“Some help” equals $22 billion of additional federal “loans” for Chrysler and GM. The Detroit News reports that President Obama has joined his Presidential Task Force on Autos (PTFOA) in signaling that his administration ain’t gonna enforce the “get your NSFW together by March 31” conditions for Motown’s second seating at the federal bailout buffet. Apparently, those conditions are so last year. The Chief Executive and his minions are more concerned (i.e., only concerned) with the NEW conditions. “If they’re not willing to make the changes and the restructurings that are necessary, then I’m not willing to have taxpayer money chase after bad money. And so a lot of it’s going to depend on their willingness to make some pretty drastic changes.” That’s because “there’s been a lot of mismanagement of the auto industry over the last several years. But they’ve all been replaced now.” Just kidding. About the replacement bit. “Everybody is going to have to recognize that the current model, economic model of the U.S. auto industry is unsustainable.” How about we start with somebody and work our way forward from there?
No surprise there.
The taxpayers will spare no expense to save those jobs. We’d have been better off to just give those workers the cash as severence pay and then close the plants.
He has to placate to his constituency.
I hope he scolds GM for thinking about moving their tool and die manufacturing abroad.
I’m starting to think that giving them a blank check would be the best solution. At least they won’t have to go through the charade of showing they’re somehow viable.
gslippy: “We’d have been better off to just give those workers the cash as severence pay and then close the plants.”
True. My worry is that they’d then leave Michigan and infect other states with UAW intransigence.
This is going too far… even his constituency here is getting tired of it.
Hello American Leyland!!!!
This make me sick… on the personal front, I owe almost $1000 in taxes on my return… I got a pay raise last year. That’s the only thing I can attribute it to, I’ve NEVER had to pay in; only got a small refund. So I’m, what, getting punished for doing well, working my ass off and getting a large merit raise for taking on more responsibility? I know there’s more to it, tax brackets, codes, etc, but when you’re trying to scrape together the money to pay more taxes in when you already have been and do pay taxes on everything else, it’s sickening to watch money being thrown away like this. And this is coming from someone who owns 2 GM vehicles and would like to have the ability to buy another in the future.
So – Toyota, Honda and even Ford now have to compete against the govt subsidised Chrysler & GM … I guess they’ll be asking next, after all, they employ Americans too.
I feel bad for Ford, they’re making an honest go of it on a low tank of gas, but their American competitors have solved their same issue of having a hole in their tank – just pour in gas at a faster rate than it’s leaking out.
People should boycott GM and ChryCo and ask the Feds to cut them off the proverbial teat.
I guess the perception is that repeating “will not let good money chase bad” somehow makes the reality more palatable. Uh, it’s not working. This is the exact same rhetoric we heard the first time around. “Meet the conditions you naughty boys, or no money.” Newsflash: you set the conditions and you set the timeline, and Detroit failed to meet them. Period. Full stop.
Giving more money while repeating the same faux-reluctance we heard a few months ago is not just bad policy and politics. It insults the intelligence, no, worse, the memory of the American people.
$22b, huh? Not bad, considering Obama could have just called those earlier “loans” instead.
Hello American Leyland!!!!
Sadly, no.
If this were American Leyland (or American Renault) the government would have simply bought out Chrysler and GM for much less money, and exercise actual control over them.
This is just corporate welfare.
Worse is that the President actually acknowledges that this is not only highly unpopular but not a long term solution. A public official acting in the interest of a small minority, whiskey tango foxtrot!?!
BDB
Yea, this is completely pathetic.
The goals isn’t to fix GM. The new owners (Pelosi, Reid, Obama) do not care about profits. The key is to keep the welfare flowing.
The American people will end this once they are stop buying GM cars. Unfortunately that is where it ends…
“Red Ink Rick announced June sales today of 56. This wasn’t our best month, but certainly better than 51 vehicles we sold in May.”
In other news, Obama announces loans totaling $20B to keep GM operating thru the month of August. When asked about the loans to a company with no sales, press secretary Gibbs stated “I know GM is a winner.. I can feel it… come on baby, one more roll!”
In other news Timmy Geithner has been admitted to gamblers anonymous.
People are boycotting Gm & Chrysler. By letting their condition get so terminal, buyers don’t want either an orphan or a soft resale piece down the road. Read Honda and Toyotas ads lately; they don’t say their the cheapest, they are rather the best investment a buyer can make. Let’s just see: You get a universally aclaimed car for it’s initial quality and warranty claims down the road. you get a “cooler” car that more “in” people are seen with, performance is generally better with Japanese fours and sixes. They mostly get better fuel mpg, and seem to run stronger and quieter. The coup-de-gras, when you want to sell it or trade it, it’s worth a lot more than Detroit iron. This final point is probably where the Detroit and Japanese cars diverge the greatest. This was true for the last several years, you now add on you are buying from a domestic company that may close or at least close your division after you buy the car. This is how people are doing the math not “you pay what we pay”. Who cares?
The goals isn’t to fix GM. The new owners (Pelosi, Reid, Obama) do not care about profits. The key is to keep the welfare flowing.
Oh, hell no. You’re assuming these people are rational.
They’re not. They’re politicians. The goal is to offend as few people as possible.
See, actual nationalization would piss off WAY too many people. I can already hear the screams of “TEH COMMUNISM!”
Chapter 11 would also piss off way too many people. “TEH WORKERS!”
Thus, we get the worst of both worlds. About three or four times the cost of nationalization combined with the utter fail of bankruptcy.
Here is my total hypothetical semi-insane plan for GM and Chrysler, were I President tomorrow:
1) The United Autoworkers is given as much money by the government as is required to buyout General Motors. GM is run from then on as a kind of “workers collective” experiment. The New United Autoworkers Motors then lives or dies by the market. If the UAW doesn’t like it, the feds throw GM’s ass into chapter 11 and/or 7, and the UAW is screwed anyway.
2) Chrysler is nationalized wholesale and dedicated totally to producing cutting edge hybrid/electric vehicles. There would be upfront costs for this, sure, but we might get some useful technology out of it. Think of it as a space program for our highways.
3) Ford would continue under a traditional business model, doing what they are doing now. Offering good cars at an honest price without government assistance. I doubt either the new UAWM or Green Chrysler would compete with them directly.
Criticism of my “plan” is welcome since this isn’t ever going to happen in the real world. But I still think it a hell of a lot better than what the feds are doing right now.
We’re blaming the people trying to fix the problem? How does this make sense?
It’s obvious to me that many of the commenters on this site are generally comfortable financially and not subject to much of the commotion in the world economy, yet.
Still, I can’t buy into Mr. Farago’s idea that capitalism can run without interference if we, as a nation, hold certain aspects in high priority—jobs, health care, home ownership, retirement, etc. Nor do I believe that Mr. Farago would actually allow hundreds-of-thousands of people to go without work while the market “corrects” and the remainder of us subsidize their existence.
The point is not to forget the crop of government and industry leaders that put us into this mess through their high degree of incompetence, greed and laissez-faire approach to economy. Put blame where it goes but don’t shoot the messenger.
Of course, they are going to believe that the next deadline is the REAL deadline, and shape up immediately! Not.
They now know they can eat at the trough indefinitely because they have now learned there are no consequences for failing to meet deadlines. They now know they are too big to fail. They now know they call the shots.
I’m confused. If investment money won’t touch these companies, and customers won’t buy enough of their product at a price they can profit from, why in the hell are we throwing my money at them?
I think Obama’s pretty smart. He’s willing to look like a bumbling professorial, have things fail and then really implement something, before the hopium wears off.
you know, I’ve been a big supporter of the auto industry and their need for help. But this is getting to be ridiculous. If there’s more of the 16% like me…
Cardeveloper:
This is how it ends. Eventually even the most ardent supporter of GM/Chrysler will see how ridiculous this is…
I just hope it doesn’t turn into another AIG debacle. Very sad that those families are living in fear every night.
We could easily see GM and Chryco dealerships being trashed as the pitchfork and torch crowd ramps up.
Why get mad at something you cannot do anything about. Our money is going to bailout the big 2.8, and that is all there is to it.
In a few months we’ll see if president Obama stands by his stern warning today or gives a bs reason why more should be given for the 3rd time.
there’s a lot of animosity over AIG, and the auto companies will be the recipient of the anger. I still believe we need a strong complete manufacturing base. The southern auto industry mostly only provides general labor jobs. The other fear is, as we drive down the D3 wages, it will drive down wages across most of the country. Literally we are entering a period of deflation and simultaneous inflation. Can’t cut down the number of trees and cotton at the rate we’re printing money and force wages down without some negative economic impact. Having said that, the more I see, the more it’s time to cut the losses on GM, Chry, AIG, Citi, etc, etc, etc.
On a side note, I listened to Rush a couple of days ago (used to be a big time listener, but lost interest years ago). Woman calls up complaining about how her way over paid husband is getting screwed, and Rush starts blaming the democrats for stirring sentiment against people making large sums of money… even if they drive their companies into the ground, justifying their huge salaries. I just don’t get it, are things that effed up?
I chatted with an executive at a stock trading company. He was justifying his HUGE salary and bonuses because of all the wealth he created for his clients. What he just didn’t understand, was that wealth was only vapor money and at some point would disappear… maybe at the profit of some other schmuck, but still vapor money. If you don’t create something, physically create something, it’s all vapor money. We are seeing the results in the economy today.
Enough whining for today, carry on :)
The money you invest doesn`t matter, if it is not invested wisely. Will Gm become more competetive after the huge loans they receive? How do they plan to improve reliability, fit and finish, model diversity? How much of the loan will go into actual R&D? Will Gm reduce model overhaul cycles? these are the questions you should ask. Where will you get enough qualified workers that will do a meticulous job at assembly line? Does Gm still have at least one American engineer who would be able to design a floorpan with an independent suspension all around? I mean not sending a check to Australia, or Germany or Korea, but here, at home, where the actual bailout happens. Gm is advertizing the Volt as if the competition was dead already. As if Toyota is going to sleep on laurels for the next decade.It even doesn`t matter if Gm products will be good enough, what matters is, as always, is, will japanese products be better than Gm offerings?And I bet, they will.So unless you deal with the cancer of engineering mediocrity, why not euthenize the patient before it wastes all the blood reserves of the country?
Cardeveloper –chatted with an executive at a stock trading company. He was justifying his HUGE salary and bonuses because of all the wealth he created for his clients. What he just didn’t understand, was that wealth was only vapor money and at some point would disappear… maybe at the profit of some other schmuck, but still vapor money. If you don’t create something, physically create something, it’s all vapor money. We are seeing the results in the economy today.
You are soooooooooooo right! bulls eye!
What if they do succeed? What if they do repay the loans?
Now reply indignatly.
I think the first sign that GM takes it’s responsibility seriously would be to see the board of directors roll Rick Wagoner to the trash heap of history.
@dpeppers
The numbers just don’t add up by themselves. You can not be that far in debt and “work” yourself out of it in a great economy. Unfortunately, we are in a horrible economy. D3 were spending money like drunken sailors, first their own money, and then their shipmates. Now they are spending their host countries money.
We, even as a country, have gotten so far over leveraged, I’m not sure the entire economy can dig out of this hole.
They now know they can eat at the trough indefinitely because they have now learned there are no consequences for failing to meet deadlines.
It’s amazing that the same philosophies used for parenting young children (consistency, logical consequences) are useful for, and aren’t being used to, shepherding large companies.
“I guess the perception is that repeating “will not let good money chase bad” somehow makes the reality more palatable. Uh, it’s not working. This is the exact same rhetoric we heard the first time around. “Meet the conditions you naughty boys, or no money.” Newsflash: you set the conditions and you set the timeline, and Detroit failed to meet them. Period. Full stop.
Giving more money while repeating the same faux-reluctance we heard a few months ago is not just bad policy and politics. It insults the intelligence, no, worse, the memory of the American people.
$22b, huh? Not bad, considering Obama could have just called those earlier “loans” instead”.
Reading my mind Ed.
Owned GM my entire short life 5 vehicles, and I am done. I have many vehicles to purchase in the future but cannot continue to support complacency.
REVOLUTION for me please. I can endure the depression, I am resourceful, can self sustain and am street wise, fnck GM and their inability to meet goals and the government allowing this to continue.
As a supplier we would have been kicked to the curb by now missing key milestones. GM in itself is a mini government.
Why get mad at something you cannot do anything about. Our money is going to bailout the big 2.8, and that is all there is to it.
Not being a citizen, I didn’t have to take civics class so I only vaguely remember something significant about 1776. Maybe something to do with high flown concepts. Probably not important.
“Everybody is going to have to recognize that the current model, economic model of the U.S. auto industry is unsustainable.”
Thank God, Obama’s seen the light and he’s going to bust the unions!
Kevin,
Obama will never, I repeat, never, do anything harmful to the unions.
Ever.
The money you invest doesn`t matter, if it is not invested wisely. Will Gm become more competetive after the huge loans they receive? How do they plan to improve reliability, fit and finish, model diversity? How much of the loan will go into actual R&D? Will Gm reduce model overhaul cycles? these are the questions you should ask.
The current money spent is not about “investment”, it’s economic welfare to prevent a deflationary spiral due in part to unemployment. It’s a short term bandaid to prevent the collapse of capitalism as we know it in this country.
This is a dichotomy that must be understood before even discussing the issue or it’s pointless misinformed bitching.
Of course to that effect, a temporary nationalization would be much more efficient, just like for the banking system, but the country (ref: this thread) is not ready for the N word.