It is being reported that Bush and Obama worked together on the $17.4b bailout package announced today, to avoid saddling the incoming chief executive with “the demise of a major American industry in his first days in office.” And based on Obama’s statement on the bailout today, it seems that he’s preparing yet more assistance for Detroit. Provided of course that automakers don’t “squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it.” Ironically though, the bailout’s structure does dump the problem on Obama before even the March 31 date. Dow Jones (via CNN Money) reports that the final $4b of Bush’s bailout (designed to carry the restructuring firms through February) can not be doled out without congressional activation of the second half of the TARP fund. And Bush ain’t gonna even try. “It’s not necessarily true that this administration, in the remaining 31 days, I believe, will go back to Congress,” White House Deputy Chief of Staff Joel Kaplan said. “What is clear is that the Treasury, with these loans (the initial $13.4b), have effectively committed the first $350 billion from the TARP.” Which means Obama will have to request that congress open the final $350b before the March 31 deadline, and only days into his presidency. And if he does free up the $350b (which he is far more likely to accomplish than Bush), well why the hell not give Detroit even more? We sure wouldn’t be surprised.
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Henry Paulson already asked Congress today to release the second $350 billion. I don’t think they will, but who knows anymore. All rational thought has ceased in Washington DC.
What a disappointing prelude to an Obama presidency, for him to join with Bush in this bailout. Like many others, I had looked forward to change over the next four years. This kind of change is not exactly what I had in mind.
The job of business is to make money by selling goods and services.
Not one word about the company showing any sort of viability by actually selling goods or services. Instead, all they need to do is ‘restructure.’
In other words, GM is being treated as though it were a government agency. It doesn’t have to become profitable, support a product, deliver quality. All it needs to do is show that it is organized properly, a nicely structured bureaucracy apparently being of utmost importance. Once it has done that it will get unlimited free money.
In 8th grade Civics we were taught that taxes are collected to fund government. What they forgot to tell us is that taxes go to fund bankrupt companies whose products are unsellable. Sort of like the mechanism that funded production of the Lada, the Volga, the Yugo…
Obama = Deal for the Zimbabwe 3, 2500 bucks a week in welfare payments to sit home and watch Oprah.
BOYCOTT.
“What a disappointing prelude to an Obama presidency, for him to join with Bush in this bailout. Like many others, I had looked forward to change over the next four years. This kind of change is not exactly what I had in mind.”
You ain’t seen nothing yet. It will take years to recover from this economic tumble if ever. The Argentina government model is not what we should follow.
What honestly is the point of this? Ford is the only car company with a global reach as is evidenced by it not being on the verge of bankruptcy while the other two have trouble selling their goods even in the home market. Honestly the way sales are, I should be able to get a Camry LE for 16-17K OTD in March. For a Malibu to be worthwhile with the threat of the warranty not being fulfilled, and with the anemic 4 cylinder it would have to be 11-12K OTD for me to consider that car instead of the Camry. Forget the Sebring, its pure garbage.
hippo:
Where did you get a figure like $2500/wk?
Also in the news today: Guess what the number one and two top selling vehicles in America for 2008 were? The Ford F-150 and the Chevy Silverado.
http://autos.yahoo.com/articles/autos_content_landing_pages/782/the-years-bestand-worst-selling-cars
I was surprised not to see that mentioned in today’s Latest News. Looks like Detroit is making at least two vehicles that people want.
IN AMERICA, WE have a two-party system. There is the stupid party. And there is the evil party. I am proud to be a member of the stupid party.
Periodically, the two parties get together and do something that is both stupid and evil. This is called—bipartisanship.
95% of wages and full benefits at roughly 70$/hr
Note a laid off construction worker in AZ or NV gets about 200 a week and no benefits.
Nice Obama says …he hopes automakers dont “squander this chance to reform bad management practices…” as if GM management has any control over their workers. Their workers have the ability to run the company into the ground.
Hippo :
He gets the benefit of having taxes withheld from that $200 a week to pay for the bailout of UAW workers.
While at the same press conference introducing the new secretary of labor that promptly accepts with a speech half in a foreign language.
WTF.
no_slushbox
Thanks for trying to improve my mood. I forgot.
This will hold the UAW over till President B.O. takes over. Then the UAW will be allowed to keep the jobs bank, etc.
Next step is to ban secret ballot elections for unionization. Then the UAW can go after the transplants with strong arm tactics.
It really pains me to read comments from people who are surprised that Obama supports the auto bailout. How many millions of similar Obama voters are surprised at this?
UAW and other unions gave hundred of millions in time and money to support Obama. They are his constituency group! The state of Michigan elects almost exclusively members of Obama’s party. I could expect the Republicans to be disappointed in Bush for the bailout, but the ignorance of disappointed Obama voters is mindboggling.
Without an auto industry you can’t consider the US a true superpower. The transplants built in the south represent nothing more than a third world industry. There is no real engineering and design going in the southern car manufacturing states.
Paulson said today he is going to use the other $350 billion, Congress does not have to approve it, under the terms of the $700 billion, Congress has fifteen days from Paulson’s request to say no, if they do not, then it is automatically available. I find it interesting that the request came in on December 19th right before the holidays, and fifteen days will take the time limit for rejection of the request to January 4th, the end of the holidays.
Bush, go home, please, you have done more enough damage, your parting gift is the fool label you will always wear.
“There is no real engineering and design going in the southern car manufacturing states.”
Neither is there in the north, as evidenced by the big 2.825’s crappy automobiles. For cars actually worth owning, for those who afford them, people look to Japan and Germany. One of the many problems of the big 2.825 is, they are charging Japanese car prices garbage American “quality.” I’d not pay more than $10K for any American car, and that’s if it weren’t’ my money. Kia makes a better car than any of the big 2.825, and for less money.
After 20 January, the children will be in charge of the Federal Candy Store…Why do you thing the brat-boy parasite Gettelfinger started his crying just after the bailout? The Democrats will hand them at least $100B in the next few years.
“BOYCOTT!” indeed.
We need a general strike by the taxpayers against Big 3 products, to show politicians that the bailout has got to stop.
Perhaps I should clarify that I was not, and am not, an Obama supporter. But I did like the way he stood up and denounced a gas tax holiday as pandering to the people. I thought he might have a similar common-sense, unpolitical view of the bailout. But no.
As you say, Jane, Obama stood up for his supporters. And screwed the rest of us. Gives us an idea of what we have to look forward to, doesn’t it?
(Isn’t it fun to imagine if a gas tax holiday had actually passed? Wouldn’t that be laughable given what has happened to oil prices.)
Hippo….
The worker doesn’t take home $70/hr or 95% of that. The $70/hr is the cost to the US auto companies and includes retiree pay (not retirement benefit to the worker, but pay to people who are retired) and benefits to the worker and retiree. These people make anywhere from $14-$28/hr (more at the low end now) and various benefit levels depending on when they were hired (2-tier system). This works out to $532-$1064 before taxes and benefit deductions.
I am not saying this is right, just please get your facts straight before you start spouting off.
I’ll be laid off at 1/2 pay as an engineer. My full pay doesn’t come close to your figure. Get your facts straight.
Personally, I am glad that the autos and suppliers are providing some cushion…there is still some compassion and a desire to retain good employees.
Without an auto industry you can’t consider the US a true superpower.
I beg to differ. The USA doesn’t make ships anymore of any size except for the most sophisticated and well-built vessels on the earth’s seas: nuclear-powered supercarriers, destroyers, and SSN’s. You don’t have to design and build all the widgets in a given category to be a superpower, or even most of them, just the right ones.
The transplants built in the south represent nothing more than a third world industry. There is no real engineering and design going in the southern car manufacturing states.
Southern California is probably the world’s car-market laboratory, with the R&D infrastructure and personnel to match, and its very much a mix of foreign and domestic companies there.
Also, America won’t stop making cars or designing them if the Big 3 all roll over. It will free up tons of human and plant capital geared towards the auto business to go towards productive use. That won’t happen so long as the government (now anyways) insists on maintaining a diorama of the way things were. Detroit could become an industrial version of Colonial WIlliamsburg at this rate…a human zoo of the way things used to be done before we knew better.
06M3S54B32: “I’d not pay more than $10K for any American car, and that’s if it weren’t’ my money. Kia makes a better car than any of the big 2.825, and for less money.”
C’mon, really? I would put a 300C or Malibu or Fusion (just one example from each) up against any Kia product.
It’s one thing, for example, to take Chrysler to task for all the junk they’ve produced since the 300C. But statements like this come across as rather childish, no offense.
Neither is there in the north, as evidenced by the big 2.825’s crappy automobiles.
Good point! However, there is some good engineering happening both in the Detroit area and in the Southern states – as well as the East and West Coast.
Toyota has an engineering facility outside of Ann Arbor. They’re the group that designed the Venza. I noticed that they had several positions open for engineers if anyone is interested. I think they have a number of other engineering facilities in the US as well.
There is also Nissan Design America in Farmington Hills, and in San Diego. Can’t forget the Nissan Technical Cener in Arizona.
These days, the Dx.xx seem to outsource a lot of their design work. The Taurus is a Volvo design and the Fusion is a Mazda. GMs seem to be mostly Opels these days.
They just doomed GM.
They have removed the last opportunity (Barry O. won’t turn up the heat) to have a reason to change.
Wagner bragging how they will lead America’s recovery is simply embarassing.
Bunter
Yeah I gotta dispute the Kia> Domestics thing.
Pretty blatantly untrue. Kia’s are probably a better value per dollar over their domestic counterpart, cause goddamn they are cheap. Better cars? naw. Kia inhabits the discount auto niche, and that’s fine, but most of their cars don’t really hold water vs. any other competitor except in that you can get a new Kia for dirt cheap.
That really ticks me off…Gettelfinger could have come out today and stated something like “I and the UAW thank the American people for this generous gift so that we can continue to buy viagra..errr…food for our children” but the little weasel basically stated “Now that we got your money, we will not cooperate and you Americans are still a bunch of sucker-fools”.
What a pathetic little runt Gettelfinger is…I’m embarrassed to share the same gender with the maggot.
I hope we all realize that if we to pay UAW salaries and benefits with requirement for their members never to build cars for Domestic 2.6, we all would be beneficiaries in the long run? This would not require expensive oversight committees in congress and senate. And management of all Big 2.6 could be laid off. That would be greatest savings US taxpayers will not get!
There are actually a few world class cars engineered in Detroit. I am referring to cars like the CTS, STS, Corvette, Viper, 300, F-150, and the Chrysler minivans. The south is happy just building foreign cars without contributing to the engineering and design. As I said before it is a third world industry down south.
I am waiting to add the Volt to the list.
There seems to be a lot of emotion, rather than logic, on display in this thread.
As has been pointed out, no one is sitting at home making $73 an hour to watch Oprah. And, Kia does not make better cars than the Big 3, just cheaper ones.
Another fallacy: “The state of Michigan elects almost exclusively members of Obama’s party.”
Michigan’s State Senate is controlled by Republicans. Michigan’s State House was also, up until the 2006 elections. Michigan’s two-term Governor Jennifer Granholm is indeed a Democrat, but she was preceded by three-term Governor Engler, a Republican.
Michigan’s two U.S. Senators are Democrats. The last Republican U.S. Senator was Spence Abraham, who was voted out in the 2000 election.
Michigan’s U.S. House Delegation is currently composed of 9 Republicans and 6 Democrats. After the new Congress is sworn in, it will have 7 Republicans and 8 Democrats.
My point? The statement that “…Michigan elects almost exclusively members of Obama’s party” is demonstrably false.
Anger-based exaggerations and falsehoods don’t serve to further The Truth About anything.
The end of Bail-Out watch kind of makes this situation unfun to contemplate/comment on.
Not because the D.x have been “saved” but because now there is no suspense. Nothing to look forward to. And I don’t mean the big question of “will they get the money?”
The bigger question of where these companies might be in a year, or two years was really interesting to speculate on.Now the question is answered…we all know the fate of GM and Chrysler, which is to say the current dinosaurs have been officially fossilized and preserved. With the exception of the little dinosaur getting eaten by the big dinosaur, there will not be a different or better company emerging from this.
Mis-timed products? Yes, by government decree now.
Outrageously bad management? Yes, but with a new layer of bad management…to get a preview of it watch C-SPAN.
Poorly built products? Not technically, but in whatever bizarre metrics instituted by Pelosi and Co. they will be an outstanding success – despite them being not what the market wishes to pay for. Doesn’t matter when you don’t need people to buy your stuff to keep the lights on. Just call C-SPAN and cry a lot, check’s in the mail next day.
Perhaps the biggest product development coming out of these outfits will now be the slow neutering and under-powering of ladder-frame trucks in accordance with our lefty-leaning Masters’ Green Envy complex, ironically giving the last market GM and Dodge were competitive in to Toyota and…Ford!
Ford is the best looking company out of the D.x by a long, long ways after today. They’ve got good product in the pike, a new F-150 that all of a sudden looks like good timing to launch, and management that is not crippled by the C-SPAN set or incompetent Harvard MBA’s at the top. Any “concession” the UAW kicks down will be to Ford’s benefit without the ruinous addiction to Patriot Crack that will forever afflict the newly-minted corporate junkies across town. Might be prudent to pick up some Ford stock, cheap. In Detroit, they’re the only game left in town with a future.
That really ticks me off…Gettelfinger could have come out…
Hang in there. The days of the human autoworker are numbered. There will be some big advances in automation coming down the pike soon that will decimate their numbers big time. Trust me, it’s coming and Gettelfinger will make it happen sooner because of his behavior. Yep Ron Gettelfinger, you’re our best marketing guy. Keep up the good work!
I remember my first encounter with the UAW many, many years ago. We were installing some equipment in an assembly plant and the bastards figured out they could sabotage the machine by shutting down it’s cooling system. We solved the problem, but I was really pissed about having to race out in a golf cart to open the valve every time the alarm went off.
I also had my introduction to plant management at the same time. Before we got the thing working right, it screwed up about 20 jobs. I ran down the line, wrote down the numbers of the cars, and tried to give the list to my contact. “Keep the list kid, the dealer will take care of it. We don’t have time to fix them.”
Arghhh!
There are actually a few world class cars engineered in Detroit. I am referring to cars like the CTS, STS, Corvette, Viper, 300, F-150, and the Chrysler minivans. Isn’t the 300 derived from an old version of the E-Class? That wasn’t designed in Detroit as far as I know. I rented a Chrysler Minivan and the interior had all kinds of squeaks. It was horrible.
The sad south could not even design a Chrysler minivan. They have no true automotive infrastructure to speak of. The upcoming Volt looks to be pretty impressive and that is a Detroit product. The Chrysler minivan got a very good review in Car and Driver.
The Pontiac solstice and sky are decent Detroit products. I know for a fact their platforms came from Detroit.
However, the failed Saturn Aura is based on an Opel platform. Bob Putz seems to be obsessed with bringing over Opels to the US that ultimately fail.
The Democrats will hand them at least $100B in the next few years.
We’ll be getting off lightly then compared to the trillions the Republicans wasted on their wars.
Akear: The Aura is based on the Pontiac G6. It may be remotely related to an Opel in the same way the Delta platform as used by the ION/Cobalt is related to the Astra [or the Chevette the Opel Kadett: very few parts were interchangable].
60% of it’s design was taken from the G6, so while not the sort of badge engineering of the GM minivan variety, it shares little with the Opel other than the way it looks. And the new Malibu is further based on the Aura, IIRC.
GM loses $10,000 on every Solstice/Sky sold.
But you are correct about the failed Opels : Catera, L Series, Pontiac LeMans, Opel by Isuzu , Opel by Buick, Saab….
The biggest US Opel bomb of them all is the Astra.
Saturn probably won’t even sell 12,000 of them this year.
This makes me very nervous about Ford’s upcoming European-sourced cars coming to the US in 2010.
I wonder if the German engineers at Opel have gotten over the shame of the ION. It is not entirely their car, but they played a role in its
development. The whole global Delta program has been a big flop.
Unlike the Saturn L1, the Aura has not broken the 90,000 annual sales mark. The Aura is currently GM’s slowest selling mid-sized passeger sedan. I think Saturn’s is going to sell about 65,000 this year.
Not good…….
There haven’t been any US “world class” cars since before WW2. If there had been, exports would have flourished abroad. Hasn’t happened, because American cars work in the US and Canada and pretty much nowhere else. Too big, in the past too flashy, and irrelevant to countries importing oil.
Meanwhile on this bailout horesemanure going on, this is what Canada’s top pundit and investment manager thinks, from the Globe and Mail a few days ago.
Read and heed:
“Regardless of which government pocket the auto bailout eventually comes from, it will be just the latest in a series of missteps we have witnessed since the credit crisis began 16 months ago and which soon enveloped the world.
That, as it happens, was one of the subjects of a wide-ranging conversation I had the other day with investing legend Stephen Jarislowsky, who has experienced just about every market condition imaginable in his storied career.
“I’m of the opinion that whether you bail them out or not, the U.S. is going to buy the same amount of automobiles,” said the 83-year-old founder of Montreal-based Jarislowsky Fraser, which manages around $40-billion. “And you cannot compete in the long run with a plant that pays, say, $75 an hour in the north with one in Mississippi which pays $47 and doesn’t have these enormous liabilities for pensions and these enormous debts.”
A far better solution would be letting the troubled makers restructure under bankruptcy protection, where they could shed uncompetitive labour contracts and redesign outmoded distribution systems.
But surely that would be disastrous for equity holders, who would likely end up with nothing? “The shareholder loses $5. He has already lost $55.”
Okay, so a bailout counts as a goof. What else makes his all-star gaffe list?
Well, the first might be putting former bosses of Goldman Sachs such as Mr. Paulson in charge of the U.S. Treasury. “I have never ever trusted anybody who works for one of these big underwriting houses,” Mr. Jarislowsky said.
“They allowed certain [financial] companies to go bankrupt, which was unnecessary. On the first day, they should have guaranteed all the deposits so there would be no runs on the banks. That would have prevented a lot of the chaos. Then they played little games” with other banks.
Then there is the aggressive rate cutting by central banks, which Mr. Jarislowsky regards as not only useless in the current environment but downright harmful, especially to pensioners.
“I don’t see the point of going to lower interest rates, because that isn’t going to help anything,” he said. “Governments have lowered them to a level which I think is stupid. When people are scared of going bankrupt and want to get rid of debts, they’re not going to borrow, not even at zero per cent.”
Mr. Jarislowsky is firmly in the camp that sees deflation as the biggest threat imaginable right now. Which is why he advocates public stimulus spending on a scale so vast that it will reignite inflation. “I think it is going to be a very lengthy recession. And we don’t know yet whether the government is going to do the right things or the wrong things.”
But he is not without optimism – about highly rated corporate bonds, good-value stocks (consumer staples, debt-free oils with no exposure to costly oil sands projects) and the lessons that will be learned by the young.
“I would think that when the young people of today come out of this, they’re going to be better citizens.” Poorer, maybe. But definitely wiser.”
Bush and Paulson are without merit themselves, IMO.