This Jackson Citizen Patriot editorial sums up Detroit’s pro-bailout stance perfectly.
A bailout-weary public has every right to be skeptical of General Motors and Chrysler. The price tag to keep these pillars of American automaking alive soon will reach $39 billion. That comes to $127 for every U.S. citizen.
The expensive reality is that the federal government will—and should—lend more money to these companies while demanding progress on the road to profitability.
The alternative—the loss of hundreds of thousands of U.S. jobs—is too much to fathom today.
GM and Chrysler are asking to borrow $21.6 billion on top of $17.4 billion they received in December. Think of it as Bailout 2.0. As the public’s patience wears thin, it also might be the last time they could get taxpayer help.
Critics can slam GM, Chrysler and Ford (which has not asked for federal help) for years of bad decisions, but they ultimately are victims of the economy’s rare condition.
Chrysler’s CEO predicts that sales of new vehicles in the U.S. will fall to a 40-year low of 10.1 million this year. The still-tight credit market means these companies are not going to get bank loans to cover their losses.
If even one domestic automaker folds, there would be a domino effect that would gut the economy. One company’s shutdown could start a cascade of misery that would claim parts suppliers, dealerships and even all of the Detroit Three. One alternative, bankruptcy, still could have the same effect.
A local economy that leans heavily on manufacturing (and has 11 percent unemployment) can hardly afford that. Neither can the national economy, which now has 5 million people unable to find work.
None of this means the federal government should give GM or Chrysler a blank check. These companies have to become profitable. That is why the two already had to hammer out fresh concessions from the United Auto Workers. That is why GM is spinning off or closing Saab, Saturn and Hummer. That is why both automakers are planning to shed more jobs.
The presidential task force that is reviewing these loan requests met for the first time Friday. It has a duty to make sure the automakers’ plans are sound, that GM and Chrysler indeed can make money again in the next year or two. Where possible, the task force also should push them to retain jobs on American soil.
In different times, these loans would be excessive. When private companies do not succeed, they fail. That is a cornerstone of the free market.
Still, these are not typical times. Right or wrong, the federal government is making a much more expensive commitment to propping up the economy in hopes of avoiding the next Great Depression. The auto companies are not asking for a handout but for loans that would be repaid.
Unfortunately, despite huge infusions of cash, the financial system in this country is still paralyzed, unable or unwilling to lend money. That is why more federal loans are needed for GM and Chrysler. Federal help should spare the economy from suffering a job loss that, today, is too much to absorb.
Ford declined the bailout but they insisted they wanted GM and Chrysler to be bailed out.
WHY?
In a “Free Market” you’d expect one competitor to try and OFF their competition right?
Its because if GM or Chrysler went bankrupt and couldn’t supply parts… FORD would get hurt when they tried to buy parts too – either by massive price increases, or by the bankruptcy of the parts suppliers.
Funny thing… I recently (last week) had an OEM bumper replaced on my Chrysler 300 and it took twice as long as usual. The auto body guy basically claimed ALL HIS GM CARS were having the same problem.
These Conservatives and Republicans simply need to be ignored.
Obama was VOTED IT TO DO THIS AND I EXPECT HIM TO GET IT DONE… PERIOD. Obama has a MANDATE from the majority who voted him in TO GET IT DONE.
McCain/ Palin probably woulda been forced to do the same thing – regardless their philosophy.
And yes, the loss (sudden shock) of millions of jobs would be disastrous.
The auto industry and the connected suppliers are a huge part of America’s payroll and taxable income.
and where would these people go?
INTO FORECLOURE?
INTO UNEMPLOYMENT?
Onto the WELFARE ROLLS.
I don’t care what anyone says. YES its bad we have to do it – but it must be done.
People like Ron Paul and Peter schiff and all those who speak out against the bailout (even if the theory of delayed pain is true) need to understand that America simply cannot let these institutions go under because they are so intertwined with the country and the world economy that letting one go under would be madness.
And what I do notice is that most of the people speaking out against, ALREADY HAVE THEIR MONEY.
I understsand its dangerous to inflate a currency/debase it, but the option is LETTING AMERICA TURN INTO DETROIT or FLINT MICHIGAN.
Obama said he was going to change and bring accountability and transparency to government.
He has delivered a pork laden bailout plan, a bunch of Clinton era re-treads, and has a tax cheat heading the treasury. Strong first month.
Now he wants to give more money to GM and the UAW for running their business into the ground.
These companies made there “Bed” they should now lie in it and not expect others(Taxpayers) to bail them out, but it all comes down to unemployed Men and Women, other Countries make Vehicles too, are they having the same problem?
Jeez, time for a bit of a repost:
Yes, let’s keep the union protected jobs and state franchise law protected dealers. Lay off the engineers and designers.
Sure, we could do something else, but it would be risky. The British have done this before so they have a safe model for us to follow.
Using Chapter 11 to get rid of the union workers and parasite dealers, while keeping the engineers and designers, would not work.
I know because the managers that would be replaced in Chapter 11s have told me so.
Here, let me fix this quote by Jerry Flint:
“Even with Because of government aid, Detroit will not be anything close to what it once was–not in our lifetime.”
By the way, current US employee counts according to this article:
GM: 91,500
Ford: 75,200 (including Canada and Mexico)
Chrysler: 38,257
I’m pretty sure Chrysler is far from too big to fail. Even counting all the gas station employees, road maintenance/construction workers, PepBoys employees, etc. that will lose their jobs if Chrysler fails.*
*According to automaker and UAW funded unbiased research.
https://www.thetruthaboutcars.com/jerry-flint-amputation-is-not-slimming-down/
And, by the way, shockingly, Jackson is a town in Southeast Michigan.
Also, continued bailouts are not Obama’s mandate. That is why support for continued auto bailouts is way under 50%, while his approval rating is way over 50%.
doch
if only it were really that easy.
the pork added to the bailout are programs the Dems wanted for years but Bush was going to veto.
What kills me is NO ONE LIKE YOU EVER MENTIONS THE 11.8 BILLION DOLLARS GEORGE W. BUSH ORDERED FOR PRESIDENTIAL HELICOPTERS or the $100 BILLION America has signed up for to buy F22’s from LOCKHEED MARTIN.
What about the multi Billion dollar missileshield THAT WON’T WORK?
So, flashpoint, if I am hearing this correctly…
Because George W. Bush wasted money, it’s not only ok that Obama does it by socializing losses (as W did with the first bail out) but it’s what he was voted in for?
To waste money? On companies that are failures, and need to fail, rather than set a precedent (like, say, Fannie Mae and Freddie Mac kind of precedents) that it’s ok to run a shitty business because the government will bail you out in the end.
That thinking didn’t help us avoid this present recession, and it won’t help anytime in the future.
Flashpoint, do you really think leaning on the caps button makes the slightest bit of difference to anyone?
It makes me realize how weak your arguments are.
All your online shouting will not make a dead industry profitable, nor make your politically charged viewpoint more economically rational.
Seriously, wasting money with pork laden spending is acceptable, because they weren’t allowed to do it before? You think a previous administration wasted money, so this one should blow a trillion just to even the score?
The price tag to keep these pillars of American automaking alive soon will reach $39 billion. That comes to $127 for every U.S. citizen.
Personally, I’d rather keep my $127. That $39B figure will reach at least $100B and probably a lot more as they aren’t going to be profitable any time soon. At around $150B, it comes out to $500 per citizen. What dollar figure would the Jackson Citizen Patriot deem unacceptable?
Flashpoint: “The 11.8 billion dollars George W. Bush ordered for presidential helicopters.”
I had no idea helicopters are so expensive. But you said “helicopters,” so that’s plural, right? Maybe he wanted an extra helicopter for a spare?
Anyway, this reminds me of a story told about Lyndon Johnson. He was at some air base, and at the end of his visit he turned to return to the presidential helicopter. However, he turned the wrong direction, toward some military choppers. A nervous Lieutenant stammered, “Uh, wait, Mr. President, over there is your helicopter.” Johnson leaned down into the young officer’s face and replied, “Son, they’re all my helicopters.”
I would happily write a $500 check, today, to anybody at all, to prevent this economy from going into free-fall.
I consider Chrysler’s failure to be a potential “tipping point” to utterly destroy consumer confidence for years to come, and GM’s failure would certainly do what Chrysler’s failure wouldn’t.
And Ford isn’t the only automaker at risk from these failures. There are a lot of common-subcontractor parts in US-made Honda, Toyotas, Nissans, BMWs, Hyundais, and Benzos.
Fuck the big three, as long as I can still get mine who cares if millions get fucked right?
This is a pay hell now or pay hell later. We either help float the bazillion old people weighing the big three down now or add them to the already fucked medicare and government “pension protection” plans as well as many more on unemployment and either going to medicaid or just stampeding soup kitchens and/or hospitals.
It’s easy to sit and spout free market platitudes as long as you don’t think their failure will directly affect you.
Scare tactics are always the best way to get Americans to support something. Tell them repeatedly that the world will end if GM goes out of business and they’ll grudgingly accept the bailout bonanza.
The supplier issue is completely bunk. At the most, prices will increase and will be passed on to the consumer. Ford supports the bailout because they may need federal money themselves pretty soon.
I also don’t think that consumers need any more confidence. Consumer confidence is what started this whole mess. For some reason there are a lot of people out there who think that making things the way they used to be, where people can’t pay for the stuff that they buy, is the cure. I think that we need to adapt to reality.
I live in Warren, so I might seem biased. But, I just feel like something should be done. Chrysler might need to be taken out behind the barn and shot. IN today’s economy, there is no reason to have 3 car companies. Despite the fact that friends and family will be hurt.
GM, is different. If they want to have the US government bail them out, well ok. But there would have to be a lot of attachments. For starters, the top…say 100 or so management should be shown the door. With no severence. The board of directors should never be allowed to make any decisions for any business again. All production would be moved to plants in the US. All modern, and flexible. Killing Saturn, Pontiac, Hummer, and Saab are good starts. GM should at least once, build a good small car. Just go buy a Civic. Copy everything you see under the hood. Put it in something attractive.
And warranty everything for 5 years. Bumper to Bumper. Do not dick people around for repairs. Guarantee resale value for 5 years somehow.
Agreed, Demetri. The politicians are not being straight with us.
History tells us over and over again that subsidizing failed industries does not work. We still subsidize corn ethanol and cotton farming even though there is, and never was, any economic reason to do it. The only reason we did it was political. Economically, those subsidies continue to hurt us, and other countries, badly.
There are political arguments to giving the carmakers loans, and this editorial makes them well. But we should resist. There is no economic argument for giving the carmakers these loans. It would take a miracle for them to pay back the huge debt burden they already carry. We cannot afford to waste our money by throwing it down this hole.
Not that we should kill off GM and Chrysler. Help them, certainly. Restructuring will help. First thing to do is get rid of Wagoner and Nardelli and the boards of both companies. Replace them with new faces. File for chapter 11 bankruptcy. See what can be worked out.
If GM or Chrysler cannot survive chapter 11, they cannot survive without it. The idea that a bailout will be cheaper than chapter 11 makes no sense at all.
Having worked in Aerospace and Defense I’m surprised that no seems cognizant that most of these products are Union Made
(Talking to you Flashpoint).
At least when the Gov’t buys a weapons system there at the end of the day there is something tangible.
if that’s actually detroit’s bailout stance, then there aren’t the words for my dismay.
the top-down bailout without a solid plan to trim all the fat and get these companies working again is good money after bad. detroit (and the rest of us) cannot expect to give anybody enough money to get things back to the way the were before the crash because that type of business (be it auto, finance or real estate) was simply unsustainable when most everyone thought the economy was okay and is definitely unsustainable now that most everyone knows the economy is hurtin’.
bailing out anybody cannot mean going back to the way things were – there’s gonna be loss no matter what and until the big boys realize that this economy isn’t going anywhere good.
Scare tactics are always the best way to get Americans to support something.
Coughs…weapons of mass destruction….coughs….suitcase nukes….coughs….Iran with nukes….
McDoughnut :
February 24th, 2009 at 9:32 pm
At least when the Gov’t buys a weapons system there at the end of the day there is something tangible.
GUESS WHAT
A CTS is just as tangible as an F22.
And the government throws away money going to these corporations.
For example, the COMANCHE program that ended in 2004 cost us $7Billion and the termination fees were another $680 Million.
So we spent $7 Billion on a HELICOPTER that was cancelled BEFORE it was produced?
Now we have the F22.
The Pentagon was going to buy over 750 but the number was cut back multiple times – to 350 – and each cutback had Lockheed Martin CHARGE THE GOVERNMENT MORE PER UNIT. So now a single jet is costing $180 Million (projected).
and don’t get me started on the missile shield.
That’s absolute bullshit. It will never work and its nothing more than CORPORATE WELFARE like the F22 is for L.M..
the government needs to SELL. To export to other countries. If we are going to sell green technology. fine. If we are gonna sell cars…fine. But we need to decide soon.
Let them go bankrupt.
When in Europe last week, I saw McDonalds, Starbucks, Holiday Inns, John Deere farm equipment, all computers ran Microsoft Windows or were Apples, and Caterpillar trucks were making noise next to my hotel room. America’s advantage lies with such companies. As a nation we may farm out the production of our cars elsewhere, just like we farmed out the production of cheap plastic toys. It’s not the end of the world at all – simply a matter of economic efficiency.
Robbie,
even if every restaurant in the world was a McDonalds, it would not add American jobs. We need to build things here, not just have service industries if we are to have decent jobs.
ruckover,
Isn’t that where the transplants come in? Japan builds cars over here, the US builds Big Macs over there. Sounds like a deal.
ruckover,
America should do what it is best at… America is a country of highly payed Starbucks global strategists, Microsoft programmers and executives, Holiday Inn client satisfaction analysts, and McDonalds food scientists. If we are going to make things here, it will be high-margin Boeings or John Deere equipment. This is a measure of our incredible success as a nation and a testament to our prosperity; not a sign of American failure.
Who really wants to be an auto line worker? It looks really boring and monotonous. People are going nuts talking about saving these jobs but I feel bad for those people. Too bad they were not able to get an education and do something enjoyable. Better to outsource the toil to foreigners with none of the opportunites that living in the US offers.
Re Flashpoint:
“A CTS is just as tangible as an F22”
But I don’t own a CTS. Nor would I want to; and truth be told, most people don’t want one either – and that’s why GM is going broke – and that’s kind of the purpose of this discussion forum.
Unlike the CTS with its French manufactured engine and German transmission I want to own a good American car. That’s why I have an Acura TL.
You seem to be cool with “Green” technologies. What if I told you that the material used in the pilots seat cushions were made from organic, free range silk and the leading edges of the wings are made of recycled beer cans – would that make you feel better about the plane?
BTW – Revenue from foreign sales of the F22 far exceed about 10 years worth of Big 3 exports. That’s a lot of jobs – Union jobs no less.
Unless, and until, someone addresses the structural problem that is GM/Chrysler.
It seems management can’t do it.
It seems Government might just prolong a futile management designed “restructure”.
It seems jobs are being lost anyway.
It seems a viable alternative future for what are likely to be ex-auto related workers is not being addressed.
It seems Ford’s chances of succeeding in their restructure are being damaged.
It seems everyone has lost sight of the fact that car sales are near-terminal, plus the market is choosing to buy fewer and fewer GM/Chrysler cars.
Maybe the costs of GM/Chrysler failing are high in the very short term, but the current approach will not deliver necessary structural change….. and the money will be gone.
GM should not sell hummer to a foreign buyer.
By revamping the Hummer product line – offering only fuel efficient clean-diesels such as Bluetech in all Hummer models and focusing on the release of the H4 model based on the HX concept vehicle, Hummer can again become profitable.
The goal for the H4 would be to reach 30 mpg highway.
By focusing on small diesel technology, something Europe does well but has been neglected in the United States, Hummer can become the leader in small diesel technology domestically. Thus, biodiesel could become the environmental solution for hummers.
The H2 could be phased out or re-imagined as an on-highway towing vehicle, like a small semi-tractor. In addition, I can see an H5, a sporty Hummer Rally Car that could target the Mitsubishi EVO and Subaru WRX STI Rally Cars. but feature an advanced all wheel drive system and dual clutch transmission.
All Hummer vehicles would use clean diesels of various sizes. The technology exists to make smaller hummers that are still exceptional off road vehicles and thus will only strengthen the brand. In addition, by using aftermarket parts in upgraded top of the line models and using technology from its racing team, Hummer could do what subaru did in creating its own niche-following backed by the sport of baja racing. it would not be that hard to market to those who dislike the “crossover”.
By offering real off-road ability AND good fuel economy, hummer could once again profit from its in-your-face image. Thus hummer could use its over the top reputation as a pillar of credibility while making smaller and lighter models. The niche market would be those who prefer a street legal dune buggy with good looks, good fuel economy, some creature comforts and a warranty.
This is why land rover and subaru have great reputations: THEY WIN OFF ROAD RACES. My father worked for GM his whole life. I am 30 years old, work out at the gym every day, and I have a bachelors degree in business and psychology. I have traveled all over the world and I know this subject. Mahindra or Tata would rake HUMMER over the coals.
Jack Baruth :
I consider Chrysler’s failure to be a potential “tipping point” to utterly destroy consumer confidence for years to come…
News flash: Chrysler is already dead as an independent company manufacturing cars and trucks and consumers can already smell it. The car market shrank and last place models built on the Chrysler GS platform don’t make the cut. No reason to build more Sebrings, Avengers, Calibers, etc. The goal should be to find buyers for the relatively good parts of Chrysler.
McDoughnut :
February 25th, 2009 at 12:24 am
Re Flashpoint:
“A CTS is just as tangible as an F22″
But I don’t own a CTS. Nor would I want to; and truth be told, most people don’t want one either – and that’s why GM is going broke – and that’s kind of the purpose of this discussion forum.
============That’s not true. The problem is, there is lots of competition made cheaper by unfair trade practices and the credit crunch has broken GMAC’s back.
Unlike the CTS with its French manufactured engine and German transmission I want to own a good American car. That’s why I have an Acura TL.
=========Acura’s are the ugliest pieces of crap I’ve seen. If I bought Japanese, I’d buy a Lexus.
You seem to be cool with “Green” technologies. What if I told you that the material used in the pilots seat cushions were made from organic, free range silk and the leading edges of the wings are made of recycled beer cans – would that make you feel better about the plane?
========= I’d feel better about the bombs turning human flesh into organic fertilizer
BTW – Revenue from foreign sales of the F22 far exceed about 10 years worth of Big 3 exports. That’s a lot of jobs – Union jobs no less.
=========SHOWS WHAT YOU KNOW !!!
The F22 WILL NEVER BE EXPORTED. THERE IS A BAN (in LAW) on EXPORTING IT.
We export F16’s and F22’s and will export the F-35 but the F22 is OURS alone/
Boy Flashpoint – you’re really all over the place on this one. Anyway…..
I’m glad to hear that you’re considering a Lexus – they’re fine cars. If I had an extra $10K I would have bought one too.
While you’re picking out paint colors you can take bets on which country will be getting their export model F22 first. Australia has already been pitched, but Japan looks interested too.
http://www.fas.org/sgp/crs/weapons/RS22684.pdf
It will be a few years, but they’ll get a couple.
Perhaps if more UAW members considered joining the IAW they could help make all those fine F16, F/A 18, F35’s that the US is exporting.
See, the US does make world class products – just not in Detroit anymore.
Easy Now on the F22 Comments
Wife spousal unit makes six figures a year on that program. You muddle it up and that red 2009 Infiniti G37 coupe I have my eye on stays right where it’s at—on the dealer’s lot.
A lot of people’s rice bowl depends on me sitting down at Tacoma Infiniti at Fife and busting open the checkbook. The F22 is the enabler.
Trickle down disaster???
I think there are options. I understand the financial implications on Ford if GM/Chrysler would go out of business, but why couldn’t they lock up contracts from part suppliers for X amount of years to ensure a fixed price while the market stabilizes?
I would think this would create an influx of cheap labor as well as a much higher demand for a Ford product (supply lines can handle the increase).
What about a sole American car company? I haven’t heard that idea thrown around. Take the best of the best from all 3 and cut the fat.
We should pay for the casket, not the life support. The casket is much cheaper.
I’m tired of the ‘these aren’t typical times’ argument, which is used to justify all sorts of desperate behavior under the guise of ‘crisis’.
America is being held hostage by these corporations. You think losing all those jobs is a fate too worse to imagine? How about losing all those jobs in 5 years AND having no social programs to help the unemployed because you gave all the god damn tax payer money to the failed corporations!?
Tax payers money should not go to engineers at Opel, Holden, Daewoo, Mazda, and Fiat. If you can’t develop a car in America then simply go out of business.
The F22 situation is relevant to this post.
Why the hell would we spend $99 BILLION DOLLARS on a fighter jet that is designed to fight a war that will never happen – and #2 Why do the republicans INSIST on funding right-wing military contractors COPORATE WELFARE – but refuse to spend less than $50 Billion on a Bridge Loan to the Auto manufacturers
The simple fact is that Sam Nunn and Newt Gingrich aren’t in power anymore and the F22 SHOULD BE CANCELLED.
As much as I love the plane it doesn’t help us at all.
Using an F22 in a ground attack role is like using a Lamborghini as a Pickup Truck.
Meanwhile, Europe takes old fighters and upgrades them with advanced avionics saving vast amounts of money until they can produce a new fighter that doesn’t break their banks ex. Grippen, Typhoon and Flanker.
America isn’t going to be using F22’s to fight China or Russia – and those are the only two countries we’d need it against – because if we got to that point, it would be a ballistic missile contest.
F22’s don’t carry Ballistic Missiles.
So the TRUTH of the matter is that the F22 and numerous other programs are CORPORATE WELFARE.
MEanwhile, Slumdog Millionaire/Idiot/ I wanna castrate criminals – Bobby Jindal – wants to cut $150 Million from the United States Geological Survey WHICH MONITORS ACTIVE VOLCANOS because he thinks its wasteful spending.
SOMEONE TELL SLUMDOG MILLIONAIRE that in the 80’s when Mount St. Helen erupted it killed 60 people and caused $2.3 Billion dollars of damage.
Goddamn Republicans make my balls itch.
McDoughnut
You don’t get it.
THE F22 WILL NEVER BE EXPORTED – TO ANY COUNTRY.
PERIOD.
The F-35 is the export model Lockheed is building.
I support the F35 program for the A model and the C-model (navalized) but the B-model is a waste of money. Vertical Takeoff and Landing for a plane designed to carry so few munitions is a waste of money. We’d be better off, upgrading Harrier II.
Flashpoint said:
And yes, the loss (sudden shock) of millions of jobs would be disastrous.
The auto industry and the connected suppliers are a huge part of America’s payroll and taxable income.
That’s very laughable. Sure I want to preserve jobs, too. But why preserve GM jobs?
I live in Canada. GM has asked the Canadian government for 7 billion to keep 7000 jobs. That’s 1 million per job.
Even if it’s the right thing to save jobs, don’t you think it’s not worth it to save these GM jobs? Why not save some other jobs, such as Walmart cashier jobs, at $50k each? That way we can save 140,000 jobs, instead of 7,000 jobs.