Bush to Destroy Big Three?

by: Matt Stoller

Fri Dec 19, 2008 at 08:42


We'll see what happens when he announces a 'plan' at 9am.

President Bush will make an announcement at 9 a.m. Eastern today about an auto bailout, the White House said.

The plan is likely to include taxpayer assistance for GM and Chrysler in return for radical restructuring. And they will have to present a credible plan to become viable firms, according to administration sources.

"It's all about viability," one official said. "We aren't going to throw good money after bad."

Officials said the most likely scenario is a plan that looks like bankruptcy but is not legal bankruptcy -- an orderly restructuring in return for taxpayer assistance, as the administration is putting it.

This could get really ugly.
Matt Stoller :: Bush to Destroy Big Three?

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Bush to Destroy Big Three? | 21 comments
Just two of them. (0.00 / 0)
Ford has the cash to survive until Obama.

GM and Chrysler are in trouble.

It has always been class war.  Just now, some folks are realizing it.  

Loan (0.00 / 0)
What does that mean? (0.00 / 0)
I mean vis a vis Bush destruction?

Looks kinda ... good? Is that possible?

It's the corker plan... (4.00 / 1)
...but via executive order, so the most onerous parts can be undone by Obama... it's actually a pretty good deal on it's face, surprisingly...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
We Just Need To Get Past Bush! (4.00 / 1)
The really horrible part was having everything collapse just at the end of the Bush administration, and not being able to do anything about it, because of the Moron-in-Chief and his band of merry thieves.

All that matters is getting past January 20th without a huge collapse. Then Obama can go back to Congress and get some reform that makes sense without having to placate assholes like Sen. Shelby.

As of January 20, all Obama needs is maybe 3 or 4 Republicans on any economic issue, and we already saw 10 peel off and joint with Democrats.

We won't have a problem getting to 560 votes on a restructuring for Detroit that makes sense and is more favorable to the unions than what Sen. Corker has proposed in his tiny little brain as a "compromise."

Why the hell should auto-workers be screwed down to what non-union shops make? How's that going to help the economy?  

[ Parent ]
That should read "getting to 60 votes" Not "560"! (0.00 / 0)

[ Parent ]
Good deal? (0.00 / 0)
It's crap.  I had a lump in my throat reading the headline.  And GM and Chrysler have both said "Thank You."  Immediately.

Details?  What about the retirees?

This protects companies but not workers.  Those guys lost the last election.  If I were McConnell and Corker I'd hire personal security guards.  McConnell in particular has been persona;l and vicious.  Maybe payback will wait till the next life but ...

Because.... (4.00 / 3)
"It's all about viability," one official said. "We aren't going to throw good money after bad."

That's what we have a military for!

And a war on drugs!

And a Wall Street bailout!

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

like the $1.7 Trillion we pissed away in Iraq (0.00 / 0)
or the $350 Billion we pissed away on Wall street, or better yet the hundreds of Billions we handed over to Big Pharma.

Bush is an asshole, we're buried in a snowstorm here in Michigan and we're being left to twist in the wind

[ Parent ]
What Strikes Me Is The Arrogance! (4.00 / 2)
These fuckers are in the death throes of the worst administration in American history, with the entire country waiting anxiously with baited breath until they can just slink out of town, and they're going on about what LONG-TERM plans for the auto-industry ought to be?

Screw you Bush! You don't get to decide SHIT! You just keep the auto-makers in business until we can get some grownups in charge.

It's like hoping that a teen-age moron who's somehow wound up at the wheel of a 747 can level out the plane just long enough to prevent it from going into a death spiral before the co-pilot can get in there and take over. You don't want the idiot teen to try anything fancy, like trying to land the plane! Just hold it steady until the co-pilot arrives and then get the hell out of the way!

[ Parent ]
Actually, I Think It's More Like Hoping A Drunk With A Shotgun Falls Asleep (0.00 / 0)
before he shoots someone's poor head off.

But, maybe that's just me.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
explain this to me (0.00 / 0)
first, see this clear breakdown of the terms of the loan, courtesy of the Detroit Free Press:
http://www.freep.com/article/2...

I find this part rather breathtaking:

Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.

Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.

I'm no expert - just a Detroiter with friends and family tied to every American auto company. But, doesn't it seem ridiculous, given their financial status and the general economic climate, to expect that these terms can be met by March 31st?

It's simple: this is a way for Bush to push the problem to the next President. And, in the meantime, he gets Congress to release the last $350 billion in TARP funds to Paulson - something Congress wasn't that keen on doing, since almost $350 billion has already been handed out with no oversight. (Barofsky did finally get confirmed on Dec. 9, so there should be some oversight now.

Breaking news: GM is giving a news conference. Live blog:

Waggoner (and GM) thanks the President, and others who have helped get to this point: first Ron Gettlefinger, then the leaders of Ford and Chrysler, members of Congress, especially the MI delegation, and our Governor. Also thanks employees of GM.

Regarding the restructuring plan: he points to what they've been doing in their restructuring plan over the past few years. Talks about how they're going to prove that American ingenuity can achieve great things.

Taking questions next... I'll post this and come back.

well Bush won't be President to call in the loans (0.00 / 0)
but the Senate GOP is llikely to wreck havoc over "viability" in March.  They are on the warpath with labor and will insist that high wages for some are costing jobs for everyone else.  The GOP is totally on the warpath and resent that workers had a seat at the table during the "negotiations"
[ Parent ]
It's Already Being Reported That Obama Will Decide! (4.00 / 2)
In March when the "viability" requirement comes due, then Obama will have to decide whether to extend the federal aid, ask for additional requirements or force GM & Chrysler into bankruptcy.

What assholes in the Bush administration think about is just pissing in the wind.

As for Republicans "screaming" about it, all Obama and the Democrats have to do is ask the American people "how many million more jobs do you want to lose? Three million? Four million?"

All you morons from the great plains states pontificating about "rewarding incompetence" how about you try and imagine what the economies of your home states will be like without all the independent auto dealers?

How about all you fools talking about bankruptcy think about how the local TV, radio stations and newspapers in your district would like GIVING BACK all the advertising revenues they received in the last 3 months as a PREFERENCE PAYMENT!

No one creditor can be favored over another! So, all you parts suppliers, auto dealers, TV and radio stations, Newspapers, and other creditors of GM and Chrysler fork over that money you got to the Bankruptcy trustee to become part of the bankruptcy estate!

Yup! They'll just LOVE you for that one!

This is the real problem with American Democracy. As long as there's no functioning media, nobody holds Republicans responsible for the insane consequences of their drooling-idiot policies. They can advocate the most irresponsible positions, and get to blather endlessly about "fiscal responsibility" without anyone saying: "you've officially painted yourself as a know-nothing imbecile and we aren't going to listen to you any more! No more air-time for you Sen. Shelby until you actually READ the bankruptcy code and learn what the consequences would be if we listened to idiots like you!"  

[ Parent ]
Mister, we could use a man like Herbert Hoover agaiaaaiiin... (0.00 / 0)

[ Parent ]
I have a question (0.00 / 0)
why wasn't Waggoner forced to quit?

oh that's right, because we don't hold anyone accountable.

"Talks about how they're going to prove that American ingenuity"

they've been talking for 20 years about this.

Also - the viability requirement is not ridiculous. this is closer to how real distressed debt refinancing works. cram down on creditors - pull the shit together, so you have a working bottom line or no money. its pretty simple and auto creditors are going to have to pay in to saving these ponies or they can do it on their own; that includes not just the UAW (whose pensions are out of wack with the rest of what's happening in the economy) but also the lousy Bond holders and all the various suppliers. Time to cut costs everywhere - wages - lower, debt obligations - lower, part prices - lower, production - lower! you dont get money to keep making 17 million cars for customers that don't exist. this viability requirement is one of the few reasonable things we've seen the last month.

~* the * Will * to go on *~

[ Parent ]
let's get you some facts (4.00 / 1)
first of all, holding one exec accountable doesn't seem to be the rule of any of the financial company bailouts, does it? I mean, they got bailouts with no oversight and they're getting bonuses, trips, etcetera.

Next, it's rather preposterous to assume all of this is Wagoner's fault exclusively. You may have heard something about the global financial crisis, which has locked up all the credit that GM and Chrysler has been using during their massive restructuring plans.

These companies have been cutting costs to a dramatic level. Have you heard that these companies are closing all of their plants for an entire MONTH? That they're completely stopping production because they don't have the funds to buy steel and parts, because suppliers are holding back parts, and because many buyers have difficulty getting financing, and more are leery of purchasing from companies that big business wants to crush?

UAW pensions are not "way out of wack (sic) with the rest of the country".

Are you aware that the global market for cars is projected to rise dramatically? The number of people in countries in Asia wanting cars is exploding. Why would you want to destroy these American companies right when they are poised to open up huge markets to new customers?

And, why destroy these companies when they are producing BETTER vehicles than the competition. Yes, I said BETTER. And, they are selling really well. If you don't believe me, read this snippet from the owner of a Ford dealership in Pennsylvania:

When you say that the Big Three build vehicles nobody wants to buy, you must have overlooked that GM outsold Toyota by about 1.2 million vehicles in the U.S. and Ford outsold Honda by 850,000 and Nissan by 1.2 million in the U.S. GM was the world's No. 1 automaker beating Toyota by 3,000 units.
When you claim inferior quality comes from the Big Three, did you realize that Chevy makes the Malibu and Ford makes the Fusion that were both rated over the Camry and Accord by J.D. Power independent survey on initial quality? Did you bother to read the Consumer Report that rated Ford on par with good Japanese automakers?
Did you realize Big Three's "gas guzzlers" include the 33 mpg Malibu that beats the Accord? And for '09 Ford introduces the Hybrid Fusion whose 39 mpg is the best midsize, beating the Camry Hybrid?  Ford's Focus beats the Corolla and Chevy's Cobalt beats the Civic?
When you ask how many times are we going to bail them out you must be referring to 1980. The only Big Three bailout was Chrysler, who paid back $1 billion, plus interest. GM and Ford have never received government aid.
When you criticize the Big Three for building so many pickups, surely you've noticed the attempts Toyota and Nissan have made spending billions to try to get a piece of that pie. Perhaps it bothers you that for 31 straight years Ford's F-Series has been the best selling vehicle. Ford and GM have dominated this market and when you see the new '09 F-150 you'll agree this won't change soon.
Did you realize that both GM and Ford offer more hybrid models than Nissan or Honda?  Between 2005 and 2007, Ford alone has invested more than $22 billion in research and development of technologies such as Eco Boost, flex fuel, clean diesel, hybrids, plug in hybrids and hydrogen cars.
It's 2008 and the quality of the vehicles coming out of Detroit are once again the best in the world!

This has been a huge attempt by Republicans to try and break the unions. They try to use perceptions from the 70s and 80s and ignore the facts of today.

Squelching the production and product development in the midst of developing excellent new products that the market EAGERLY wants is foolish business sense.

But maybe you're right. Putting some pencil-pushing bureaucrat in charge - one that doesn't know squat about the auto business, is probably a better answer. Just ask Chrysler. Cerberus is doing just peachy with their takeover of Chrysler. ;)

[ Parent ]
interesting stuff from press questions to Wagoner (0.00 / 0)
Negotiating process was straightforward.

Rod Meloni from WDIV Detroit asks about how these new work rules, wage restrictions, etc. are going to work - does Wagoner believes that they'll be able to meet these requirements in negotiations with the UAW. Wagoner responds that he thinks they'll be able to work with the UAW to find a way to meet them.

about the financial viability question (reporter notes that analysts think its virtually impossible to accomplish): Wagoner says he doesn't think it's impossible, and in fact is "highly confident" they can meet the test.

The government did not suggest to the big three that they go into bankruptcy.

Does Wagoner think that the terms will be more negotiable once the Obama administration takes over? Wagoner is focused on meeting the terms he has now.

GM President says that the terms of this (and viability) are even more specific than their turnaround plan... but they're going to do it.

They expect to get the first drawdown of the money by Dec. 29.

Flint plant was being delayed (this is a plant that would be developing the engine for the Volt and Cruze -  highly efficient engines for the low mileage, low emission cars GM has designed) and they will continue to "retime it" (i.e. delay the project), but they expect the terms of this loan will not stop them from this project or other new product development.

There is no Car Czar (yay!) but there is a "presidential designate" - this has not been clearly explained or defined.

I'm continuing with local coverage... not much new here other than them saying that they are fully focused on executing the GM turnaround plan, and are not having any merger talks with Chrysler.

Some twit is hammering on about our hourly wage worker pay versus the hourly wage pay of foreign automakers... question is basically brushed off.

GMAC (financing arm for GM, which is what has caused such a huge and sudden crisis): they want to keep GM and GMAC on the same restructuring timetable, although "on different paths" since GMAC is working on a bond exchange and is working on becoming more of a bank company. It sounds as if they will continue to try to keep GMAC since it works hand-in-hand in providing financing to people who will buy GMs products.

more in next post.

[ Parent ]
more from Wagoner's press conference (0.00 / 0)
on brands: discussing with others about a deal on (getting rid of) Hummer. Saab has so much volume in Europe, so it depends on the Europe volume. Saturn - we'll see what happens.

on Wagoner's future: he plans to stay. He believes this is incredibly important work, and believes he has a good management team, and with this financial support, he thinks they will be able to meet the sudden financial crisis and meet the turnaround requirements.

[ Parent ]
I thought that GM sold GMAC to Chrysler (0.00 / 0)

[ Parent ]
I think you're mistaken (0.00 / 0)
Bush is on your side.

And there will be no credible plan to back up the excuse of burning tens of billions on this dead wood.

sigh - anyway, the left will see how mistaken this all was in about 6 months when they come glad handing for more.

~* the * Will * to go on *~

Bush to Destroy Big Three? | 21 comments
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