Barack Obama’s turd blossom David Axelrod appeared on ABC’s “This Week” today (via Reuters), quietly backing the president-elect away from is electorally-necessary support for an automaker giveaway. “We all have a stake in the survival and the prosperity of the auto industry,” said the future senior White House adviser. “But in order to do that, they’re going to have to retool and rationalize their industry for the future,” he said. “If they don’t do that, then there’s very little that taxpayers can do to help them.” This puts Obama back on the same page as the congressional Democrats, who have been markedly less supportive of a bailout since the Detroit CEO’s miserable performance before the House Financial Services Committee this week. “There must be a business model that they work off of,” Speaker of the House Nancy Pelosi tells CBS’ “Face the Nation. “No one would invest in a company without seeing that, nor should taxpayer dollars be invested without seeing that business model and that business plan.” The real question then seems to be, what do Obama, Pelosi, et al expect to see in the way of a new plan come December 2? Because other than being sure that they want to see a plan, we haven’t got much from them in the way of specifics.
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Well a good start might be a detailed timeline on how the loans will be repayed. Nancy and Co. need to realize that they are dealing with people who think short term only. The only thing important to Wagoner right now is the Cheque (check?)on his desk with all those nice zeros on it. In fact he might conveniently forget that it’s a loan in the first place. GM is like a black hole for money right now and if there isn’t a good few well tied on strings to any money thrown into that black hole the Taxpayer will never see it again. Of course if GM does come up with a detailed business plan that does not fundamentally change things in the manner in which C11 would change things, Congress might conclude that one would want to be a stark raving lunatic to loan GM a dime. RIR and the BOD may not favour the C11 route but they ought to be making friends with as many C11 lawyers as they can in the next few weeks.
Again I will say:
Every moment GM refuses to give Congress a plan is another moment I won’t buy a GM product and will encourage friends not to.
GM, I want you to either declare bankruptcy or prove you won’t need a bailout again to fix yourself. I don’t want to have an orphaned vehicle. Your unwillingness to do these simple things makes me question your leader’s leadership.
The clock is ticking, and you need to make a decision now, rather than waiting for a bailout that may well not materialize. Show me I can trust your warranties. Get Obama to promise that my warranty will be backed somehow if you go out of business. Prove to me that I can trust you with my money and my business. That will do more for you than any bailout will.
The real question then seems to be, what do Obama, Pelosi, et al expect to see in the way of a new plan come December 2? Because other than being sure that they want to see a plan, we haven’t got much from them in the way of specifics.
They’re not asking for a “new plan”…they’re asking for a “plan”. Something besides not knowing how much public money they’re going to end up wanting.
Let’s assume they were asking private investors for this money. Let’s further assume that, when asked for a business plan, our Fearless CEOs wanted specifics as to what was being requested. Do you really think our Fearless CEOs would get a second hearing?
They warned me this election could result in the “third Bush term” and it’s looking more every day like they were right!!
Ed, with all due respect, when someone asks for a plan, it’s the person being asked who must then come forth with something (or not!). To expect Pelosi and the others to say what the plan should be is to place the burden on the wrong party, no? As an aside, some of the recent commentary at the site might make one think that Obama was already in office. Give the guy a break. Actually, I thought we still had a president. So where is he?
I watched Saturday Night Live last night. Wagoner’s plan on the opening skit was about what I expect the 2.8’s plan would be. It was funny, but a sad state of affairs.
They warned me this election could result in the “third Bush term” and it’s looking more every day like they were right!!
Uh, that’s a bit of a stretch, don’t you think? Remember, folks, cynicism is a tool that injects distrust. Distrust means you assume politicians are corrupt and malfeasant, which in turn lets them be corrupt and malfeasant in a “boys will be boys” manner. Don’t be lazy and let that train of thought actually take precedence over real thought and analysis.
Obama sort of cornered himself in this situation, but it wasn’t one his team could have realistically predicted. From his point of view, he wants to get the workers in a better situation. From day one he’s been critical of Detroit for their SUV glut and their mismanagement, so when he’s skeptical of that same management (especially after the bullshit begfest) he’s not going against his word. He just needs to find another way to live up to his promise of helping Detroit.
I’m sure that the Dem’s have their own part in the misery that is Detroit, but it was with strong GOP support that the brilliant auto managers were able to keep building their luxo-barges and stradatanks, while resisting fuel efficiency standards.
As to Jeff’s question: where’s the actual president? He is in Peru drinking alcohol, if that makes you feel any better:
http://www.dependablerenegade.com/dependable_renegade/2008/11/screw-it-ahm-of.html
Loosely translated:
If you want any Messiah Bucks do what ever we want you to. This means being our bitch and making cars no one wants but we think they should own. When they don’t sell, we’ll think about blaming the foreign invaders (that didn’t pay us homage or play ball with the UAW) and create a special anti transplant tax to get people’s attention.
I think they are going to regret running their companies into the ground. It’s plain to see the massive discounts and sales were designed to burn cash and setup this crisis. GM especially. If they were treading water there would be no tit to nurse from.
Now the politicians, safely re-elected or elected, are going to pinch off that teat until they get what they want. And it better be a happy ending.
This guy isn’t even our president yet. Can we see what policies he will actually put into action before we can put him on the fail boat?
I enjoy reading industry news on this blog, but when entries consistently veer into political shots, it becomes less enjoyable to read.
I want to hold this guy’s feet to the fire, along with all the other politicians and industry workers, but it’s not his time. He’s not our president yet.
Whom among us believes there is a member of Congress experientially fit to judge whether a plan for making a $150B revenue operation viable is credible or not? This request for a plan is a charade and whatever “The Three Tenors” come back with will have little relevance to the actual outcome of a bailout vote. The fact of the matter is that in 2010, the cost game begins to change for the D3. For GM and Ford, most of what they have fielded in product from the last 5 years of their design and engineering work has been quite credible. There is still more in the pipeline. They are otherwise over-dealered, under-warrantied, poorly promoted and late on world class small cars. However, small cars are not the meat of the market so that’s not the strategic liability. Put another way, being late with small isn’t fatal as long as late doesn’t turn into never. From the pipe, it looks like late will merely be late.
No plan works to a timetable without restoring reasonable credit and confidence. We need a president and primary executive staff that is willing to use the full arm-twisting power of the Executive Office to knock heads in the banks who have their snout in the TARP. It’s unconscionable that banks propped up by taxpayer largesse are sitting on the money and not actively lending. You want to start fixing GM, Ford and Chrysler? Well, sure, dump the Directors and force new elections if they take the funds. Demand resignation of each CEO with right to re-apply for their jobs in a competitive search. Let the EVPs, SVPs, VPs sweat their performance while the new bosses are vetted and hired. Let a Democratic president be Nixon-in-China and tell the UAW behind the scenes that the Democratic Party will turn its back on them if they don’t re-negotiate in good faith. Yup, all that. But that’s the small stuff.
Get things moving in the big picture. This banking meltdown is creating an oligarchy of huge players. Fine. Get the CEOs all in a room and do a Lyndon Johnson, twisting ears until they get the message that the President wants a moritorium on foreclosures, and either massive mortgage modification or all existing mortgages over 4.5% rolled back to that rate for the next five years with *incremental* adjustments tied to LIBOR or prime allowed thereafter for variable rate loans, and 30/15 yr fixed returning to their present rates over two years of monthly adjustments. The market can set new mortgage rates, but negative equity, option ARMs and 0% down are off the table. Bank cost of cash is tiny now, so the lenders will still make money. Bang heads to loosen major bank lending between themselves and to reasonable levels for reasonably creditworthy people and businesses. Christ on crutches — you can get 36 months no-interest credit for a $10,000 home theater system but people can’t qualify for car loans, refis or mortgages! Make good on a massive infrastructure reconstruction program funded by February 1st. We badly need it anyway.
Push off tax increases until 2010. Create a $100B Green/Alternative Energy Venture Fund run by experienced venture professionals (not civil servants), with $400B reserved behind it if early track record for investment selection is encouraging by the end of 2009. Signal to the market that TARP will be used for its original purpose, not for ownership of banks.
Give the D3 their initial $25B bridge loan. Reserve $50B more with performance or cost-management triggers, and add the $25B already promised for plant modernization and retooling. Cap it altogether at $100B — no effing around — so the companies know there’s a point when the well runs dry.
Then certain hand-wringing Americans have to step up and shed their “…my LeBaron / Celebrity / Tempo crapped its transmission…” grudges against the D3. Then we just might emerge with world class car companies out the other end of this tunnel. Kiplinger, really? Are we really going to detonate a world of hurt just to avoid a little shared financial risk? When did Americans start walking around with downcast eyes gazing at their shoes?
Phil
Then certain hand-wringing Americans have to step up and shed their “…my LeBaron / Celebrity / Tempo crapped its transmission…” grudges against the D3.
Does that include my 2004 Intrepid? Some of these grudges are fresher than others.
I like Phil’s plan. It addresses the issues nicely.
I particularly agree with his last statement. I was driving driving home last night and looking at the odometer of my 2003 CTS (which was built in August of 2002 according to the door sticker). We’re within a few hundred miles of 100,000. I was thinking that here’s an early-build model that’s six years old and, despite a few parking lot dings, it still has shiny paint, strong mechanicals and is almost totally rattle free. Not bad at all.
It would be a great shame if some of the products that GM make were to die. Not all of them, but some of them are without equal in the market. By way of contrast, Honda, Nissan and Toyota make nothing that scream “Buy me!” the way that the CTS-V does.
Phil’s comment, ” This request for a plan is a charade ” nails it, finally.
As the articles pile up that miss the point about what is actually going on here, it gets frustrating. What are writers’ reluctances to call a spade a spade? Expose BOTH the politicians and big 3, not just the latter! Is there some time period after an election where you “aren’t allowed”?
Are all of you too young to have seen the movie “Catch 22”? Have you never heard the phrase AND know what it means? That is THE topic here. Go rent the movie, it is in the Classics section and is the relevant piece covering the little soap opera being played before us now.
Quite simply, the politicians DON’T want to see a Plan! Because the only way it can answer their general requirements is if its a lie!
Phil – you are oh so correct here. Now that CitiGroup has gotten their 300 billion “pounds of flesh”, it shows just how much of a charade the whole congressional hearing fiacso really was/is. $300 billion without raking anyone over the coals, yet the D3 CEO’s are reamed for two days with no outcome. The Washington circus continues unabated …..
Business as usual – just move along …….
Let us consider America’s unionized workers and the struggling powerless retirees who were given broken promises and betrayed by corporations, Washington, media and todays befuddled union officials?
http://westfallmike.tripod.com/Page11.htm
http://westfallmike.tripod.com/Page12.htm
http://westfallmike.tripod.com/Page10.htm
http://westfallmike.tripod.com/Page14.htm
http://unionreview.com/insights-analysis-uaw-betrays-autoworkers
http://www.umflint.edu/library/archives/westfall.htm
http://www.monroelabor.org/links.html
http://michaelwestfall.tripod.com/id50.html
Stein X Leikanger: I’m sure that the Dem’s have their own part in the misery that is Detroit, but it was with strong GOP support that the brilliant auto managers were able to keep building their luxo-barges and stradatanks, while resisting fuel efficiency standards.
The problem wasn’t that the domestics built big SUVs and pickups. Toyota spent a lot of money to get into the big pickup market (just in time for it to implode) and has always offered large SUVs. Same with Nissan.
BMW and Mercedes have been happy to sell large, gas-gulping SUVs. And I don’t recall any increased devotion to small cars on Chrysler’s part when Daimler was running the company (right into the ground, as it turned out).
It was Detroit’s decision to treat small cars as the red-headed stepchildren. That’s not Washington’s fault. And government regulations can’t mandate the development and production of GOOD small cars. The Cobalt and Aveo prove that one every day….
Stein X Leikanger: As to Jeff’s question: where’s the actual president? He is in Peru drinking alcohol, if that makes you feel any better:
Actually, it does. After the hearings and the performance by the UAW and Rick Wagoner, the last thing I want is any of my money going to bail out GM, Chrysler and the UAW. They – not the government – have lots of work to do if they want to earn any sort of bailout.
Here’s my problem…why didn’t they already have one locked and loaded?
All 3 companies have known for months that they are in dire need of money. Why didn’t they use some of the time since the global financial crisis derailed their companies (which is total crap anyway) to put togther several plans on how to get out of it.
They shouldn’t need until Dec 2nd, they should have last Friday. That they didn’t says all we need to know.