Detroit’s hometown newspapers are reacting positively to the most recent requests for another round of automaker bailouts. Shocking, I know. After all, Detroit’s media is fast becoming the most notorious bailout boosters on the block. But titling an editorial “U.S. auto producers make a solid case for federal aid” is really stretching things, even by Detroit News standards. And as conditions worsen, the rose-colored-glasses act is really wearing thin. To paraphrase an old Soviet joke, there are two ways Detroit can be turned around: the natural and the miraculous. The natural way is that the Archangel Michael and his bands of angels descend to earth and work 24 hours a day to save the city’s economy. The miraculous way is that the automakers do it themselves. Detroit’s local media clearly believes in miracles.
“There are still some hangups,” admits the DetN editorial board. “Final deals with bondholders and the United Auto Workers are incomplete. They are working diligently to come to agreement. When the process is completed, they will be different companies, and Michigan will be a different state.” Of course embedded in this bit of Pollyanaism is an admission that the automakers have failed to coax the necessary concessions to have an actual viability plan. Of course as viability aspirations, the current GM and Chrysler plans are magnificent.
And despite urging the feds to keep the automakers clasped to the tax-money bosom, the DetN editorial can’t help but point out that bailout checks won’t prevent the consequences they were meant to head off. “Congress and the administration should see in these reports a good faith effort by companies struggling to survive,” deadpans the editorial. “They’ve already made huge sacrifices and they’re willing to make more. They are demanding wrenching, painful changes of their investors and their employees. And ultimately, the pain of these changes will be felt by Detroit, Michigan and large swaths of the industrial heart of the nation.” Though the DetN takes up the alarmist call, arguing that “if the government fails to provide the necessary aid, the consequences, not just for this state, but for the nation, may be too difficult to imagine,” the real message for lawmakers is lurking below the surface. Bailout money hasn’t elicited the necessary union or bondholder concessions or prevented job loss, but more would be great.
Over at the Freep, Mark Phelan makes the extraordinary case that the “latest plans embrace reality.” Ya think? Rick Wagoner’s admission that 2009 US sales wouldn’t reach the 10.5M “downside” scenario from GM’s December 2 plan tells Phelan that GM is embracing said reality. Funny, because my impression was that it simply proved that GM constantly trots out the most optimistic numbers they can get away with. In fact, in order to hit the current 9.5M unit “downside” scenario, economic conditions can’t get any worse. If you think that assumption “embraces reality,” you might as well start buying GM stock now. Tellingly, Phelan doesn’t even try to explain how Chrysler’s plan reflects a stronger grasp on reality. And yet the title still uses the plural for “plans.” Credibilitygasmic!
Reminds me of Pravda trumpeting the old Soviet Union’s triumphs. Exactly the same tone.
No matter. The US taxpayer is now the proud owner of GM, Chrysler and the UAW.
Nothing that gobs of money won’t fix, temporarily. I wonder if the union will actually be running things and giving the orders?
“They are demanding wrenching, painful changes of their investors and their employees.”
“Oh my god, the people that invested in a bankrupt company, and the employees that helped to bankrupt the company might have to make concessions. What kind of world is this where investors can be allowed to lose money?”
Jeez, these people used to think that they were capitalists and rugged individualists. Ha!
The inevitable failure of the Detroit automakers is exposing the bailout supporters, the management, the employees and the dealers of the Detroit automakers as the whiny communists (far left of socialists) that they are.
The major Detroit newspapers are now to the left of Sweden:
As commentator ex-gm pointed out:
“Sweden slams GM for plans to drop Saab”
http://www.businessweek.com/ap/financialnews/D96E122G0.htm
Some quotes by Enterprise and Energy Minister Maud Olofsson:. . .
“voters picked me because they wanted nursery schools, police and nurses, and not to buy loss-making car factories”. . .
When Communism is perfected (circa end of 2009 according to GM’s glorious 5-year plan) there will be 12 retired/benefit-taking UAW to every one benefit-generating UAW employee at GM…How glorious is that?…And the UAW then bitches about $15 per hour salaries.
I see nobody owned up to writing that DetN editorial.
I know I wouldn’t.
@bluecon: Correct me if I’m wrong but the American taxpayer doesn’t own *any* of either of these businesses. We have given them loans they can’t repay, subordinate to the bond holders’ loans which they also cannot repay, in exchange for nothing.
The Swedish prime minister very to the point: GM is setting a trap for us. They have to pay over one billion dollars to their contractors if they just walk away from Saab, which is why they are trying to get us to take over. GM management is playing hardball, looking for money everywhere, expecting tax payers to foot the bill for their mistakes.
The Swedish government has said that they will not support Saab as it is currently set up, but that it will explore what other manufacturing the talent at Trollhättan can be used for. Green tech and alternative drive-trains being among the areas mentioned.
Saab’s board tonight decided it will file for controlled reconstruction, a form of bankruptcy protection, tomorrow.
The Swedish opposition (socialist) is critical and feels that the gov’t should have taken over Saab. Apparently, GM has been making a tour of Europe, hat gun in hand, asking for protection money from various governments.
I was wondering what had happened to Baghdad Bob after the Gulf War……….evidently he’s now writing Op Ed pieces for the DetN.
Stein X Leikanger – interesting scoop in your message above:
“Saab’s board tonight decided it will file for controlled reconstruction, a form of bankruptcy protection, tomorrow.”
Is this a fact? If so, then they moved quicker than I expected.
Oh no, Sweden more Conservative than the USA?
Who woulda thunk.
@KeithF–Well technically the US taxpayer doesn’t own GM and Chrysler but in reality, yes they do.
GM’s market capitalization is at $1.25 billion today. Chrysler’s owners have walked away from Chrysler. I would say no one really owns either company. Both have negative value — they are worse than worthless.
I laughed at the first paragraph explanation of natural vs. miraculous.
Just checked the latest on the Saab reconstruction (bankruptcy protection) as per Stein X Leikanger above.
Swedish TV reports that a board meeting tomorrow 11am Swedish time will take the decision to file for reconstruction. The filing will then be formally submitted to a local court on Friday.
A Swedish reconstruction is different from a Chapter 11. One major difference is the time scale. The protection offered is usually very short. The maximum duration is supposedly 9 months.
Can a notorious lossmaker like Saab be transformed into a viable company in 9 months, one wonders? Or at least into a something that can be sold? Or given away?
The problem for GM is that simply closing down Saab could be hugely expensive and complicated (lawsuits from dealers, contractual nightmares etc).
“The problem for GM is that simply closing down Saab could be hugely expensive and complicated (lawsuits from dealers, contractual nightmares etc)”
This is the time to do it since it will be the taxpayer paying all this off…That’s what I would do if I was a tax-taking maggot…Get while the getting is good!
@bluecon :
Well technically the US taxpayer doesn’t own GM and Chrysler but in reality, yes they do.
No, the US Govt owns the loan on GM et. al. You pay the govt for services. That money ceased being yours as soon as you gave it to the govt. What they do with it is their perogitive. You, the tax payer will NEVER see any of the interest on that loan IF it were to be paid back. I don’t think anyone here believes that.
Saab stopping payments.
Board convening now – expected to approve a call for a controlled reconstruction, a de facto bankruptcy declaration, but with a 9 month window for reconstruction.
Swedish gov’t not budging, saying that this is all GM’s doing, and GM’s responsibility, and claiming GM is acting in a cowardly manner in just abandoning Saab when GM realized it wouldn’t get taxpayer money from Sweden.
Polls in Sweden show that 87% of those polled are against using gov’t funds to rescue Saab.
Hmmmm……SAAR projected according to Jan. sales 9.2..9.3? No talk of the money flowing to the banks and the insurers. Toyota’s cash burn becoming evident. No Nissan deathwatch. Nope. No bias here.
I saw one financial guy say that GM’s actual worth if you figured everything out was negative 92 billion.
That is what the taxpayer owns. The UAW liability of a million dependants.