldwin in the last election, so it looks like you and I may be lone voices in all of this. But, of couse, now we have worked ourselves around to NOT helping the Detroit 3. Afterall, someone has to be the first to say no to Federal money. Grove City College and now GM!
ronnie schreiber – this would go a lot faster if you would stick to the actual talking points instead of making assumptions. but, i’ll try and muddle through your mess of a response.
“Mock all you want” okay.
“McCotter is pretty consistent in sticking to a conservative ideology” except for this one, very important, time.
“it’s his opinion that this is a crisis and not a time for ideological orthodoxy” right, i got that, he said so in the video.
“You know, the way the guy you voted for says he’s not going to repeal Bush’s tax cuts” big swing and a miss, ronnie schreiber. beware your assumptions and stick to the points of the arguments.
“I know that it’s hard for a “progressive” like you” ooo, strike two.
“but some folks in Washington actually serve their districts” foul tip! i agree, he is trying to serve his ditrict. doesn’t mean he’s not wrong, though.
“assy plant” ha! you said assy plant.
“Perhaps you’d be willing to tell them to their faces how you think they are lazy and greedy.” strike three! never said this. i think they are neither lazy nor greedy.
“Apologize for imputing racist motives to me.” ask nicely, you cur. (where’s my slapping glove and dueling pistol?) actually, i was the one being racist here, not you.
“You’re eliding past my point that CAFE gives structural advantages to the imports, who for the most part don’t make large cars and light trucks” i’m not eliding past anything. no one had an advantage, the CAFE standards were there for all. if the big 3 decided to keep making trucks and suvs then fine, but they knew the price of that. it was a level playing field.
“Does a large segment of American consumers find that domestic cars don’t meet their needs? Sure” thanks for agreeing with me.
“Apple computers are “largely unneeded” because they only have 10% of the personal computer market” i would include the generally higher price, too, but yes, they are largely unneeded.
“Maybe we’ll start hearing about how “nobody” wants an Apple computer” there is a difference between want and need you seem to be missing here.
“Yep, another one of those mean, nasty, greedy American corporations.” you’re not even trying to throw strikes anymore, just aiming for the batter. it is a fact that some american corporations get large subsidies. for good or bad, it’s what happens.
“Toyota is run by living saints” i think you have to be dead to be a saint, no?
“but that’s a side issue to the indisputable fact that Japan keeps out US agricultural products” yes, and agribusiness has a strong lobby and if they wanted to push the point of better trade with japan i am sure they could manage it.
“Why do you want Toyota and Honda to be able to sell products here but have no problem with Japan restricting imports of those things that we can produce competitively?” i never said this. bad assumption.
“So, do you approve of giving healthy banks billions in giveaways?” no.